Critical illness cover is also called critical illness insurance. It is a long term insurance scheme that covers specific illnesses that are listed in the policy. In case the policyholder faces a serious illness that is there on the list, a lump sum amount is offered as insurance coverage. This amount is absolutely tax free. This payment can help the insured take care of his financial needs after he is diagnosed with a critical illness. It can be used for making alteration to the house, pay off debts, rent or mortgage, etc. It is absolutely the policy holder’s choice on how he/she wants to utilise the amount received as cover.
What is Critical Illness Cover?
Critical Illness insurance scheme will take care of all the monetary needs of the insured if he/she is diagnosed with an illness that is mentioned in the list of illnesses as per the policy. One must understand that all types of health conditions are not covered under this insurance plan. The policy also states how serious the illness should be to get coverage under the plan.
The different examples of Critical Illness are as follows:
- Heart attack.
- Specific stages and types of cancer.
- Conditions like multiple sclerosis.
Most of the insurance policies also cover the permanent disabilities. These disabilities can happen due to any illness or injury. The pay-out happens only once and after that the policy ends. Some of the policies will pay-out smaller amounts for less severe illnesses.
What is not covered?
Some of the serious illness might not be on the cover list. For example, certain cancers and other conditions that are not there in the policy. A policyholder will not be able to avail cover for a critical illness that he/she already suffered from before taking up the insurance policy. If the policyholder dies due to such a critical illness, there will be no pay-out after the demise.
The policy will have complete details about what the policy does not covers and what it does cover. The insurance seeker must be fully aware of the cover requirements and then apply for the one that suits his/her needs the best.
Do you actually need critical illness insurance?
The benefits that the policyholder already gets with his/her health insurance plan might not be enough. A Critical Insurance scheme must be considered if:
- An individual does not have enough savings to cope with financial needs in time of a disability or a serious illness.
- An individual does not get any employee benefits that would offer him/her longer time off everyday job in times of illness.
Who does not need it?
There are situations when a critical illness plan is not required. An individual will not need it if:
- He / She has substantial amount of savings that would provide financial support in times of illness to cover medical costs, bills, loans, etc.
- He / She has someone to take care of the lifestyle costs, shared commitments, etc. when he / she is unwell.
How much does the critical illness cover cost?
The cost of the critical illness cover depends on several factors. These factors are as follows:
- Age of the applicant.
- Whether the insurance seeker is a smoker or has been a smoker in the past.
- Present health condition of the insurance seeker including accurate weight, family medical history, etc.
- The type of job that the insurance seeker is associated with. There are certain jobs that come with higher risk factor and depending on that the premiums for the insurance coverage may change.
- The amount of cover applied for by the insurance seeker.
- Muscular dystrophy.
- Major burns.
- Fulminant viral hepatitis.
- End stage lung disease.
- End stage liver disease.
- Loss of speech.
- Bacterial meningitis.
- Aplastic anaemia.
- Multiple sclerosis.
- Motor neuron disease that are associated with permanent symptoms.
- Permanent paralysis of the limbs.
- Major bone marrow or organ transplant.
- Stroke resulting in permanent disability.
- Kidney failure that needs regular dialysis.
- Coma of a specific severity.
- Treatment assisting reproduction.
- Treatment for hormone replacement.
- Treatment outside India.
- Cosmetic surgery or dental care.
- Infertility treatment.
- Terrorism, war, military or navy operations, civil riots.
- AIDS / HIV infection.
- Critical conditions due to childbirth or pregnancy.
- Illness due to external or internal congenital disorder.
- Illness due to drug, alcohol and tobacco consumption.
- Demise within a period of 30 days from a surgery or diagnosis of the critical illness.
- Critical illness detected within the first 90 days from the start date of the policy.
Some of the popular Critical Illness Insurance Plans:
There are various insurers in India that offer great critical illness insurance policies. Some of them are as follows:
- Religare Health Insurance - Assure.
- Bharti AXA General Insurance – Smart Health Critical Illness.
- Max Health Insurance – Health Assurance.
- Apollo Munich Health Insurance – Optima Vital.
GST rate of 18% applicable for all financial services effective July 1, 2017.
Disclaimer: Premiums may vary depending upon factors like age, location and prevailing taxes/GST.