At times you are diagnosed with a critical ailment and can involve very expensive treatment and may involve intensive care which is not covered by comprehensive insurance so you may have to pay from the pocket. A critical health plan pays a lump sum on diagnosis of severe ailments.
Why is it Important?
You receive a lump sum of money which you can use to pay for loss of income as you are unable to work, or pay debts, or for expensive treatment. On the whole it can even add to your health insurance policy.
A critical care illness cover is cheaper than an indemnity plan, for example a comprehensive insurance plan for a 30 year old individual with a sum assured of 5 lakhs will cost about Rs.6000 annually as compared to a critical illness plan which will cost Rs. 1,500 for the same.
"A comprehensive health plan covers a wide range of risks and is therefore significantly expensive than a critical illness plan that covers specific situations," says Arvind Laddha, chief executive officer and managing director, Vantage Insurance Brokers & Risk Advisor.
A combination of comprehensive health insurance and critical illness cover can give a good balance between pricing and coverage. "A Rs 5 lakh indemnity cover along with a Rs 10-15 lakh critical illness cover should be a decent mix," says Mukesh Kumar, head of strategic planning, HDFC ERGO.
Critical illness plans are sold by life insurance and general insurance companies. Life insurance offers policies with longer tenures - for example – ICICI’s Prudential Crisis cover has a 50 years maximum cover and ICICI Lombard’s Critical Care can be bought for 5 years.
Companies that Cover Critical Illness plans-
Each company has clauses which may vary from other companies, for example ICICI Prudential's Crisis Cover protects against 35 illnesses, Bharti AXA's Smart Health covers 20 of them, while Aviva's Health Secure pays for 12 ailments. Some of these illnesses include-
• Heart Attacks
• Kidney Failure
• Major Organ Transplant
• Multiple Sclerosis
Some companies include many more illnesses
"One should evaluate and compare a few different plans to decide which suits the best. Consider the list of illnesses covered, the cover amount, the claim procedure and the payment history of the insurer," says Suresh Sugathan, head, health administration team, Bajaj Allianz General Insurance.
Critical illness covers are fixed benefit plans. You get the entire sum insured irrespective of whether one is hospitalized or not and whatever the treatment expenses are. However, details vary from plan to plan.
The built-in coverage also differs from policy to policy. While some insure accidental death and partial or total disability due to accidents, some don't.
A Comparison of some standalone Critical Illness Policies-
|HDFC Ergo||Critical Illness||Rs.1,405|
|ICICI Lombard||Critical Care||Rs.2,017|
|Bajaj Allianz General||Critical Illness||Rs.1,500|
|Reliance General||Critical Illness||Rs.1,538|
Points to consider before buying a Policy-
• "Age and medical history are important while deciding the appropriate sum insured," says Sanjay Datta, chief, underwriting and claims, ICICI Lombard General Insurance. The sum insured should be higher for the aged as they are more likely to develop chronic ailments.
• Older people should buy larger covers as they are susceptible to various illnesses, indemnity plans are very limited at this age and have low sum insured and will come co-payments and strict terms and conditions.
• Also take into account existing covers such as Mediclaim or personal accident and disability insurance policy. Along with this keep in mind the cost of treatment, and financial losses due to income loss.
• Check family history for cardiac or any major ailments and check if the policy covers those ailments.
• You can buy a standalone critical illness policy or one with your existing health policy.
• "The advantage of a standalone critical illness plan is that it is not compulsory to renew your health or life plan if you want to keep the critical illness cover. Riders are recommended as clubbing covers can facilitate easy management," says Gaurav Rajput, director, marketing, Aviva India.
• Critical illness plans are sold both by life Insurance Companies and general Insurance Companies, the difference being that life Insurance Companies offer longer tenures. There are some special plans offered for women and senior citizens, Bajaj Allianz offers critical illness covers for breast cancer, ovarian cancer and cervical cancer.
• Some companies give a lifelong renewability and some stop at 50 years.
• According to the survival clause, the insured must survive for a minimum of 30 days after diagnosis. The waiting period refers to a period of 3 months after inception of the policy, though this can change from policy to policy.
• When the assured tests positive for HIV/Aids he is not eligible for Critical Health cover.
• When the assured, is hurt or wounded, due to act which involves terrorist activity or with arms or ammunition.
• Sometimes some insurers put a cap on the amount that can be claimed for certain illnesses. The claims record should be looked into before you buy a policy from the insurer. It is generally 30 days after diagnosis on submission of all the relevant documents.
Things to look out forBefore Purchasing Critical Care Health Insurance Policy
• Always read the small prints of the policy. Make sure you know exactly what is covered and what is not covered.
• Check if premiums are fixed or increase every year. Fixed premiums may be slightly higher but are better in the long run. These policies offer a guaranteed premiums.
• If you have a family see if you buy such a cover for the family. Some critical care policies may start at 18 years and end at 50 or 70 years and may not cover children.
• Compare the policy offered with that of another company’s policy compare two or even three to see what key features are offered by each before you make a choice.
Look if there is cooling off period in the policy i.e if you change your mind say within 14 days of buying the policy – you are eligible for full refund of your first premium.
Many policies have a ‘survival clause’, this means that you must survive for a minimum of 30 days after diagnosis.
There maybe a waiting period before the policy becomes functional and this can be as much as three months from the start of the policy.
Sometimes some insurers put a cap on the amount that can be claimed for certain illnesses. The claims record should be looked into before you buy a policy from the insurer.
Making a claim-
The insurer pays the benefit as a one-off lump sum and this is usually tax-free.
Payments may not be immediate and can take 28 days to 6 months after a serious illness or disability is diagnosed. Disability claim usually take longer.
Remember that a critical illness insurance cover is different to Income Protection or a permanent health insurance where a regular income is provided in the event of long-term sickness or injury.
‘Provides you with Lump sum money in case of critical illness or surgery such as Organ Transplantation that a normal Health Insurance Policy may not cover’
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This policy has been designed to cater to the needs of Senior Citizens. It covers Hospitalization and Domiciliary Hospitalization Expenses under Section I as well as expenses for treatment of Critical Illnesses, if opted for, under Section II.