Know all about Critical Illness Health Insurance Plan
The incidence of critical illness cases in India has been on the rise. Illnesses such as cancers, cardiovascular diseases, chronic respiratory diseases, and diabetes account for 60% of total deaths in India. The number of new cancer cases each year is 12.3 lakhs, and this figure is expected to increase 5 times by the year 2025. As per figures released by WHO, cancer cases will multiply by 70% in the next two decades. Cancer disease alone accounts for 7% of deaths in India. With over 12 lakh heart disease cases, India accounts for 60% of heart disease patients worldwide.
These statistics are signaling the rising trend of critical/serious illnesses in India and it urges the need to have a critical illness cover that can help to pay the treatment expenses incurred in critical illness. We never know when the health uncertainties will strike us and how to tackle the situation emotionally and financially. Financial backup to safeguard yourself against the treatment expenditure and other allied expenses is essential. Relying on your savings to encounter such critical illness expenditure is not prudent.
Thus, there is a need for an alternative arrangement to combat financial expenditure if a critical illness is diagnosed.
Table Content
- What is a Critical Illness Insurance Plan & How it Work?
- Where to buy from?
- Best Critical Illness Health Insurance policies in India
- What is not included under a Critical Illness Health Insurance Plan?
- Why should you buy Critical Illness Insurance?
- What are the benefits of Critical Illness Insurance?
- Types in which you can avail a Critical Illness Cover
- Tax Benefits of Critical Illness Insurance Plans
- How to choose the best Critical Illness Plan in India?
- Final Thought
- Related posts:
What is a Critical Illness Insurance Plan & How it Work?
A critical illness (CI) insurance plan is a special category of health policy that pays the sum insured as a lump sum amount of acquiring a severe ailment. A CI policy offers ‘fixed benefit’ as a lump sum, on the diagnosis of a critical illness. The lump-sum benefit available under this type of plan helps you to cover the cost of care and treatment, recovery expense, paying off debts, compensation for lost income due to decreased earning capacity, etc.
The illnesses which are usually covered as critical illnesses include cancer, heart attack, stroke, kidney failure, coma, or heart valve surgery, etc. Suppose you are diagnosed with a heart attack or any other covered critical illness, the insurance company will pay you the lump sum amount irrespective of the cost involved in treatment.
Where to buy from?
A Critical Illness plan is available with a life insurance company, general insurance company, or standalone health insurance company. Also, you may visit an insurance web aggregators website which acts s a comparison portal and helps you compare the critical illness plans available in the market. The policy terms for a critical illness insurance cover are more or less the same, whether you are buying with a life or non-life insurer. The key aspect to choose between a standalone policy and a rider depends on your requirement.
Best Critical Illness Health Insurance policies in India
| Plan Name | Number of Critical Illnesses Covered | Sum Insured (min/max) | Survival/Waiting Period | Premium | Entry Age (min/max) |
|---|---|---|---|---|---|
| Care Assure Plan | 20 major illnesses | Rs 5 lakhs to 1 crore | Survival Period: Not Applicable Waiting Period: 90 days | 3,367 | Min: 18 years Max: 65 years |
| HDFC ERGO Health Critical IllnessSilver Plan | 8 critical illnesses | Rs 1 lakh to 50 lakhs | Survival Period: 30 & 90 days, depending on the illness Waiting period: 90 days | 3,835 | Min: Adult: 18 years; Children: 18 years Max: Adult: 65 years; Children: 25 years |
| Niva Bupa CritiCare Plan | 20 major illnesses | Rs 3 lakhs to 2 crores | Survival Period: 30 days Waiting period: 90 days | 2,368 | Min: 18 years Max: 65 years |
| Bajaj Allianz Critical Illness Insurance Plan | 10 Major Critical Illnesses | Rs 1 lakh to 50 lakhs | Survival Period: 30 days Waiting period: 90 days | 3,000 | Min: Adult: 18 years, Children: 6 years years Max: Adult: 65 years, Children: 21 years |
| Star Criticare Plus Plan | 9 Major Critical Illnesses | Rs 2 lakhs to 10 lakhs | Survival Period: Not Applicable Waiting period: 90 days | 17,228 (Also covers regular hospitalization) | Min: 18 years Max: 65 years |
(Premium is calculated for 30 years aged individual for a sum insured of Rs 10 lakhs)
What is not included under a Critical Illness Health Insurance Plan?
Following are the conditions that are usually not included in a Critical Illness Plan contract.
- Any Illness, sickness, or disease other than those specified as Critical Illness
- Any pre-existing illnesses/diseases
- Any claim within the waiting period is not covered
- Treatment received outside India
- Any Critical Illness directly or indirectly associated with AIDS/HIV
- The condition arising due to alcohol or drug use
- Participation in criminal activity or a breach of law with criminal intent
- Attempted suicide
- Intentionally self-inflicted Injury, etc.
(Exclusions may vary from one insurer to another and one plans to another.)
Why should you buy Critical Illness Insurance?
Cover for treatment cost: A prostate cancer surgery requires around Rs 3 to 6 lakhs, kidney transplant costs around 3 to 14 lakhs, cost of bypass surgery varies between 2 to 6 lakhs, breast cancer surgery cost approximately 2 to 4 lakhs. A critical illness treatment cost is quite huge, which will drain off all your life’s savings, and even then you may not be able to pay all the treatment bills. Buying a critical illness (CI) cover will pay a lump sum amount which will help you to pay for the treatment cost without any financial worries.
Serves as a financial backup: The incidence of a critical illness leads to loss of income due to poor health conditions and it becomes tough for you to manage your family’s monthly expenses. With a lump sum amount payable in a CI cover, you need not worry about your family’s expenses while taking treatment for a serious illness.
Saves you from taking debts: Critical illness patients have to liquidate all of their assets, savings & investments to pay the cost for critical illness treatment. It disrupts the financial stability and they need to take debts for maintaining the finances. A critical illness plan pays a fixed benefit for the treatment and you don’t need to take any loan for meeting the treatment cost or other essential family expenses.
Peace of mind: By buying a CRITICAL ILLNESS insurance cover, you know that you will get a fixed amount that will easily cover the treatment cost, in case you are diagnosed with any critical illness. It always gives you relief.
What are the benefits of Critical Illness Insurance?
Lumpsum Benefit: Critical illness insurance plans offer a lump sum amount equal to the sum insured amount of being diagnosed with the listed critical illness. This payout helps the insured to pay for the cost of treatment and recovery expenses. Under most of the CRITICAL ILLNESS plans, this benefit is payable subject to the applicable waiting period and survival periods. Some insurers such as Edelweiss Tokio Life and Bharti AXA Life offer cover for multiple claims as well.
Income Benefit: A specific percentage of the sum insured is payable on a monthly basis for a fixed period. This benefit is usually payable for 5 years post-diagnosis of the critical illness and mostly, it is applicable under plans offering cancer cover.
Waiver of Premium: The future premiums are waived off upon diagnosis of the covered critical illness for the remaining policy period or for a specified period, as applicable under the policy chosen.
Types in which you can avail a Critical Illness Cover
As a Rider: Critical illness cover can be opted as an add-on the cover along with your basic health insurance plan or a life insurance plan. Critical illness cover opted as an add-on or rider only provides you with a restricted sum insured, not exceeding the basic health policy sum insured. Also, the number of critical illnesses covered may be limited, leading to restricted coverage.
As a Standalone Insurance Plan: Having a standalone critical illness health insurance policy provides you the flexibility to choose the coverage, as per your need. You will have a vast list of critical illnesses covered with a standalone policy. As far as features are concerned, riders are imposed with restrictions, and choosing a standalone critical illness policy will be an advisable move.
Tax Benefits of Critical Illness Insurance Plans
A critical illness policy is basically a health insurance policy and it offers tax benefits towards the premiums paid under section 80D of the Income Tax, 1961. The critical illness rider took with your life insurance policy also gets the tax deduction under section 80 D.
For the premium paid by you for medical insurance for you, your spouse, & kids, the tax deduction you can avail of is up to Rs 25,000 when none of you is aged above 60 years. You can also avail of tax benefits up to Rs 25,000 for covering your non-senior parents. For you or your parents is exceeding 60 years of age, a tax deduction of Rs 30,000 is applicable till the financial year 2017-18 which will be increased to Rs 50,000 from the financial year 2018-19.
| Critical Illness Insurance Plan – An essential cover over and above your basic Health Insurance Policy Merely buying a basic health insurance plan may not suffice to combat the gigantic treatment expenses to treat a critical illness. Your basic health insurance policy is limited to hospitalization expenses maximum up to the limit of the sum insured which may fall short to treat a critical illness and allied expenses. Your basic health insurance plans are plans of indemnity which means whatever is the actual expenditure that much amount is only paid to you subject to the terms and conditions under your basic health insurance cover. A Critical Illness health insurance plan acts as a second degree of health protection cover which gives you additional financial protection to treat the diagnosed critical illness. Critical illness plans are also known as FIXED BENEFIT health insurance plans and do not work on the principle of indemnity. The entire sum insured is payable to you in case of a critical illness diagnosis. It is up to you how to utilize that claim money and the insurance company has nothing to do with it. Also, it should be opted over and above your basic health insurance plan to avail of comprehensive health coverage. |
How to choose the best Critical Illness Plan in India?
Size of the cover: The size (sum insured) of the critical illness plan varies, depending on the critical illness you may suffer with. The sum insured is chosen in a manner that it should at least cover the cost of diagnosis of illness & recovery expenses. The treatment cost of critical illness is quite hefty and usually, its diagnosis costs around Rs 10 to 15 lakhs. It would be better to opt for a sufficient cover that pays for the entire cost of the diagnosis. Also, don’t forget to consider medical inflation, while opting for a CI cover.
Illnesses covered: The number of critical illnesses covered is also a major determining factor while opting for a policy. It’s better to choose a critical illness insurance policy having a higher number of critical illnesses covered. You must also check whether different organs are covered against critical illnesses, so you would be able to get wider coverage. Most of the insurers offer coverage for illnesses including cancer, heart attack, stroke, kidney failure, heart valve replacement, major organ transplant, coronary artery bypass surgery, etc. If you have a family history of any major illness, make sure it is covered under the policy.
Survival & Waiting Period: The survival period is the specified number of days during which the insured has to survive post-diagnosis of a critical illness to avail of the benefits applicable under the policy. The waiting period is the time duration for which the insured has to wait after buying the policy to make the claims admissible under the plan. It is advisable to choose a critical illness plan, which comes with the least or no survival period and waiting period, so you don’t have to wait for availing cover in the event of a medical emergency.
Check sub-limits: Sub-limits place a monetary restriction on the benefits payable for certain critical illnesses, as specified in the plan. You are advised to pick a plan with zero sub-limits or at least sub-limits.
Lifetime Renewability: With lifetime renewability, you have the flexibility to renew your critical illness plan lifelong irrespective of your age. It’s wise to choose a critical illness plan which comes with a lifetime renewability option.
Compare plans: Before you choose a plan for buying, it is essential to compare critical illness plans, benefits online and chose the one that offers maximum benefits. Also, check the claim settlement ratio of the insurers and pick the one that has a good claim settlement ratio (95% or above), which increases the probability of settling the claims.
Final Thought
A critical illness is fatal in nature. Taking timely treatment will help you to get rid of the illness. Considering the hefty cost involved in its treatment, it would be a better option to opt for an adequate critical illness cover. Before buying a critical illness cover, it’s essential to read through the exclusions mentioned in the policy document and choose a policy that offers appropriate coverage.
Insightful. Nice post