No matter how young or old you are, how rich or poor you are, how healthy or unfit you are, illnesses don’t discriminate. If you want proof of this, simply think of that famous actor whose young son was diagnosed of cancer, or that online page you saw where a young mother was trying to raise funds for her teenaged daughter’s treatment. When such an illness strikes it brings with it a world and worries, while depleting your savings at the same time. In health insurance, we call these critical illnesses and to help you face the costs associated with such illnesses, we offer a critical illness policy. Let’s find out what critical illness policy is and why you need it.
what is Critical Illness Cover?
A medical condition that typically translates to a longer-term treatment course, which can be life-threatening or fatal, is defined as a critical illness. The road to recovery from such an illness can often be long, hard, and riddled with high costs and uncertainties. Plus, you may be required to undergo surgery, or other forms of treatment for an unknown period of time. Cancer, for instance, is considered a critical illness since a patient diagnosed of cancer may need surgery, chemotherapy and radiation.
What is a Critical Illness Cover?
With its extensive treatment period, the diagnosis of a critical illness like cancer, can be physically and mental draining for the patient, emotionally draining for their loved ones, and financially draining for the family member funding the treatment costs. However, your health insurance provider allows you to eliminate this last aspect of the equation by offering a critical illness cover.
A critical illness cover or policy essentially enables you to manage the costs of treating a critical illness. Under this policy, the insurer provides the financial compensation, typically a lumpsum amount, that you can use to fund the treatment costs. Insurers may offer critical illness cover as an additional rider to an existing health insurance policy, or as a standalone policy.
How does a Critical Illness Policy work?
Let’s assume your relative has been diagnosed of a critical illness, say cancer. Their doctor has recommended surgery, followed by six rounds of chemotherapy, and possibly, radiation treatment. The patient must start the first round of chemotherapy 21 days after the surgery and maintain a gap of 21 days between each chemo session. As such, the treatment period is inconclusive.
To enable the patient to concentrate on their treatment, the insurer typically provides the sum insured as a lump sum, or as a staggered payout to the policyholder. In case of the latter, the insurer pays a fixed percentage of the sum insured as a lumpsum (generally 25%), and the remaining amounts in EMIs spread across a specific duration.
So, if your relative has a critical illness policy worth ₹20 lakhs, the insurer pays the sum insured amount, depending on their chosen payout model. However, the policyholder can file a claim only after riding out a waiting period, and an initial survival period after being diagnosed of a critical illness. The policyholder can use the insurance payout to pay for the treatment costs, as and when they come up.
| Trivia: It helps to buy a critical illness plan when you are younger, since doing so allows you to easily rider out the waiting period, which generally lasts up to 4 years. |
Why is Critical Illness Insurance important?
Investing in critical illness insurance proves to be a wide, prudent decision for many reasons:
- A critical illness policy helps covers the costs of a wide range of illnesses which are designated as critical by the IRDAI.
- Such a policy helps you bear the high costs associated with treating long-term illnesses, which could otherwise burn a huge hole in your pockets.
- The sums insured under these policies are usually high, and you can choose to get a lump-sum payout, so you don’t have to keep filing claims at regular intervals.
- Since a critical illness diagnosis can impact your ability to work and provide for your dependents, you can use the sum insured amount to cope with your everyday expenses.
- The high sums insured under a critical illness cover empower you to afford the best medical treatment, without having to compromise.
- Ther premiums charged against critical illness insurance policies are usually low, especially if your purchase the policy when you are young, fit, and healthy.
- You can save money further since any investment in health insurance plans makes you eligible for tax deductions under section 80D of the Income Tax Act.
List of Diseases Covered Under a Critical Illness Policy
The best critical illness insurance plans typically cover you against up to 30 ailments and resulting medical conditions classified as critical by the IRDAI. The commonly covered illnesses include:
| Different Types of cancers | COPD & Similar Heart Diseases | Kidney/Renal Diseases |
| Multiple Sclerosis | Stroke | Permanent Paralysis of Limbs |
| Muscular Dystrophy | Major Organ Failure And Organ Transplantation Procedures | Chronic Lung Diseases |
| Chronic Liver Diseases | Coma | Major Head Trauma |
| Motor Neuron Diseases | Parkinson’s Disease | Loss of Limbs |
| Major Burns | Loss of Speech | Loss of Hearing |
Remember to check the list of diseases covered under your health insurance with critical illness cover before purchasing the policy to ensure you are eligible for coverage against the maximum illnesses.
| Trivia: Besides the waiting period, you also have to ride out a survival period after being diagnosed of a critical illness. The survival period usually lasts for 14 to 30 days after a critical illness diagnosis. |