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
|Company||No. of illness||SA (Lakh)||Entry Age||Rs 3 Lakh||Rs 5 Lakh|
|1 to 50||6 to 59|
|3 to 12||20 to 45|
|1 to 5||5 to 60|
|3.5 to 15||18 to 60|
|2 to 5||5 & above|
*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.