What is a Critical Illness Insurance Cover

To put into simple terms, critical illness insurance is the arrangement that will provide a certain degree of financial security in case you become gravely ill. This policy pays you a predefined sum if you suffer from a critical illness and get diagnosed regarding the same. What’s more, this sum is completely tax-free.

Generally, life insurance and critical insurance cover are available in combinations. But the only catch is, in an emergency situation, you have the option to claim only one. When you opt for a critical insurance policy, you can decide its tenure. You have to pay premiums throughout the tenure and once the tenure ends the protection provided by the policy also ceases to exist.

Who should opt for the critical illness policy?

The reasons for opting for a critical illness insurance cover are different for different age groups. The similarity between the different plans is that they all are compelling and need to be addressed as soon as possible.

A single person may have his loan payment facilitated in case he becomes critically ill and often, it is that loan application demand cover which the critical insurance policy can provide. A family head can ensure that his children’s education fees are paid and that his family is looked after properly even if he falls critically ill. The advantage of buying this insurance is that it also makes up to the extra cost of change in lifestyle in the cases of critically ill patients.

Should I buy it?

One thing that you need to assess before purchasing this policy is the benefit of the pay-out and the impact of premium payment on your financial calculations. A critical illness insurance premium calculator can be used to calculate the second part, as for the first part, you need to carefully assess and ensure that the pros outweigh the cons completely.

The policy is particularly useful when your whole family depends largely on your monthly salary. In other scenarios, if you do not have any financial dependents and do not share any financial commitments, then it is best that you do not enrol yourself for this policy and may go for other insurance products.

What is the amount of cover that I need to opt for?

Some insurance plans offers partial payment of sum assured depending on the seriousness of your illness. The basis of arriving at the answer to how much cover you need is to determine what would be the actual monetary losses that would be incurred if you stopped working due to illness. This amount has to sum up with other factors such as financial commitments, loan repayments, children’s expenses, mortgage, etc. This amount is unique for each, and therefore, the answer to this question needs to be answered on an individual basis.

Which illnesses does the critical illness insurance policy cover?

Certain types of cancer, heart strokes and attacks, Parkinson’s disease, deafness, meningitis, head injury, are some of the classifications of critical illness and are included in the policy.

One must note that the illnesses covered in a policy entirely depend on the insurance company and this cover changes from company to company, and one must read the documents carefully to get a gist of it.

What else is required?

You will have to submit your medical history and would be required to give details about your current financial health to the insurance company. This will allow you to get a critical insurance quote. This information allows the insurance company to determine the risks associated upon covering you, and the price is then given to you accordingly. One must be honest and must provide accurate information to avoid any future problems with the insurance company.

It is always advised to stay protected, and critical illness insurance does just that seamlessly. It ensures that the financial flow does not become intermittent even in cases of critical illness. You must buy it to safeguard yourself and your family from potential threats that entail critical illness.

Benefits of Critical Illness Plan

There are several benefits of a critical illness policy. Some of them are:

Covers medical expenses and hospitalization: Medical treatment can be very expensive and can become a huge financial burden if you’re diagnosed with a critical illness.

Covers loss of income: You may need to take several leaves from work for the treatment. A critical illness plan will cover for this loss of income.

Income replacement: In case of a critical illness, it’s not just you but also your family that is financially impacted. A critical illness plan pays a predetermined lumpsum amount that you can use to cover your medical and household expenses.

Tax benefits: Critical illness insurance comes with tax benefits, as the payout is completely tax-free under Section 80D of the Income Tax Act.

Peace of mind: While you’re dealing with an ailment, the focus should be on the medical treatment. A critical illness policy ensures that you don’t have to worry about the financial implications of the treatment or loss of workdays.

Covers a range of expenses: If you are diagnosed with any of the covered ailments, the critical illness policy will make a lumpsum payment. You are free to decide how you want to use the money. It can be used to pay for hospitalization expenses, household expenses, loan EMIs, children school fees or any other expenses.

Covers treatment in a foreign country: Critical illness insurance can cover you even if the treatment is taking place in another country.

Factors to Keep in Mind When Opting for a Critical Illness Plan

Budget for the treatment: Medical expenses can be very high for treating a critical illness. So, it’s important that treatment expenses are covered, as this is the foremost purpose of a critical illness insurance policy. You can find out about the expenses involved from a trusted medical professional or a person who has knowledge of this. Researching online will also give you an idea.

Miscellaneous expenses: When deciding on the cover, remember that there may be several other expenses involved apart from the medical bills. This may include various tests, hospitalization and post-treatment care costs. Undergoing treatment may need you to take several leaves from work. So, you may wish to consider loss of income and household expenses or liabilities, so that your family doesn’t have a huge financial burden while you’re undergoing treatment.

Inflation: When deciding the cover, consider the inflation rate. Inflation makes medical and all expenses escalate every year.

Check the illnesses covered: When choosing a critical illness plan, it’s vital to check all the ailments that are covered. The policy will list out all the serious diseases or conditions that it covers.

Waiting period: A critical illness policy will typically specify a period after which it comes into force. This is called the waiting period. It starts from the date on which you purchase the critical illness policy and continues till the benefits kick in. The waiting period of a critical illness insurance plan could extend from a few weeks to a couple of years. So, it’s important to select a plan that comes into effect as early as possible.

Critical Illness Policy FAQs

Q.1. Why do you need Critical Illness Plan? Being diagnosed with a critical illness can be emotionally devastating. At such a time, you wouldn’t want your family to be dealing with the massive financial burden of massive medical expenses. A critical illness plan covers for these unexpected expenses, leaving you worry free about the financial aspects of the treatment. With appropriate cover in place, a critical illness policy can take care of hospitalization, treatment and post-treatment care costs and more.

When undergoing treatment, you may be incapable of reporting to work. A critical illness policy can cover for this loss of income and provide for household expenses as well as take care of liabilities like home or car loans.

Q.2. What are the Features of Critical Illness Plan?

The main features of a good critical illness plan are:

Coverage: This refers to the various illnesses that the critical illness policy covers. The more extensive the list, the more comprehensive is the policy. Illnesses covered may include life-threatening critical illnesses like cancer, heart attack, brain tumor, kidney failure, muscular dystrophy and more.

Payment terms: The payment is typically made as a lumpsum amount on diagnosis of a critical illness.

Life stage rebalancing: If you get a term insurance plan with a crucial illness cover, you can benefit from this feature. It rebalances the cover for your life and for critical illness every year.

Waiver of premium: Some critical illness insurance policies waive off premium payments on diagnosis of any of the covered critical illness.

Fixed premium: The premiums remain fixed through the term of the policy, although the critical illness cover may increase at predefined intervals.

Q.3. What are the Inclusions of Critical Illness Policy?

There are 36 critical illnesses covered under a critical illness plan:

• 01. Cancer of specified severity
• 02. Myocardial infarction – first heart attack of a specific severity
• 03. Open heart replacement or repair of heart valves
• 04. Kidney failure requiring regular dialysis
• 05. Major organ/bone marrow transplant
• 06. Coronary artery bypass graft
• 07. Multiple sclerosis with persisting symptoms
• 08. Strokes resulting in permanent symptoms
• 09. Coma of specified severity
• 10. Permanent paralysis of limbs
• 11. Motor neuron disease with permanent symptoms
• 12. Benign brain tumor
• 13. Blindness
• 14. Deafness
• 15. End stage lung failure
• 16. End stage liver failure
• 17. Loss of speech
• 18. Loss of limbs
• 19. Major head trauma
• 20. Primary (Idiopathic) pulmonary hypertension
• 21. Third degree burns
• 22. Alzheimer’s disease
• 23. Aplastic anemia
• 24. Medullary cystic kidney disease
• 25. Parkinson’s disease
• 26. Systemic Lupus Erythematosus with lupus nephritis
• 27. Apallic syndrome
• 28. Major surgery of the aorta
• 29. Brain surgery
• 30. Fulminant viral hepatitis
• 31. Cardiomyopathy
• 32. Muscular dystrophy
• 33. Poliomyelitis
• 34. Pneumonectomy
• 35. Severe rheumatoid arthritis
• 36. Progressive scleroderm

Q.4. What are the Exclusions of Critical Illness Insurance Policy?
The exclusions of a critical illness insurance policy are:

• Any listed critical illness that manifests within 90 days after the policy begins
• Pre-existing disease
• Illnesses due to a congenital defect
• Any intentional injury
• Life insured being under the influence of drugs and alcohol
• AIDS/HIV
• Injuries or illnesses caused due to:
  • War
  • Terrorism
  • Criminal and unlawful act by the life assured
  • Underwater activity

Q.5. Who should buy Critical Illness Insurance Policy?
Anyone can buy a critical illness insurance policy as everyone faces the risk of such illnesses. Our lives have become increasingly sedentary, our regular food habits are not the healthiest and there isn’t enough time to exercise. These have made us more prone to serious illnesses. With medical expenses surging, the cost of treatment of major diseases has become almost unaffordable. If you’re hospitalized for the treatment, the costs could be even higher, especially if you need to visit a super-specialty hospital. So, opting for a critical illness policy is prudent.