What is critical illness insurance?

There is only so much you can do to take care of your health—follow a balanced diet, disciplined lifestyle, proper sleep and rest, and daily exercise. While these may help in maintaining overall health, critical illnesses such as heart attack, stroke, and paralysis can strike any time, without warning. This is why you must invest in critical illness insurance.

Critical illness insurance will cover you against more than 35 critical illnesses including cancer, blindness, and heart attack. The insurer pays a lump sum amount in case you are diagnosed with a severe ailment or require bypass surgery or organ transplant. You can buy this policy as an add-on cover along with your standard health insurance.

Use the pay-out from this policy for treatment or to make up for the gap in income in case you are unable to work temporarily due to illness.

Features of a critical illness policy

• Low premium

Critical illness add-on comes at a much cheaper price for the a good sum insured amount as compared to health insurance. Plus the coverage is also pretty straight-forward. The entire payout is made on diagnosis of a specified critical illness.

• Lump sum payment

The lump sum amount that you receive can take care of your treatment costs, medical  travel, and accommodation. You just have to provide proof of your illness to receive the entire amount.

• Coverage for a wide range of diseases

This insurance covers:

• Cancer, stroke, heart attack
• Coma, deafness, kidney failure
• Loss of limbs and speech
• Paralysis, Parkinson’s disease
• Severe burns, Aortic surgery
• Heart valve replacement
• Coronary artery bypass surgery
• Major organ transplants

Factors to consider while purchasing a critical illness policy

• The number of illnesses covered

All insurers may not cover the same number of illnesses under the plans. You have to compare and select the plan which would be useful. You may want to ensure some diseases that your parents may suffer from are covered. Please note that pre-existing diseases are not covered under critical illness add-on.

You should consider buying a critical illness cover for your elderly parents as an added protection along with health insurance for senior citizens.

• The sum-insured or the coverage amount

This is very important since you must consider the following:

• Everyday expenses
• EMIs or loan amounts if any
• Tentative cost of treatment
• Monthly income loss
• Premium

A critical illness may reduce your ability to work for some time. You should make financial provisions and choose an adequate amount of sum insured so that your family does not face financial problems.

• The claims process

You should know the claim filing system to be able to complete the process at the earliest. Keep a note of the documents that would be required, the network hospitals under the insurance company and the claim settlement record of the insurance company. The critical illness cover must be renewed annually.

• Waiting period

A critical illness policy consists of an initial waiting period.

There is generally a waiting period of 90 days from the date of issue of the policy. You can file a claim only if you are diagnosed with a disease after this period.

• Tax benefits

The critical illness policy has tax benefits on the premium amount. When you receive the payout after diagnosis of a critical illness, the amount would be exempted from taxation. If you work in an organization, your employer may cover you with a group critical illness cover.

• Age of the insured

The premium for critical illness policies increases with age as older people have a higher risk of developing chronic diseases. It would be better if you go for a policy in your twenties when the premium amount would be lower and you would get the coverage for a longer period.

• Term of the policy

Critical insurance policies are beneficial in long term. You would be allowed to make only one claim in your lifetime

As discussed above, the critical illness policy is an additional cover besides your regular health plan. It is better to get the coverage at an early age as you can benefit when diagnosed with a chronic disease later in life. Also, you will have to pay a lower premium amount if you buy the policy early in life.