All you Need to Know About Critical Illness Insurance?

bySurobhi BoseLast Updated: August 19, 2022
What is Critical Illness Insurance P

In this day and age, people getting affected by lifestyle diseases and critical illnesses are very common. And, with the burgeoning cost of healthcare in India, the treatment for a critical illness can burn out all the savings of an individual. Thus, it is imperative for individuals to have critical illness insurance to ensure total financial security against any type of medical emergencies. Critical illness insurance provides coverage against long-term and serious illnesses that require expensive medical treatment.

Further in this article, we have discussed in detail everything that you need to know about critical illness insurance.

What is a Critical Illness Insurance Policy?

A critical illness insurance policy provides coverage to the insured against life-threatening critical diseases such as heart attack, cancer, renal failure, etc. A lump-sum amount is paid by the insurer to the life insured to take care of the exorbitant medical expenses in case the life insured is diagnosed with any critical illnesses. Critical illness cover is offered by most health insurance companies as a rider benefit along with the basic health insurance plan. To avail of this rider option, the insurance buyers need to pay an additional premium along with the basic premium of the policy.

Features of Critical Illness Insurance Plan

Let’s take a look at the features of a critical illness insurance plan:

  • Critical illness coverage- The coverage is offered for up to 36 major critical illnesses such as cancer, tumor, heart ailments, kidney failure, etc.
  • Lump-sum payment- The treatment cost is covered by the insurer as a lump-sum payment for the illnesses that are mentioned under the policy documents
  • Easy claim processing- The claims can be processed easily based on the diagnosis report
  • Waiting period- Generally, coverage is offered after the end of the waiting period
  • Loss of income- A part of lump-sum can be used can income replacement
  • Total and permanent disability- One can also get insurance coverage for total and permanent disability under a specific variant of the critical illness insurance rider

Advantages of Critical Illness Insurance

As compared to other health insurance policies, there are certain types of benefits offered by critical illness insurance plans. Let’s take a look at these benefits:

Financial Support in Times of Need

The policyholder can choose a high sum insured level with a critical illness plan, ensuring total financial protection in the event of several illnesses or advanced treatment. In case the policyholder is diagnosed with any critical illness as mentioned in the policy, a lump-sum amount is paid to the insured for the treatment and surgery of the critical illnesses. The regularity of the payment depends on the predetermined terms of the critical illness policy.

Numerous Critical Illness Covered

A critical illness insurance policy provides coverage for 36 major critical illnesses. It is important to go through the policy documents carefully to know how many and what type of illnesses it covers.

Add-on Coverage on Top of a Health Insurance

Critical illness insurance can be purchased as an add-on cover along with the basic health insurance policy. Even if an individual has a health plan covering the risk that may arise due to any medical emergency, the critical illness cover can be a great help in case the policyholder is diagnosed with any of the critical illnesses. It can be used as a rider to enhance the coverage of the policy.

Acts as an Income Substitute

In case, an individual is diagnosed with critical illnesses, it is possible that the health conditions don’t allow him/her to continue working. In such a situation the family can go through a financial crisis. However, if the policyholder has adequate coverage under a critical illness insurance policy then the claim amount can be used for the treatment of the disease, and the life insured will not have to burn a hole in the pocket.

Affordable Premiums

If a person is suffering from any pre-existing illnesses or critical illness, then it is important to have a critical illness insurance policy along with the basic health insurance policy. Moreover, these plans can be purchased at an affordable premium rate. The insurance buyers can compare the quotes of the policy online and choose the most beneficial plan as per their requirements.

Tax Benefit

The life insured can avail tax exemption on the premium paid towards the policy under Section 80D of the Income Tax Act. Tax exemption up to Rs 15,000 can be availed under Section 80D of the IT Act. For senior citizens, this limit is up to Rs. 20,000.

Critical Illness Insurance Plan Vs Health Insurance Plan

It can be devastating for any individual to be diagnosed with a type of critical illness. A health insurance policy has a sum assured of Rs. 10 lakh takes care of the incurred treatment cost. The critical illness insurance cover differs in many ways as compared to a normal health insurance policy. Let’s take a look at the difference between critical illness insurance and health insurance plans.

ParametersCritical Illness Insurance PlanHealth Insurance Plan
CoverageOffers coverage for up to 36 critical illnesses.It offers extensive coverage including pre and post-hospitalization costs.
BenefitsHospitalization is not required to avail of the benefits. The lump-sum amount can be claimed on the basis of the diagnosis.The insured can avail cashless hospitalization facility at the network hospitals. They can get the reimbursement of incurred hospitalization expenses by submitting bills.
Waiting PeriodThe waiting period depends on the severity of the illness.There is a waiting period of 30 days available in some policies.
MeaningIt provides coverage against life-threatening diseases such as permanent paralysis, tumor, cancer, etc.It offers comprehensive health insurance coverage including hospitalization expenses.

Exclusions in Critical Illness Insurance Policy

Certain exclusions of the critical illness policy are:

  • The policy covers critical illness that is diagnosed within the waiting period
  • Death within 30 days of diagnosis of critical illness or surgery is not covered under the policy
  • Pregnancy or childbirth-related critical condition
  • Any critical illness developed due to tobacco, smoking, drugs or alcohol intake
  • Any critical illness developed due to external or internal congenital disorder
  • Any dental care or cosmetic surgery
  • Hormone replacement surgery
  • Treatment underwent outside India

The Bottom Point!

It is wise to have critical illness insurance cover for individuals who are suffering from the same. With the help of a critical illness insurance policy, one can ensure that he/she has the right coverage to take care of the treatment cost and help their family to be financially secured. Make sure to go through the fine lines of the policy before making an informed decision.

How much critical illness insurance cover do I need?
The age of an individual, lifestyle pattern, annual income and city of residence are some of the important parameters that help to determine the appropriate coverage required.
What are the documents required while purchasing the critical illness insurance?
Some of the documents that should be kept handy are; age proof, address proof and identity proof. A specific document may be required in case the insured undergoes a medical test.
Does life insurance cover critical illnesses?
Yes, the life insurance policy provides coverage against specific critical illnesses under the rider benefit offered by the policy.

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