How critical is Critical Illness Insurance

Medical care and treatment costs are on the rise and according to research diseases like Cancer can affect individuals in all age groups. If you are financially well-off, then you would have enough money to comfortably pay for such high medical costs. However, there are individuals who would have to make ends meet at any cost as emergency medical treatment cannot be put aside. Smart individuals plan for such contingencies ahead in life.

But before taking such steps, it is important to know the various options that are available. Most people know about a health insurance policy or a mediclaim cover. But there are very few who know about a Critical Illness Policy.

A critical illness policy covers major illnesses like Cancer, Stroke, Heart Attack, Coma, Kidney Failure, Paralysis and various others. If a person contracts any of these conditions, the treatment costs can be extremely high. In most cases a single dose of medication can put a hole in your savings. Critical illness policy is different from a health insurance policy.

Health Insurance policy: Covers medical expenses only if you are hospitalised for more than 24 hours. There are some policies which cover day care procedures that do not require 24 hours hospitalisation, but only the ones mentioned in the policy document.

Let us understand the coverage of a Health Insurance Policy with the help of an example.

Mr. Joshi buys a Health Insurance policy with a sum insured of Rs 5 lakhs. He gets hospitalised for 7 days and his hospital bill amount is Rs 80,000. The insurance company will pay this amount of Rs 80,000 only, even though his sum insured is Rs 5 lakhs.

Critical Illness Policy: Pays the sum insured on diagnosis of the condition, irrespective of the amount incurred on the treatment.

 If Mr. Joshi buys a Critical Illness policy of sum insured Rs 5 lakhs. He contracts any of the major illnesses and informs his insurer; the insurance company will pay him the entire sum insured of Rs 5 lakhs. He can utilize this lump sum money to cover any expenses as per his requirement.

Critical illness plans offer a much higher coverage amount and the illnesses covered under one policy may differ from another.

How to pick the right Critical Illness Policy:

  • Compare features, benefits and premiums of at least 2-3 insurance plans.
  • Choose a policy which covers the highest number of illnesses
  • Read the exclusion list carefully before buying the policy
  • Look for a policy with the highest renewal age limit

Generally there are 2 alternatives that you can choose from while taking a critical illness plan. One is payment or reimbursement on diagnosis; in which the insurance company pays lump sum amount immediately on diagnosis. Second option is payment or reimbursement on survival for 30 days or more, which means that the insurance company pays only if the insured survives the pre-specified waiting period.

If you want to cover your family, then you can opt for family floater option. Under this you can choose a sum insured for your spouse, dependent children. This sum insured covers family members for one or multiple claims during a policy period.

Comparison of Critical Illness Policies

CompanyNo. of illnessSA (Lakh)Entry AgeRs 3 LakhRs 5 Lakh
Bajaj Allianz

10

1 to 506 to 59

1650

2400

ICICI Lombard

9

3 to 1220 to 45

1687

2801

IFFCO Tokyo

10

1 to 55 to 60

1292

1933

Tata AIG

11

3.5 to 1518 to 60

2823

3949

Bharti AXA

20

2 to 55 & above

1752

2920

*approx premiums are for age 36. (table added by Hemant Beniwal)

Should you buy a Critical Illness Rider instead?

There are some health insurance policies that offer Critical Illness Rider as well. The sum insured for critical illness in such case can either be 50% or 100% of the basic sum insured. If you do not want a separate critical illness policy, you should at least buy critical illness rider on your health insurance policy. This will increase your premium by a small amount but is totally worth the price!

This is a guest post by Deepak Yohannan –he is the CEO of MyInsuranceClub.com , an insurance price and features comparison site in India.

Disclaimer: This post represents the opinion of its author only, and does not in any way reflect the opinions of the author’s employer, The Financial Literates or the other authors who write content for this Website.

24 COMMENTS

    • Dear Hemantji,
      i want to ask you that with my mediclaim policy should i buy critical illness rider or should take TOP UP .i mean what is the main difference between critical illness rider or TOP UP
      thanks
      deepak

  1. I think CI rider covers less number of diseases than an individual plan.

    Btw, what happens when a claim is made against a CI rider or CI individual policy? Does the rider or individual policy continue even after claim settlement?

  2. Hi Hemant,

    Hats off for sharing your gr8 knowledge…….
    I want to take a health cover for my father (63) heart patient & mother (58) diabetic. Which is the best health insurance policy for them?? pls reply. Thanks…

  3. Hi Vicks,
    I would like to give my ideas which can help you out. As your father crossed 60, you have limited options to choose from. Anyhow what i know you can opt for Oriental Insurance, by taking a family floater on your name and add your parents in the policy, from all Public sector companies it provides you max 5 Lakh of insurance and covers them above age 80 also. All companies do not provide insurance above 70-75. By taking a family floater you may save on premium(if you take single policy for each of your parents) and use the policy only for your parents.

    If you are account holder of PSU banks like BOB or BOI you can opt for policy for your parents before they turn 65. If your father have account in any of the PSU he can buy for himself and your mother. It is a group insurance for bank account holder and cover max 5 lakh with minimum premium.

  4. Hi Anand
    I would like to clarify one thing here, if you opt for the insurance from PSU banks there will be no agent between you and insurance company and you need to call third party urself and process your insurance. However it is not a difficult task..

    -Purvesh

  5. Hi all,
    As usual Hemant has produced a master piece for drawing our attention to a very Critical issue that we usually keep on the back-burner as we do with all critical issues. most of the time URGENT takes over IMPORTANT in our life and urgent is not always good for all of the people. Many a time it fulfills the prophecy ‘Haste makes Waste’.
    Purvesh has given valuable insight by bringing to fore a new way in which one can get cover against critical illnesses. But as I had this cover from PNB that came along with my Debit card, I later checked out that it was only for the first year and not for subsequent years like the group accident policies banks offer during their “Bachat Khata Saptah” drives. Also in many cases (and branches) the bank officers are not equipped with info on how to proceed with such specialised products for which (1) they are not give special training; (2) they are not directly rewarded in form of commission (usually the branch is); (3) they are not dealing with it routinely (only once in a blue moon some one would go to a typical bank branch for buying Critical illness cover).
    The above scenarios are not “one size fits all” as there are some very good branches that have done specially very good in customer dealings and keep their staffers updated on all things in which the branch deals. Again I had personal taste of such delightful care at one of the SBI branches. So, if you are among the lucky few who have a friendly and updated branch staff, then probably it will be the best option to go for.
    I also searched the websites of many general insurance companies who are offering such covers a detailed analysis as per the data available on their websites is available on the Google document (use the link ) [ https://docs.google.com/spreadsheet/ccc?key=0AlcQULrMa-IvdGdHd1dYSzFQdTE2MFllYmZDVndXVkE&hl=en_US ]. It is similar to the one Hemant has produced above in the article, but his is simple and indicative mine is complex and would require more brainstorming.
    It was a sock and a revelation that apart from National Insurance no other PSU company provides critical insurance cover!!!! They all are busy making money.
    ONE MOST IMPORTANT thing that I stumbled upon was a very unique critical illness care facility that is available to anyone outside of USA to avail the best of facilities in top 15 of USA hospitals – the Preferred Global Health ( pghworld . com ). I am not recommending this company as I got info on it only through Internet but it is worth looking at for a person who may have some link in Boston, USA to check out the credentials of the company. Also, I have no idea about the costs that may be incurred on such a plan and whether it is for individuals and/or groups such as companies/clubs for their members.
    But even before buying a critical illness cover I would recommend that one should buy the regular medical cover for family and may opt for a critical illness rider with that.
    Regards,

  6. Hi Hemant,

    I have a mediclaim of Rs. 3.o lacs. Would you recommend CI insurance from Bharati AXA (20 illnesses covered). If yes should I go for 5 lacs or 10 lacs?

    what would be the premium for age 43, for 5 lacs & 10 lacs

    • Hi Bhat,
      I would like to ask you the mediclaim which you is from which company?
      Secondly if you want to increase your premium i will tell you to go with Apollo munich or star health.

    • Hi Mr Bhat,
      Whats the name of the plan from Bharti AXA which covers for 20 illnesses ?
      On their website I see only one critical care illness cover which covers 30 illnesses (Triple Health Insurance Plan)

  7. Hi Hemant,

    I came across life insurance policies which comes with critical illness ridercovering 10 major illness, if we at least take it for 25-30 years term it is a well suited product provided we do not have special critical illness policy. Also i found few critical illness policies which covers the same number of illness are much costlier than having it as a rider over 25 years of period. As Critical illness policies are renewed after 5 years with increased premium amount. My question is , is it a right approach to but this life insurance with critical illness rider at early age and buy special critical illness policy at later stage as a top up policy?
    -Purvesh

  8. Critical Illness and Personal Accident policy of Bajaj Allianz is quite cheap.
    How to go about it or there is any other good one ?

  9. Did some research work on Critical Care Illness covers and found cheapest and good claim ration is of Bajaj Allianz but it covers around 10 illnesses, for 10 lacs cover cost 3000/- for a persons age 31 yrs
    Bharti-AXA has around 20 illnesses costs around 4900/ yr.
    Icici Pru crisis cover has 21 illnesses covered but bit expensive.
    which one to choose ? I know it depends person to person but we can discuss…..

  10. hello,
    Please suggest appropriate critical illness for me-my details being 39, single, female.
    I would prefer it if you could guide me about the company and policy name as well. What is the minimum coverage one can start with?
    Thanks,

  11. Hi,
    I know this is not the right blog for this but need help. I am 28 years old and not married. I do not have a medical insurance an now want to buy an individual policy for 4 to 5 lac cover but with so many different options I am getting confused. Can some one suggest me a few policies my main criteria are the 1. No cap on room rent. 2. Cashless and good hospital network in Delhi, Mumbai and Pune 3. Should cover me for general accidents an accidents caused while on adventure trips, Road accidents and etc as I am an adventures person.
    Thanks in advance….

    • Dear Samraat,

      All basic health plans cover hospitalization expenses in relation to accident or any other reason. For no cap limits you can select from Apollo Munich or Max Bhupa.

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