What is Critical Illness Insurance?

Critical illness insurance is an insurance cover that will provide you with financial security in case you are severely ill. It’s a must in today’s time with increasing medical expenses. Critical illness insurance provides you cover against life-threatening diseases. It pays you a pre-determined sum assured in lumpsum in case you are diagnosed with a critical illness. Critical illness covers critical diseases like heart attack, paralysis, cancer, etc.

Critical illness insurance can opt-in three ways. Either you can opt for a separate critical illness insurance policy. Or else you can opt for an additional rider along with a health insurance plan or term plan.

Features of Critical Illness Insurance

The important features of critical illness insurance are as under:-

• Lump sum payment:- In case of diagnosis of covered critical illness, the insurance company makes a lump sum payment immediately to the policyholder. He doesn’t have to wait for the treatment to start.
• Monthly income:- In case of being diagnosed with a critical illness, the policyholder may get the benefit of monthly income. A part of his sum assured is paid out to substitute the monthly salary.
• Premium waiver:- There are chances that your insurance company may waive off your premium payments of the policy if you are diagnosed with a covered critical illness.
• Fixed premium:- The critical illness cover may increase with pre-defined intervals but the premium remains fixed throughout the tenure of the policy.
• Benefit coverage:- The insurance provides coverage for more than 30 major critical illnesses like a tumour, cancer, heart attack, paralysis etc.

Benefits of Critical Illness Insurance

Have you ever thought about what will happen to your family if you are unable to earn because of critical illness? In addition to regular expenses, how will you cope with medical expenses for critical illness treatment? Critical illness insurance can be at the rescue in such a situation. Let us understand its benefits.

• Covers medical and hospitalization expenses:- Medical treatment of critical illness is too costly. All expenses are taken care of with critical illness insurance.
• Tax Benefits:- The Payout received in critical illness is tax-free under Section 80D of the Income Tax Act.
• Protection against disability:- In case of permanent disability due to an accident, your policy will continue and you don’t have to pay any premiums.
• Lower premium:-The insurance premium of a critical illness policy is genrally quite lower.
• Mental peace:- When you are being treated for critical illness, the focus shall be on recovery rather than anything else. With a critical illness policy taking care of all medical expenses you don’t have to worry about any expenses.
• Varied expenses covered:- On being diagnosed with critical illness, you are paid the lump sum amount. You can use this amount in any way i.e to pay off the home loan, household expenses, children’s school fees etc. There is no restriction to the usage of the lumpsum amount received.

Why do we need Critical Illness Insurance?

Critical illness insurance is very important nowadays. Just a few days of being sick can lead to heavy medical expenses. Then you can imagine the medical expenses your family need to bear in case of critical illness. This can be easily taken care of by a critical insurance policy. It covers doctor’s fees, hospital expenses, medical expenses etc. And most important thing is that the sum assured is credited as soon as the insured is diagnosed with the disease and doesn’t have to wait for hospitalisation or treatment.

Who should buy Critical Illness Insurance?

The policy is very helpful in case you are the only earning member in your family and your entire family depends on your income. Further experts say that critical illness policy is beneficial for those with family medical history.

How to choose Critical Illness Insurance?

Before taking critical illness cover, you shall take into consideration the following parameters.

• Sum Assured:- Critical illness requires huge medical and treatment expenses. So you shall take care that you keep a sufficient sum assured while purchasing the policy. A higher sum assured can offer you security.
• Age:- Buying a critical insurance plan at a young age can be beneficial as it will have a low premium.
• Inflation:- Inflation increases every year. While deciding the sum assured, one shall consider the inflation rate also. Inflation makes medical expenses costlier every year.
• Critical illness covered:- One shall assess which critical illness is covered by the insurance company. The hereditary disease and family illness history shall be taken care of.
• Renewability Age:- It shall be seen that it offers either maximum age or lifelong renewability to avail maximum benefits.

Illness covered under Critical Illness Insurance

Critical illness covered in critical illness policy varies from one insurance company to another insurance company. However, majorly there are 36 illnesses covered under critical illness. They are as under:-

• Cancer of specified severity
• Myocardial infarction – first heart attack of a specific severity
• Heart Valve Surgery
• Kidney failure requiring regular dialysis
• Major organ/bone marrow transplant
• Progressive scleroderm
• Loss of speech
• Coronary artery bypass graft
• Multiple sclerosis with persisting symptoms
• Strokes resulting in permanent symptoms
• Coma of specified severity
• Motor neuron disease with permanent symptoms
• Blindness
• Deafness
• End-stage lung failure
• End-stage liver failure
• Loss of limbs
• Permanent paralysis of limbs
• Major head trauma
• Pneumonectomy
• Third-degree burns
• Alzheimer’s disease
• Aplastic anaemia
• Medullary cystic kidney disease
• Parkinson’s disease
• Systemic Lupus Erythematosus with lupus nephritis
• Apallic syndrome
• Major surgery of the aorta
• Brain surgery
• Fulminant viral hepatitis
• Primary (Idiopathic) pulmonary hypertension
• Cardiomyopathy
• Muscular dystrophy
• Poliomyelitis
• Severe rheumatoid arthritis
• Benign brain tumour

Exclusions under Critical Illness Insurance
There are certain exclusions in critical illness insurance. They’re as under:-

1. Pre-existing disease
2. Any diseases caused by disability from birth
3. Illnesses because of a birth defect
4. Any intentional injury
5. Life insured being under the influence of medication and alcohol
6. Any disease caused due to prolonged usage of tobacco, drugs or alcohol
7. Sexually transmitted diseases like HIV and AIDS
8. Suicide
9. Injuries or illnesses caused due to:
   1. War
   2. Terrorism
   3. Criminal and unlawful act
   4. Underwater activity
      

Conclusion

While buying a term plan or insurance only a few people consider critical illness rider. One shall go for a critical illness rider with a term plan or insurance policy. alternatively he can take sole critical illness policy.