7 Things to Consider When Buying a Critical Illness Cover

December 1, 2021 Mutual Fund

All of us wish for a life that is happy and free from difficulties, but we should not forget that challenges are the part and parcel of life and we have to face it. We simply cannot deny the possibility of getting an illness or injury considering the ongoing pandemic and fast-paced lifestyle. Any severe illness or uncertainty can break us emotionally and financially. Nowadays there is an increased awareness about financially protecting ourselves and our families against any medical emergencies through health insurance. Similarly, it is equally important to protect our family’s well-being by being adequately insured and provide them financial protection in case of an unforeseen event.

Many of us receive benefits of health insurance and basic life insurance from our employers. However, many others who work for small or medium employers, do not receive such benefits and have to buy health insurance policy and life insurance policy on their own. But even though you are receiving insurance benefits from your employer, it is always a wise choice to have your own insurance coverage as the employer policies can change at any time or you might start working for some other employer that does not provide you such benefits.

However, is buying a health insurance policy and life insurance policy enough to get financial protection against all the possible uncertainties of life?

The number of deaths due to critical illnesses has been constantly increasing over the years. These illnesses have the potential to reduce your ability to work, which can completely stop or reduce your earnings. The treatment of critical illnesses can cost a pretty penny. Some health insurance companies cover a few critical illnesses under their base term plan that are mentioned in the policy document. However, about 35-40 illnesses are categorised under critical illnesses, and no base policy covers all of them. Therefore, it is crucial to buy a critical illness insurance policy to ensure that you are financially protected against such illnesses.

What is Critical Illnesses Insurance?

Critical illnesses insurance provides coverage against life-threatening critical illnesses, such as paralysis, cancer, heart attack, etc. It typically offers a lump sum payment to the insured on a diagnosis of any of the listed critical illnesses. Critical illness can happen to anyone at any time so, getting a critical illnesses insurance at the right time can secure you from uncertainties.

Here are the key features of Critical Illness Insurance:

1. The Critical Illness Insurance Policy can be purchased as a standalone policy or as a rider with a basic health insurance policy or life insurance policy. Hence, both, life insurance companies and health insurance companies offer critical illness policies.

2. It offers coverage in the form of a fixed lump sum on survival of 30 days post-diagnosis of the critical illness.

3. Critical illness insurance policies usually have a waiting period of 30 to 90 days. Hence, any diagnosis done before the completion of the waiting period will not be eligible to file a claim.

4. Since the sum assured is paid in a lump sum, you can use the remaining amount for any of your requirements after paying for your medical treatment.

5. You can avail of a tax benefit of up to Rs 25,000/- under Section 80D of the Income Tax Act, 1961, for self, spouse and children. Similarly, senior citizens can avail of a tax benefit of up to Rs 50,000/- annually.

6. If your parents are above the age of 60 years, and you get a critical illness for them, then you can claim a maximum tax benefit of Rs 75,000/-; i.e. 25,000/- for self and 50,000/- for parents. If you are above 60 years and buy a critical illness cover for your parents, then the maximum tax benefit will be Rs up to Rs 1,00,000/-

7. You can also buy multiple critical illness covers and claim for all of them in case of an unfortunate event.

8. The insurance companies in India typically cover 35 to 36 critical illnesses. The list of such illnesses may vary from insurer to insurer but here are some of the common dread diseases that are generally covered under critical illness cover:

   • Cancer

   • Kidney Failure

   • Primary Pulmonary Arterial Hypertension

   • Multiple Sclerosis

   • Major Organ Transplant

   • Coronary Artery Bypass Graft

   • Aorta Graft Surgery

   • Heart Valve Surgery

   • Stroke

   • Coma

   • Total Blindness

   • Myocardial Infarction (First Heart Attack)

   • Paralysis

This list is given only for your understanding of insurable critical illnesses. Before purchasing any critical illness policy, it is advisable to check with the insurer about the list of critical illnesses covered under the policy.

Things to consider before buying a Critical Illness Insurance Cover as a standalone policy or as a rider with Health Insurance or Life Insurance:

1. Increasing Age:

Due to the complexities in health conditions with increased age, the possibility of getting critical illnesses like heart stroke, diabetes, paralysis, etc. also increases. Furthermore, medical expenses for the treatment of such illnesses are substantially higher than normal treatments. So, staying prepared and getting insured for such uncertainties can secure you financially. If you are a senior citizen or have a senior citizen in your family, then it is a good idea to buy a critical illness insurance policy.

2. Present Health Condition:

The hectic lifestyle and work stress can lead to dread diseases in the future. For those who work in high-pressure environment should take the policy in order to stay financially secure. Your present health condition and lifestyle should be one of the important deciding factors while buying a critical illness insurance policy. Besides, if your family has a medical history of a critical illness, then in that case, it is advisable to cover yourself with critical illness insurance early.

3. Future Medical Expenses:

Considering their present earnings, many people believe that they can bear the medical expenses in case of a medical emergency. However, healthcare inflation is rapidly increasing in India. Therefore, it is necessary to consider your future financial condition and possible lifestyle changes when buying any type of insurance. With a critical illness insurance policy, you get maximum coverage against critical illnesses at an affordable premium. Hence it is advisable to buy an adequate critical illness cover for yourself as well as your close ones.

4. Policy Premium:

The premiums of critical illness insurance policies are typically affordable. However, different insurance companies offer critical illness insurance policies for different premiums. Therefore, you should compare and check the premiums of different insurance companies to get the maximum coverage at the lowest premium. Although the difference in the premium is not very high, it makes a considerable difference in the long run. You can easily check and compare the premiums of different insurers on their official websites.

5. Insurance Company:

It does not make sense to focus only on the premium amount as not opting for a reputed insurer can create issues at the time of claim settlement. Therefore, it is crucial to choose the right insurer for all your policies. While choosing the insurer you should check if the claim settlement process is easy, quick and customer-centric, if the customer service is prompt, if the insurer has your preferred hospitals in the list of their network hospitals, and the insurance company has a good reputation in the market. You can get all this information online and also get to read the reviews of their real customers.

6. Convenience:

Ensure that the process of buying and renewing your critical illness insurance policy is smooth and hassle-free. Many insurers offer online purchase and renewal of the policies which could save a lot of your time and money. Also, flexibility to make changes in the existing policy is another important feature that can be of great convenience if you extend your family or in case of an unfortunate demise of any of the family member covered under the insurance or simply need to extend the policy cover with changing lifestyle.

7. Exemptions, Exclusions, and Terms & conditions:

Before buying the critical illness insurance policy, ensure you have thoroughly read the list of exclusions, policy exemptions, and terms & conditions of the policy. If you are looking for financial protection against a specific critical illness, make sure that it is covered by the insurer by reading the list of critical illnesses covered under the policy. Reading all the policy documents beforehand will help you to avoid any future disputes.

To Conclude:

With increasingly stressful lifestyles, covering yourself and your loved ones with a critical illness insurance policy makes a wise choice. You can buy it as a standalone policy from a health or life insurer or can buy it as a rider in your health or life insurance policy by paying a slightly higher premium. Choosing the correct critical illnesses insurance policy is crucial and a big decision so, do your through research. Make sure you consider the points discussed above when buying a critical illness cover to get the maximum benefits and to avoid any future disputes.

This article first appeared on PersonalFN here