Importance of a critical illness insurance policy

Importance of a critical illness insurance policy

Know more about what a critical illness insurance policy does for you.

3 mins
01 Feb 2023

Have you realised that in the recent past, while discussions around staying healthy have increased, there are a lot of instances of critical illnesses that are also coming up in conversations? Critical illnesses like cancer, strokes, heart ailments, and autoimmune diseases have become part of conversations across families. Critical illnesses cause as much mental stress as they create financial stress. To be honest, a lot of the mental stress is because of a lack of awareness about the treatment plan and the expense attached to it.

Given our lives today and what we see around here, it is wise to be prepared for things that are coming up ahead of us. Give a good thought to purchasing critical illness insurance.

What is critical illness insurance?

A critical illness insurance policy offers comprehensive coverage against life-threatening conditions. When you opt for a critical illness policy amidst the rising medical costs, you safeguard your savings from being drained due to high treatment charges.

Most health insurance plans offer critical illness as an add-on cover with an additional premium. Choosing to take on the critical illness add-on insurance cover can be an ideal ally during medical exigencies.

Critical illness plan: How it can help

A critical illness policy provides coverage against several life-threatening health conditions, such as heart attack, organ transplants, cancer, renal failure, etc. Due to the constant inflation of medical and healthcare costs, opting for a comprehensive health insurance policy becomes necessary to meet expenses during emergency medical conditions.

Key features of a critical illness insurance plan

  • High coverage amount
    Critical illness policy provides coverage of up to Rs. 50 lakh to give you access to the required medical treatment without worrying about expenses.

  • Lump sum payout
    Critical illness policies usually offer a lump sum payout to the policyholder when the illness is diagnosed so that treatment charges can be taken care of.

  • Tax exemptions
    Claim tax deductions on the premium paid for a critical illness covered under Section 80D of the Income Tax Act of 1961. Those below the age of 60 years can claim up to Rs. 25,000. Additionally, senior citizens over 60 years old can claim up to Rs. 50,000 under this section. The amounts may vary depending on the prevalent tax regime.

Things to keep in mind while opting for a critical illness policy

  • Inclusions and exclusions
    You must go through the inclusions and exclusions of the policy. There can be instances where a policy may not cover the expenses for an illness that you consider a critical health condition.

  • Sum insured
    One must consider the sum insured while checking different policy options. As the cost of treatment varies for different critical illnesses, checking the coverage amount becomes imperative before applying.

  • Claim settlement ratio
    Checking the claim settlement ratio of the insurer is essential to consider so that at the time of a claim, there are no delays or hassles.

  • Waiting period
    The waiting period is the stipulated time after which a policyholder can avail of the benefits of the insurance policy.
    Check all the waiting periods mentioned in the document to be sure about when claims can be raised and will be accepted.

Tax benefits under a critical illness insurance policy

The fact that critical illness insurance offers tax benefits is an additional advantage, and you can claim tax deductions against the premium paid under the relevant sections of the prevalent tax laws.

Importance of critical illness insurance in India

One of the most important benefits of this insurance plan is the enhanced coverage. It covers a wide range of critical illnesses and helps the insured manage all associated healthcare expenses besides hospitalisation costs. A critical illness insurance plan also offers a lump-sum amount which helps individuals manage healthcare costs in a better way.

Who should buy a critical illness insurance policy?

  • People over 40 years of age
    People over 40 years old are more vulnerable to such illnesses and should opt for a critical illness insurance plan to save themselves from financial burdens during demanding times.

  • Individuals with a critical illness history in the family
    Many serious illnesses have hereditary causes, and individuals with such a family history must opt for this insurance plan.

  • Primary earners 
    Those who are the main bread-earners for their respective families must consider opting for this policy to cut down on their financial worries due to any critical health condition.

Inclusions of Critical Illness Insurance policy

Here are the standard inclusions under critical illness policy:

  • Critical illness health insurance mainly covers max upto 50 major critical illnesses. Some of these are coronary artery bypass surgery, stroke, kidney failure, major organ transplant, etc.

  • The critical illness cover amount varies depending upon the insurance provider.

  • You can benefit from critical illness insurance within 30 days of diagnosis or as mentioned in the terms and conditions of the critical illness insurance policy.

  • The insured gets the lump-sum amount as mentioned in the critical illness policy.

  • The critical illness insurance policy also covers annual health check-ups.

Exclusions of critical illness insurance policy

Here are the standard exclusions under the critical illness policy:

  • There is no compensation if a person dies within 30 days of diagnosis of critical illness or surgery.

  • Any critical illness developed due to smoking, tobacco, alcohol, or drug intake is not included in a critical illness insurance policy.

  • The critical illness developed due to internal or external congenital disorder is not included in critical illness insurance.

  • Pregnancy or childbirth-related critical conditions are not covered under critical illness insurance.

  • Adventure sports injuries, self-harm, and war injuries are not included in the critical illness policy.

How to file a claim for critical illness policy?

Here are the complete process for the Claim Process for Critical Illness Insurance Policy:

Cashless claim

Cashless treatment is only available at a network hospital registered with Bajaj Allianz. To avail of the cashless treatment, the following procedure must be followed:

  • Approach the network hospital with your policy details.

  • The hospital will verify your details and send a pre-authorisation form to the insurer.

  • The insurer will verify the pre-authorisation request and convey the policy coverage and other details to the hospital.

Planned hospitalisation

  • Insured members should intimate about admission at least 72 hours before.

  • In the case of emergency hospitalisation, the insured member or his representative should intimate such admission within 24 hours.

  • The insurer will send you or the network hospital a pre-authorisation letter. The pre-authorisation letter, ID card issued to you along with this policy, and any other information or documentation that the insurer has specified must be produced to the network hospital identified in the pre-authorisation letter at the time of your admission to the same.

  • If the procedure above is followed, you will not be required to directly pay for the medical expenses above the aggregate deductible in the network hospital.

  • Original bills and evidence of treatment in respect of the same shall be left with the network hospital.

Reimbursement claim

If the insurer denies pre-authorisation under the cashless claim procedure mentioned above in a critical illness insurance policy. Or if the treatment taken is in a hospital other than a network hospital or if you do not wish to avail of the cashless facility, then the following procedure must be followed:

  • You or someone claiming on your behalf must inform the insurer in writing immediately within 48 hours of hospitalisation and gather all the hospital documents.

  • In the event of the insured person’s death, someone claiming on their behalf must inform the insurer (in writing) immediately and send a copy of the post-mortem report (if any) within 30 days.

  • The insurer shall not indemnify you for any period of hospitalisation of fewer than 24 hours, except for day-care procedures.


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