Q. My parents (63 and 60 years of age) have health insurance coverage of ₹3 lakhs each. Do they need to have an additional critical illness policy?
Health insurance covers medical expenses incurred due to illnesses, injuries, or accidents. Typically, health insurance policies cover in-patient hospitalisation expenses such as room rent, doctor's fees, operation theatre charges, pre-and-post-hospitalization expenses, and day-care procedures. However, coverage may vary depending on the policy, and certain conditions and treatments may be excluded.
Critical illness insurance, on the other hand, provides a lump sum payment if the insured person is diagnosed with a specific critical illness listed in the policy. The illnesses covered include serious conditions like cancer, heart attack, stroke, kidney failure, major organ transplant, paralysis, and blindness. Some policies may cover additional illnesses or have exclusions for certain conditions.
If the policyholder is diagnosed with a covered critical illness, they must provide medical proof of the diagnosis to the insurance company. The company will review the claim and, after approval, make a lump sum payment to the policyholder, usually after a waiting period of 30 days from the date of diagnosis.
Unlike health insurance, critical illness insurance provides a lump sum payment regardless of the actual medical expenses incurred. The policyholder can use the payment to cover medical expenses, lost income, or other expenses such as home modifications, childcare, or transportation costs.
Whether someone needs a critical illness policy in addition to health insurance depends on several factors, such as age, medical history, family history, and financial situation. For example, if someone has a family history of critical illnesses, such as cancer or heart disease, or is at a higher risk of developing a critical illness due to lifestyle factors such as smoking, then a critical illness policy may be worth considering.
It's important to note that critical illness policies may have exclusions, waiting periods, and coverage limits. Please read the policy documents carefully and understand the terms and conditions before buying any insurance policy.
Consulting a financial advisor or an intermediary certified by the Insurance Regulatory and Development Authority (IRDAI) will help you understand the options and make informed decisions.