scorecardresearchCritical illness insurance: Why should you take the policy, and for how much?

Critical illness insurance: Why should you take the policy, and for how much?

Updated: 10 Jun 2022, 04:16 PM IST
TL;DR.
We explain the details of critical illness insurance plan that includes the illnesses covered, ideal amount of coverage and the relevance of survival period
Tax benefit given under Section 80D is also available on the premium paid for these plans. 

Tax benefit given under Section 80D is also available on the premium paid for these plans. 

After being diagnosed with a critical illness such as cancer or kidney failure, meeting exorbitant hospital bills may turn unpracticable given a small medical insurance cover of 5 to 7 lakh.

As a result, it is suggested that the insurance policy holders take critical insurance plan too. They come handy when a user is diagnosed with the likes of cancer or kidney failure — which the God may forbid.  

As they say forewarned is forearmed. So, let us read further!

"Critical illness coverage is usually for illnesses that have very high treatment costs and therefore a basic health insurance cover is not sufficient to cover such expenses," says Naval Goel, Founder and CEO of PolicyX.com. 

One of the unique features of critical insurance is that the sum assured is given when the illness is diagnosed regardless of the actual expense incurred. This is, however, subject to the survival period and severity of ailment.

Common conditions to claim

Survival period: Most of these critical illness plans come with a survival period that can range from zero to 60 days. This means that after the diagnosis, the insured person must survive for this period in order to receive the pay-out.

Severity of illness: Some insurers don’t release their sum assured in the early stage of diseases such as cancer. Some schemes, however, do make the payout even at the first stage. For instance, Aditya Birla's Activ Secure – Cancer Secure scheme assures to give 50 percent of sum assured for early-stage cancer and 100 percent for later stage, and 150 percent for advanced stage cancer.

These are some of the insurers offering critical illness cover:

 

Tata AIG Criti-MediCare Insurance: Coverage Against up to 100 critical illnesses

Aditya Birla Health Insurance (Activ Secure – Cancer Secure): Stay protected for all three stages of cancer: 50 percent of sum assured for early, 100 percent for major and 150 percent for advanced stage cancer.

Bajaj Allianz critical illness insurance: Coverage against 10 critical illnesses and lifetime renewability

Future Generali critical illness policy: Sum assured up to 50 lakh for policyholders under 45 years and 20 lakh for the above 45 years of age.

Tax benefit is also given under Section 80D on the premium paid for these insurance plans.

Usually, the number of critical illnesses that are covered under the plan range between half a dozen to up to 100. As a result, policy holder should make sure that most common illnesses such as cancer, brain tumour, damage to spinal cord are covered.

Kapil Mehta, Co-Founder, SecureNow Insurance Broker, believes that critical illness cover should be a minimum of 10 lakh. “This is the typical out of pocket expenses or loss of pay that you may incur if you get ill with a critical illness,” he says.

Standalone or rider?

These critical illness insurance policies can be bought as standalone policies or as rider to the existing medical insurance policy. Insurance experts suggest that customer take standalone policy since if you decide to port your medical insurance policy later, the new insurer may not offer the same rider.

“I prefer separate policies to riders for critical illnesses because the separate policies tend to have a much wider coverage of diseases. In fact, many diseases such as deafness, blindness, Alzheimer's and Parkinson are more often covered in stand-alone critical illness insurance. These are diseases that have a high out-of-pocket expenditure,” adds Mr Mehta.

Naval Goel from PolicyX.com also concurs. "It is better to go for a separate policy as these are very rare diseases but may cost very high. The costs of such policies are usually lower than health insurance so it is better to go for a higher sum assured separate policy," he says.

First Published: 10 Jun 2022, 04:11 PM IST