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Critical Illness Health Insurance - How To Choose The Best Critical Illness Insurance Plan? Research Team | Posted On Wednesday, April 03,2019, 04:02 PM

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Critical Illness Health Insurance - How To Choose The Best Critical Illness Insurance Plan?



As part of smart financial planning, you may avail a term life insurance plan to financially safeguard your family or pay off debts in case of an untimely demise. However, you may not have planned for medical emergencies like a critical illness which can blow your savings away.

Advances in Medicare and healthcare have increased life expectancy, which means more people are surviving illnesses that caused fatalities in previous generations. However, the treatment of critical illness comes at a high expense and changes your financial status.

Critical illness insurance plans in India are insurance plans that are designed specifically for these situations.

Critical illness insurance plans offer financial support when medical and long-term care costs a lot and can blow away savings.

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Critical Illness Health Insurance - How To Choose The Best Critical Illness Insurance Plan?

What Is Critical Health Insurance?

Critical health insurance plans are long-term plans which cover specific critical illnesses as mentioned in the policy terms and conditions. If you are affected by a critical illness, then the policy would pay out a lump sum which can be used for the following:

  • Hospitalization charges
  • Medicines
  • Recuperation support
  • Daily expenses
  • School fees, EMIs and other bills
  • Debt due to illness
  • Lost income due to reduced ability to work

The most important underlying criteria for making a claim is that the insured must survive for a minimum of 30 days from the date of diagnosis of the critical illness. These 30 days are in addition to the initial waiting period of 60-90 days which most insurers follow.

SEE ALSO: Critical Illness Health insurance

Critical Insurance Coverage

Few of the illnesses covered under critical illness plans are multiple sclerosis, heart attack, cancer, stroke, transplantation of major organs, kidney failure and so on. With increasing competition, insurers are covering more illnesses like major burns, loss of speech, loss of eyesight, deafness, and so on. Typically, the policy outlines the illnesses that are covered, and this varies across insurers. HDFC Ergo covers 8 illnesses while Max Bupa, Bharti AXA and Religare cover 20 illnesses. ICICI Lombard and Tata AIG policies have 9 and 11 illnesses covered respectively.

Exclusions in Critical Insurance Policy:

The major exclusions across most insurers in India vis-à-vis critical insurance plans are as mentioned below:

  • Pre-existing diseases and injuries at the time of availing the insurance.
  • Acquired Immune Deficiency Syndrome, AIDS, and other related diseases related with HIV.
  • Joint replacements are not covered, unless due to an accident.
  • Critical illnesses that is genetic in nature.
  • Treatment for health conditions arising due to abuse of drugs or liquor and intentional self injuries.

Who Should Buy Critical Health Insurance?

The major factors that define the need of a critical health insurance policy are as mentioned below:

  • Modern day problems like work pressure, poor and unmanaged lifestyle along with bad food habits have made Indian youth highly susceptible to lifestyle related diseases like heart attack, diabetes, obesity, and hypertension.
  • Irrespective of the profession, business or service, a disruption in income could put finances out of order and ruin your lifestyle.
  • Generally, the treatment of a critical illness is very expensive. Your savings in addition to a health insurance plan may not be enough to cover the expenses.

The premiums paid towards critical illness insurance plans qualify for tax deduction of up to Rs 25,000 a year under Section 80D of the Income Tax Act.

After evaluating the requirements, you must compare various insurers and pick that insurer which offers coverage for those diseases which could affect you. Important factors to be accounted here are illnesses covered, sum assured, procedure for claiming on the insurance policy and the rate of claim approval by the insurer (claim settlement ratio).

A general health insurance plan (mediclaim policy) covers you up to a certain extent. However, it is not sufficient for covering living expenses and lifestyle habits, when you are affected by a critical illness. Hence, it is important to avail a critical illness cover as a top-up on self or employer offered health policies.

For example, if you are in the age group of 25-30 years, with a Rs 5 Lakh medical insurance, then you can add a critical illness cover of Rs 10 to 15 Lakhs to cover self and family against financial difficulties.

How to Choose the Best Critical Illness Insurance Plan?

To choose the best critical illness insurance plan, you must consider the below mentioned parameters:

  • Add-on or Stand-Alone: Stand-alone policies are separate plans that have no relevance to your pre-existing general health insurance plan. Add-on policies are those policies that can be tied up with your pre- existing health insurance policies. Stand-alone policies are flexible and offer huge coverage.
  • The Perfect Cover: A detailed knowledge on benefits offered and the add-ons included in the plan, with an eye on limitations, will help you choose the right policy wisely.

The premium of a health insurance policy rises with increase in age as people are more prone to critical illnesses and diseases as they grow old. Keeping this in mind, it is wise to avail a health insurance policy at a younger age.

  • Special Plans: Few insurers offer special plans for women and senior citizens. They are designed keeping in mind your needs. For example, Max Bupa health insurance has a women exclusive plan which covers critical illnesses like cervical cancer, breast cancer and ovarian cancer. You must check out for those exclusive plans when choosing a critical illness plan.
  • Renewability and Age: Few insurers have imposed a limit on the age of insurance renewability. Once you attain that age, then you will not be allowed to continue with the plan. However, there are insurers offering lifetime renewability. Senior citizens must have a plan covering a wide range of diseases as their health plans have a lower sum assured and are costly.
  • Inclusions and Exclusions: All insurance policies come with a catch. This is exactly what you must look for. It is must to make a detailed study and research on inclusions and exclusions of any policy. This helps in understanding constraints and limitations of the policy. Check with the insurer if add-ons are allowed.
  • Waiting Period: After availing a policy, you may have to serve a waiting period. Few insurers have waiting period of 2 to 3 years, meaning, your claims will not be honored in this period. When two insurers offer similar benefits but have different waiting periods, then you must choose that insurer with a shorter waiting period.
  • Illnesses and the Diseases Covered: If the policy does not cover the most common critical illnesses like cancer and chronic heart disease, then you must think twice before availing it. Most insurers cover around 8 critical illnesses, but there are insurers covering 20 or more critical illnesses. Consider lifestyle and family history when choosing a policy.

SEE ALSO:  Family Health Insurance Plan

How to File a Claim for Critical Health Insurance Policy?

To claim on critical health insurance policy, you must get in touch with the insurer. Below mentioned documents are generally asked by most insurers:

  • A duly filled claim form.
  • A copy of the photo ID card.
  • Medical certificate issued by the doctor mentioning the health condition.
  • Discharge summary.

Advantages of Critical Health Insurance

Following are the advantages of critical health insurance:

  • No Depletion of Savings: If you don't have a critical illness plan, then most of your savings would be spent on paying the medical bills. You would have accumulated a good amount of money to fund children’s education, marriage and so on, but critical illnesses can change your plans and disrupt your life. For example, your daughter's marriage is set to happen in the next 6 months and your lifetime savings are spent on treating a critical illness. This directly impacts funding for the marriage, which forces you to go for a loan.
  • Funds for Any Purpose: The proceeds of a critical illness policy may help in repaying home loan and allows you enjoy the same lifestyle, that you were having with a regular monthly salary. The approved claim is not contingent to any conditions of hospitalization under network hospitals or presentation of hospital invoices and so on; the claim is honored by just producing a certificate from the doctor.
  • Income Replacement: If you are the breadwinner of the family, then a critical illness would bring your family to a state of financial instability, as it reduces the ability to work. Availing a critical illness plan offers a financial back up. The income that you would have earned, would be replaced by the proceeds of a critical illness plan and this gives you peace of mind. This helps in repaying debts, paying school / college fees of children, funding children/s marriage and so on.

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