The increasing incidences of Non-Communicable Diseases (NCDs) in India further make it essential to have one plan for critical illnesses. According to the World Health Organization, Non communicable diseases (NCDs) kill 41 million people each year, equivalent to 74% of all deaths globally1. NCDs include critical illnesses like heart diseases, cancer, diabetes, and chronic kidney diseases, among others.
Detection of a critical illness in you or a family member is not only emotionally debilitating but also financially draining for the entire family and can derail your life goals. With the cost of healthcare expenses increasing almost at the double the pace of inflation, the financial burden that critical illness in the family brings can be as challenging to deal with as the emotional trauma. However, you can always plan ahead for such financial stress.
What Is A Critical Illness?
A critical Illness can be one of the many serious ailments, which require lengthy medical procedures, including surgeries, and other pre- and post-hospitalization care to be fully cured. Some of them can be chronic in nature and may require lifelong medication and treatment. These medical procedures and treatments, many of which are only conducted in large private hospitals, cost a fortune.
Add to this the cost of medication, regular follow-ups with doctors and alternative treatments and one critical illness in a family can cause irreparable damage to your finances, if you have not taken additional protection.
What is Critical Illness Benefit?
The critical illness benefit is an optional rider available under some life insurance plans, that pays a pre-defined sum assured upon the diagnosis of a critical illness, listed under the plan. This rider enhances the protection under the base plan to offer a comprehensive coverage to the life assured.
Features of Critical Illness Cover
The salient features of the critical illness cover are as follows –
- The cover is available as an optional rider which can be bought with a Life Insurance Plan, for added coverage. You can choose the same for coverage against major life threatening illnesses as covered under the rider.
- The claim is paid only if the life insured suffers from a critical illness specified under the rider and undergoes a treatment for the same.
- The sum assured is paid on diagnosis of the critical illness
- The coverage is usually available for a specific tenure as defined under the critical illness rider.
- The premium that you pay for the cover is allowed as a deduction from your taxable income. You can claim the deduction under Section 80D of the Income Tax Act, 1961 under old regime of Tax, up to Rs. 25,000 if you are below 60 and Rs. 50,000 if you are 60 years and older.
- You can use the critical illness benefit received to meet any financial need that you might have.
- Under some plans, there may be a waiting period, cooling off period or survival period to become eligible for the benefit payout, subject to policy terms and conditions.2
How to Choose the Suitable Critical Illness Cover?
To choose the suitable critical illness cover, here are some things that you should keep in mind –
- Choose a critical illness plan or rider that covers a higher number of illnesses and medical treatments. The larger the number of illnesses covered, the better the protection you would receive.
- Choose a sum assured which is optimal enough to meet the expensive treatment costs and/or any other financial liability that you might have.
- Compare the premium vis-à-vis the coverage offered by the different critical illness insurance plans. Choose a plan that offers a competitive premium rate without compromising on coverage.
- Look for plans that can be renewed till you are older. In other words, choose plans which have a higher maturity age so that you can be covered longer.
- Opt for plans that have a shorter survival period so that you can get the claims earlier.
Conclusion
A critical illness benefit can add an extra layer of protection and cover medical emergencies. The lump sum benefit that you get can be used to pay for your financial obligations or treatments, depending on your needs. So, understand what the benefit is all about and choose it with your life insurance policy as a rider or opt for a standalone critical illness plan for adequate coverage.
FAQs
1. Can I purchase a critical illness benefit once I am diagnosed with an illness?
No, you cannot purchase the benefit after being diagnosed with an illness. The critical illness benefit covers uncertain illnesses, not ones that have been certainly diagnosed.
2. What are the documents required for a critical illness rider?
You might have to submit a medical examination report and a health questionnaire to buy the critical illness rider.
3. Does term insurance cover critical illness?
Pure term insurance plans only offer a death benefit upon demise of the life assured. However, you can opt for add-on riders like the critical illness rider with your term plan for coverage against critical illnesses listed under the rider.
4. Is there any medical test required before purchasing a critical illness rider?
The requirement of medical tests depends on your age, existing medical conditions, the sum assured chosen for the rider and other factors. The insurance company would underwrite your policy and then determine whether medical tests are needed or not. The tests are not mandatory as they depend on individual policies.
Reference
1. https://www.who.int/news-room/fact-sheets/detail/noncommunicable-diseases
2. https://business.outlookindia.com/personal-finance/insurance/reasons-why-its-good-to-have-a-critical-illness-cover-in-addition-to-your-health-insurance-policy
Other References
1. https://www.livemint.com/money/personal-finance/here-is-what-you-should-know-about-critical-illness-cover-11660152937906.html
2. https://economictimes.indiatimes.com/tdmc/your-money/all-about-critical-illness-plans-and-how-to-choose-one/articleshow/51810014.cms
3. https://www.etmoney.com/learn/insurance/how-much-critical-illness-insurance-do-i-need/
4. https://www.bajajallianz.com/health-insurance-plans/critical-Illness-insurance.html
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