Critical Illness Cover
Critical illness refers to illnesses that cause serious harm to health, which may prove fatal also. These illnesses have a significant impact on our lives as they can not only suppress our physical endurance but also test our financial endurance due to prolonged and expensive medical treatments. Critical Illness Policy is a type of insurance coverage that pays you a lump sum on the diagnosis of a critical illness. Let us understand how critical illness cover works.
What is Critical Illness Policy?
It is a type of health insurance that provides you a lump sum amount when you are diagnosed with a critical illness. The illnesses forming part of the insurance are disclosed to you before purchasing the policy.
Some common illnesses which are listed as critical are cancer, tumor, heart ailments, kidney failure, etc. The sum insured is paid as a lump sum regardless of the actual medical costs. The insurer does not bother about how the payout is spent.
Upon payment of a claim for a critical illness, the policy would be terminated. You cannot claim it again if you are diagnosed with any other critical illness at a later stage.
Features of a Critical Illness Cover
The features of a critical illness cover would vary from one insurance provider to another. Some of the common features of a critical illness plan are as below:
- Only specific illnesses are classified as critical in the policy. The list of critical illnesses varies from one insurer to another.
- You will receive the Sum Insured as a lump sum payout as soon as you are diagnosed with a disease covered under the policy.
- The premiums are generally low as this only covers a limited number of illnesses, which are specified in the policy.
- You can make a claim only after the waiting period as defined in the policy.
- You cannot make more than one claim on this policy.
- Pre-existing diseases are permanently excluded in this policy.
Why should you buy Critical Illness Policy?
Critical illnesses can affect your health severely for a long time and may stop you from going to regular work or from carrying out other routine activities. Irrespective of whether you can work or not, you have to meet regular monthly expenses such as rent, EMIs, living expenses, etc. Also, your expenses might increase as a result of the medical treatments/tests/consultations, etc which are not covered by health insurance. The standard health insurance will only cover your hospitalization expenses.
Having critical illness insurance will help you to manage your expenses and maintain your lifestyle when diagnosed with a critical illness. The lump-sum amount will help you to meet your financial obligations while recovering from the illness.
Purchasing critical illness cover is extremely important especially when you are the only income earner in the family.
In today’s world of rising diseases and health issues, it is very important to safeguard yourself and your family from the negative financial impact a critical illness can bring.
- Increasing health issues
With ever-increasing pollution and leading unhealthy lifestyles, the number of people diagnosed with critical illnesses has been increasing consistently. So, it is better to protect yourself with a critical illness cover.
2. Rising Medical Costs
Your regular health insurance will cover only the hospitalization expenses and some parts of pre and post-hospitalization expenses. However, while managing a critical illness there can be many other regular medical expenses such as doctor consultations, diagnostic tests such as blood tests, scanning, etc. which cannot be claimed on your regular health insurance. Receiving a lump sum for this purpose will reduce your financial burden.
3. Tax benefits
The premium paid for the critical illness insurance can be claimed as a tax deduction under Section 80D of the Income Tax Act, 1961. You can claim a deduction of up to Rs.25,000 if you are below 60 years and Rs.50,000 if the age is 60 years and above.
Difference between Critical Illness Insurance and Regular Health Insurance
Some of the differences between critical insurance and a standard health insurance plan are as follows:
|Critical Illness Insurance||Health Insurance|
|It is a specific health insurance plan which provides protection only against illnesses specified as critical.||It is a general health insurance plan which provides cover for hospitalization expenses.|
|The entire Sum Insured is paid as a lump sum on the diagnosis of critical illness.||The plan covers medical costs such as hospitalization, medicines, surgery, etc. for any illness or injury which are a part of the plan subject to a maximum of the Sum Insured.|
|You can use the amount received from the claim for any purpose.||You can only make the claim against the actual medical expenses incurred.|
|These plans have a low premium as protection is provided only against certain illnesses||Premiums are high as they provide comprehensive health coverage and cover most of the hospitalization expenses|
|The policy is terminated once a lump sum payout is made. You may not receive the claim if they suffer the same illness for the second time||You can claim multiple times for the hospitalization expenses incurred up to the maximum of sum Insured,|
Things to consider before purchasing a Critical Illness Insurance
- Read the terms and conditions of the policy thoroughly especially those related to the waiting period for the claims.
- Check which illnesses are covered by the policy. You have to ensure that you are covered for those illnesses to which you are at risk or genetically disposed of.
- Check the exclusions mentioned in the policy.