Critical Illness Insurance

A critical illness policy is a form of health insurance that provides coverage for life-threatening medical conditions and long-term critical illnesses that require expensive medical treatment. Some examples of serious medical conditions covered under critical illness insurance are cancer, heart attack, kidney failure, and many more. When the policyholder gets diagnosed with such a disease or condition, the critical illness policy provides a large lump-sum amount of money to cover the treatments and other expenses. Many insurers offer critical illness insurance as an ‘add-on cover’ with their health insurance plans. 

Features of Critical Illness Insurance Plans 

Here are the main features of critical illness insurance plans that you should be aware of: 

1. Coverage for Critical Illnesses 

As mentioned above, the critical illness policy is especially effective in providing coverage for serious and life-threatening medical conditions such as stroke, cancer, organ transplant, paralysis and dozens more. 

2. Lump-Sum Payout

When the policyholder is diagnosed with any disease covered under the critical illness insurance policy, the insurer will pay out a large sum of money. The insured can use this large amount of funds to pay for their expensive hospital bills and take care of living expenses. 

3. Straightforward Claim Process 

The critical illness policy has a straightforward claim process as the plan covers a specific set of diseases. If you get diagnosed with one of these diseases, you will be provided with coverage without any hassle. 

4. Waiting Period 

It is important to note that coverage for pre-existing diseases will be provided after the waiting period is over under the critical insurance. 

5. Covers Lost Income

The lump-sum amount you receive from critical illness insurance can also help you replace your lost income due to your medical condition or illness. 

Benefits Of Critical Illness Insurance

When you buy health insurance with a critical illness benefit rider, you can avail the following critical illness insurance benefits:

1. It can act as a replacement for your income

Usually, the medical expenses are covered under the employer’s health plan or your existing health policy. If the health insurance plan covers your treatment and hospitalisation expenses, the critical illness benefit acts as an added financial benefit.

Moreover, if you fall short on your health insurance coverage, the payout received from term insurance critical illness benefit can be used. Otherwise, the amount acts as an income replacement source to stabilise your financial situation until you recover.

2. It provides cover against life-threatening diseases

As we know, our health is bound to degrade as we grow old. In extreme situations, most people acquire life-threatening illnesses that require extreme care and treatment. Considering the fact that many individuals in India are suffering from heart diseases and diabetes, it is better to have an insurance plan that covers you against it. As explained earlier, the term insurance plans with critical illness cover protect you against extensive critical health conditions that you may/may not suffer in the future.

3. It offers tax benefits

Along with the primary term insurance tax benefits, critical illness cover provides additional tax benefits as well. So, if you have term insurance with critical illness cover, the premiums paid can be claimed for tax deductions under Section 80C and Section 80D of the Income Tax Act, 1961. The overall amount that can be claimed for tax deductions is ₹1.5 Lakh and ₹25,000 respectively for each section.

4. You can secure a larger coverage for a nominal price

One of the main benefits of term insurance is that it is the most affordable life insurance product available in the market. You can get extensive coverage at an affordable premium price. In fact, you can use the term insurance calculator to determine the premium amount based on your chosen sum assured and add-on benefits.

Tax Benefits under a Critical Illness Policy 

One of the benefits of buying a critical illness policy is the tax deductions. You can claim deductions of up to ₹25,000 on the critical illness insurance premium costs. If you are above the age of 60, you can claim deductions of up to ₹50,000 under this policy. Moreover, if you are also making the premium payments for yourself and your elderly parents, you can claim a combined tax deduction of up to ₹75,000. 

Diseases Covered under Critical Illness Policy 

Let's take a look at the inclusions under the critical illness policy: 

• Certain types of cancer

• Heart attack

• Heart surgery

• Organ replacement procedures

• Kidney failure

• Bone marrow transplant 

• Permanent paralysis 

• Liver disease (end-stage)

• Lung disease (end-stage) 

• Hepatitis 

• Multiple sclerosis 

Note: These are just a few of the diseases that are covered under critical illness policies. For a more exhaustive list, please refer to your insurance policy document. 

Exclusions under the Critical Illness Policy

The following are the exclusions under critical illness policies:

• Pre-existing diseases that are under the waiting period will not be covered. 

• Diseases caused due to consumption of alcohol, drugs or smoking will not be covered. 

• Medical conditions related to pregnancy and childbirth will not be covered.

• HIV/AIDS is not covered under this policy. 

• Dental or cosmetic procedures will not be covered under the plan. 

• Hormone replacement treatments will not be covered. 

Note: This is a typical list of exclusions under the critical illness policy. Before buying, you should always check out the full list of exclusions on the insurance policy document. 

How to Choose the Best Critical Illness Cover?

Here are some important points to keep in mind when choosing a critical illness policy. 

1. Rider or Stand Alone Policy 

You can choose to buy critical illness cover in two ways. First, you can buy a standalone critical illness cover. Alternatively, you can buy critical illness as an add-on cover with your health insurance plan. 

2. Critical Illness Benefits

To avail coverage for critical health conditions under a health insurance/term plan, you should purchase a policy that offers critical illness benefits. Even though you may have to pay additional premiums over and above the existing term plan premiums, you will be covered against several critical illnesses during the policy term. 

3. High Sum Insured 

The medical expenses in India are rising rapidly, and when it comes to treatments of critical ailments, the costs are off the roof. It can easily burn a hole in your savings. Moreover, some critical illness treatments can go on for a longer time. Opting for term insurance with a critical illness benefit that offers a high lump sum amount will help tackle the situation financially.

4. Longer Coverage Duration

While you consider a high sum insured, it is also important to choose a plan that offers coverage for a longer time. As explained earlier, some critical illness treatments usually take time. Hence, a longer policy tenor will ensure that you are well protected for a longer duration.

5. Payout

A policy with critical illness benefits will pay out the sum insured amount either as a lump sum or in percentage (depending on the level of severity of the disease). Choose a plan that offers optimum coverage so that you get enough money as the payout to manage the expenses incurred.

6. Special Critical Illness Plans 

Many insurers offer highly specific critical illness health plans for certain demographics. For instance, insurers offer women’s critical illness plans with a focus on providing better coverage for certain critical illnesses faced by women, such as breast cancer, cervical cancer, etc. Similar plans are also available for senior citizens. 

7. Inclusions and Exclusions 

Inclusions and exclusions refer to what’s covered and not covered under the policy. Read the inclusions and exclusions of all available critical illness policies, then decide which one to buy based on how many inclusions it offers. 

8. Waiting Period 

If you are suffering from an existing illness at the time of buying the policy, you should try to opt-in for a critical illness cover that has the lowest waiting period. This will allow you to get coverage for your pre-existing illness as soon as possible. 

How to Buy Health Insurance Covering Critical Illness

Critical illness is often featured as an add-on cover under general health insurance plans. Here are the steps you can follow to buy a critical illness coverage along with health insurance:

• Step 1:   Click on the Buy Now button mentioned on the top of the page. . 

• Step 2:  Browse through the different health plans available and then select a plan that suits your needs.

• Step 3:  When going through the add-ons, make sure you select the critical illness cover for your plan.

• Step 4:  Submit the necessary documents and make the online premium payment.

Your health insurance policy with the critical illness cover will be sent to your registered email. 

Factors to Keep in Mind While Choosing a Critical Illness Policy 

Here are the important factors that you need to keep in mind while choosing a critical illness policy: 

1. Sum Insured 

One of the most important factors that need to consider when looking for a critical illness policy is the amount of sum insured that you will need. Try to look for a plan that offers the highest sum insured in health insurance at reasonable rates to have the highest possible level of coverage. 

2. Standalone Critical Illness Policy vs Add-on Cover 

You will have the option to buy a standalone critical illness policy or get it as an add-on cover. If you already have a health plan but no critical illness cover, you can opt for the standalone critical illness policy. However, if you do not have health insurance, you should look for a health plan with a critical illness as an add-on cover. 

3. Cost of the Policy 

One of the most important factors that you need to keep in mind is the cost of the policy. You can find budget-friendly plans by comparing different critical illness policies online.

4. Inclusions and Exclusions 

It is extremely important that you understand the inclusions and exclusions of the critical illness policy. This will help you make informed decisions about which is the correct plan for your specific needs. 

5. Compare Plans Online 

The best way to find the right plan for your requirements is to compare the different critical illness covers available from different insurance plans online. This will allow you to analyse the cost, features and benefits offered by different policies. 

How to File a Claim for Critical Illness Policy

Here are the exact steps you can follow to file a claim for critical illness policy:

• Step 1: As soon as you find out about your diagnosis, contact your insurance company and inform them about your intention to file a claim.

• Step 2: Fill out the claim application form correctly and attach all the required and relevant documents.

• Step 3: Once your claim application is received, the insurance company will start the verification process.

• Step 4: After successful verification, the claim will be approved and the insurance claim funds will be transferred to you. 

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