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Know about the 2nd Most Important Insurance Cover after Term Insurance Critical Illness Insurance

Posted by : Siddharth Jalan on | Jun 09,2017

We are at high risk of falling prey to critical ailments, like cancer, heart attack, kidney failure, etc. The sad part is that due to a sedentary lifestyle, even youngsters are suffering from diseases which were earlier associated with people aged 50 and above. As per some insurance estimates, 40% of heart patients in India belonged to the age-group of 25-30 years.

Sticking to a healthy diet and proper exercise regime could keep some ailments at bay, but sometimes it is due to the hereditary reason that people develop a critical ailment. Unlike other diseases, the treatment in case of such diseases could put excessive pressure on the family’s financial condition. The cost of critical ailments treatment can go above lakhs and one may either have to borrow from relatives or break their current investments. Further, contracting a critical ailment also negatively affects an individual’s earning capacity. The situation deteriorates further if a breadwinner is diagnosed with a critical ailment.

It is good to have a term insurance policy which promises to offer financial protection to your family in your absence, however, what if you don’t die but suffer from critical ailment? Considering the change in lifestyle and fall in the age-group of people who have cancer or heart attack, it makes complete sense to go with a critical illness insurance policy to rule out facing of life-threatening diseases.

How critical illness insurance policy works?
A critical illness (CI) policy pays a lump sum amount, equal to sum assured, to the insured if he/she is diagnosed with a critical ailment. It means, as soon as the insured is diagnosed with a critical ailment, the policy pays the entire sum assured which can be used to pay for household expenses along with medical treatment and debts, if any. Regardless of how much your medical bills are, the insurer pays the entire sum assured.

CI plans are, therefore, known as defined-benefit plans as the benefit is fixed and paid irrespective of medical expenses. Even if a person has more than one CI plans, every policy will pay the sum assured. It is different from a Mediclaim policy which is an indemnity plan and reimburses only hospitalisation expenses.

Note, the insured should survive for 30 successive days after the diagnosis of critical ailment to file the claim. Similarly, there is a waiting period of 90 days at the start of the policy and any critical ailment diagnosed within that tenure will not be covered by the insurer.

What is covered under a CI plan?
The number of critical ailments covered under a CI plan may vary from one insurer to another, however, some ailments which are covered by most of the insurers are a stroke, heart attack, coronary artery bypass, cancer, paralysis, etc.

How much should you buy?
The answer to this question depends on several factors like age, income, the number of dependents, etc. Ideally, one should have a minimum coverage of Rs 15 lakhs, considering the fact that the entire amount is paid after the detection of critical ailment.

From where can you buy a critical illness insurance policy?
In India, CI plans are offered by life insurance companies, general insurance companies and standalone health insurers as well. Either you can directly approach these insurance companies and buy online or take the help of insurance advisors like SecureNow who will ease the entire process of buying the policy. Bought from any company, critical illness insurance policies are eligible for tax benefits under Section 80 D of the Income Tax Act, 1961 as well.

Can a critical illness rider replace critical illness insurance?
You can attach a critical illness rider with your main term insurance or health insurance policy as well. Though, a rider has similar features as that of a standalone policy, there could be some flexibility in a critical insurance plan to increase the sum assured at the same level of premium. Therefore, if affordability is not an issue with you, it would be better to opt for a standalone critical illness insurance that offers extensive coverage.

Overall, having a critical illness insurance cover is the second ring of protection after term insurance that everyone should consider. Remember, the suffering only increases if along with poor health one has to deal with financial hardships as well.