What Is Critical Illness Insurance?

As the name suggests, critical illness insurance is a comprehensive insurance cover that offers protection against life-threatening disorders such as kidney failure, renal failure, cancer, HIV, and heart attack, among others. 

Under the policy terms, it offers a substantial amount of one time lump sum payout that helps in covering the massive costs of medical and other expenses related to such illnesses. Having such insurance cover allows you to access quality healthcare services without looking over your shoulder for funds. 

Reasons To Choose a Critical Illness Insurance Policy

There are several things in life that you have little control over. And your health is one of those things. While you may work towards having a fit and healthy life, it is almost impossible to have complete control. Thus, it is good to be prepared by having a health insurance policy that will take care of the medical and other expenses in case of illness. But then the question comes to mind if I already have a health insurance cover, do I need to purchase a critical illness policy?

The answer to it is simply that it is often advisable to have one. Even though you buy the best medical insurance policy that is in line with your health cover needs, you may still face a dearth of ample coverage in case you are diagnosed with any critical illnesses. A primary health cover often does not provide protection against out of hospital expenses for life threatening diseases such paralysis, stroke, or cancer, to name a few. 

Another vital factor to consider is medical inflation. We have seen considerable growth in the costs and expenses of medical treatments over the past few years. Moreover, during the initial and middle phases of the pandemic, the prices went up even higher because of the lack of care or treatment methods. The results are well-known to all of us. What it shows is that you can never be too sure of anything. A primary health plan may just not be sufficient in case of a prolonged illness leading to higher medical and other costs. 

A few reasons why you may choose a critical illness cover are given below:

• Covers medical expenses and other treatment costs: Treatment for critical illnesses such as cancer or HIV is expensive. Having an insurance policy that covers these illnesses makes it easier to manage high costs of consultation and hospitalization. 

• Recoup your loss of income: Naturally, if you are diagnosed with any life-threatening disease, you will seek medical help to neutralize it. As you fight for your health, your expenses keep on mounting, and your savings may take a massive hit. More often than not, you are physically incapable of working, and that may lead to a loss of income as well. In such cases, having a critical insurance cover can be of great help. It can offer full or fixed payments to help cover the loss of income. 

• Help in supporting other monthly expenses: As a working professional, you may have specific responsibilities and liabilities. A hit on your health and income reflects negatively on your liabilities, such as loan payments. With the help of a fixed payout of your critical insurance cover, you can manage these monthly outgoings without any additional burden. 

• Provides additional support along with your health plan: A critical insurance cover offers you to get other financial aid over and above our primary health insurance cover. In addition to that, it also covers a wide range of disorders and illnesses which are not insured in your basic Mediclaim policy. Hence, having a critical illness cover gives a better chance of dealing with these medical conditions and rising expenses. 

• Affordable premium payments: It is a common misconception that critical illness insurance is off the limits for the majority. A large part of the misconception is fueled by the misinformation about the exorbitant premiums that need to be paid to avail of such cover. However, it is not true. With technological developments and reasonable government regulatory control, critical insurance policies are now easily accessible and that too at affordable rates. You should check out different policies and their respective benefits before opting for one. 

• Tax benefits: Another massive benefit of choosing a critical insurance policy is of availing tax benefits. With the coverage, you not only protect yourself from serious illnesses but also get some tax benefits for the premiums you paid for the cover. These payments fall under Section 80D of the Income Tax Act. 

You can thus claim a tax deduction of up to INR 25,000 for the health cover premium payments. For people above 60 years, the deduction is INR 50,000 under the above-mentioned section. 

Types of Critical Illness Covers

Typically, each insurance provider has its own way of offering critical insurance policies. By and large, we can divide these covers into two categories: 

• Bundled cover 

It is an insurance cover where you can choose to cover yourself from a range of critical illnesses. Typically, the bundles come in the form of 9, 25, or 43 conditions. You can opt for coverage ranging from INR 1 lakh to INR 1 crore depending on your requirement. Such policies have specific eligibility criteria, including the age of the purchaser and are renewable across your lifecycle. Moreover, the cover also protects multiple relationships if mentioned at the time of purchasing. 

• Disease-specific 

As the name suggests, in this policy, you opt for cover against a specific disease such as cancer, HIV, or kidney failure. The benefits of the policy remain similar for both categories. 

Important to remember if you purchase a critical illness cover, it typically comes with a waiting period. This period differs from provider to provider. On average, the waiting period is 90 days from the date of the purchase. There are also different waiting periods depending upon the policy terms. For example, the insurance provider may give a slightly longer waiting period in case you are opting for a cover for an existing health condition. 

Documents Needed to Raise a Critical Illness Insurance Policy Claim 

When you are filing a claim for critical illness insurance cover, you must have the necessary documents at hand. A checklist is given below:

• Claim form: It is the most important document on the list. While filing for a claim, you must have duly filled and adequately signed the health insurance claim form to the insurance provider. These days, the document can be quickly submitted online, and you can also track the progress of the claim. Typically, it is advisable to inform the insurance company and submit the form within 30 days of the diagnosis of the disease covered under the policy terms.
• Once the insurance company receives the claim form, they can request the following documents for further scrutiny:

1. All the necessary and relevant medical reports of your health condition, medical history, results of an investigation, treatment receipts, and the discharge certificate from the hospital. 
2. An accurate and detailed diagnosis of the medical treatment for which you are submitting the insurance claim. 
3. Any other documents as requested by the insurance provider for seamless claim settlement

Things to Keep in Mind While Purchasing Critical Illness Insurance Policy

When you think of purchasing a critical disease insurance cover, you must consider the following factors before making a decision:

• Sum Assured: How much cover is a good cover? It can be difficult to put a number on it. Experts often advise you to opt for coverage on the higher side to ease your financial burdens when an emergency arises. Check with your financial advisors before any purchases. 
• Sub-Limits: You should also check for sub-limits of your insurance plan before making the buying decision. Typically, there are sub-limits for medical tests and surgeries. It is imperative to check for these things as it affects how much cover you are actually getting for a specific expense. 
• Type of Insurance Cover: Generally, in India, the insurance providers offer critical illness cover in two forms – as a standalone policy or as an additional cover or rider with the existing health cover or life cover. Thus, you should carefully read the policy terms and conditions and check what aspects are covered. 
• Exclusions and Inclusions: It is imperative that you should check for the different inclusions and exclusions offered by your insurance policy. What are the different diseases that are covered, what charges are excluded from the coverage, etc. are some a few factors to keep an eye on while signing on the insurance policy documents.
• Renewal: All these insurance policies have a tenure of one to three years, after which it needs to be renewed. Some critical disease insurance policy providers put a cap on the maximum age renewals. Hence, experts advise checking this particular ceiling before buying any plan. Moreover, it is more beneficial to opt for a plan that gives lifelong renewals. 
• Age: These insurance plans come with coverages and costs for different age groups because of their varying health risks. Thus, the insurance cover for the elderly comes with a higher premium than those for the younger generation. It is typically advised to opt for an insurance cover that best aligns with your age and health insurance needs. 

Bottom Line

Insurance is a key aspect of any sound financial plan as it saves you from unexpected expenses. While having health insurance is a must for us (as highlighted during the Covid-19 pandemic), you should also think about having a critical illness cover. Life is uncertain, and it is best to be prepared. The earlier you opt for a critical illness cover, the premium will be more affordable and will help in keeping you and your family financially safe and sound in the long run.