Healthcare in India is becoming increasingly costly every year, and a standard health insurance policy may not be sufficient to cover all medical expenses. In case of unforeseen life-threatening diseases like a heart attack, kidney disease, or cancer, an average health insurance policy may fall short in covering the associated expenses.
The treatment costs for such critical conditions are generally high and extend over the long term, potentially draining savings. In this scenario, a critical illness cover can protect your financial security and your peace of mind.
Keep reading to learn about the importance of critical illness cover, how it works, and who should consider it!
What is a Critical Illness Cover?
A critical illness cover in the health insurance provides a financial safety net against a host of life-threatening diseases such as heart attack, stroke, cancer, kidney failure, etc. Under this rider, the policyholder is entitled to receive a lump sum critical illness cover upon diagnosis of certain illnesses listed under the policy.
It is usually a predetermined lump sum amount that is disbursed to the insured once the diagnosis is confirmed and approved by the insurer. In standard health insurance plans, the medical bills are settled by the insurer as they are incurred, but a critical illness cover provides a lump sum amount upon diagnosis, which brings peace of mind during these unanticipated situations.
It helps you decide the right course of treatment and manage the expenses accordingly, as the funds are disbursed early on the onset of the disease. Thus, the funds can be used to pay for advanced medical treatment, surgeries, and medications that may not be covered by the standard plan. Non-medical costs like travel, home care, loan repayments or EMIs, and household expenses can also be covered if the insured individual is unable to earn due to illness.
What are the Different Types of Critical Illness Covers in India?
Critical illness covers in India can be broadly classified into two types:
- Critical Illness Rider: If you already have a health insurance policy, then you can include this add-on to ensure comprehensive coverage. It may slightly increase your premium, but it significantly enhances protection in case you or your loved ones are at risk of critical diseases.
- Standalone Critical Illness Insurance Policy: It is an independent health insurance policy that is purely dedicated to critical illnesses. It has higher sum insured options and can be personalised as per the specific health risks of the insured individual. If you wish to secure maximum financial protection, then this is the best option to consider.
Importance of Critical Illness Cover in India
Critical illness insurance in India has become increasingly important due to the rising incidence of diseases and high medical inflation. Here’s how a critical illness cover can benefit you in adverse times:
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Covers High Treatment Costs
Treatment costs for any critical illness can pile up to lakhs, depleting your savings quickly. Also, arranging funds for treatment within a short timeframe is financially burdensome. A critical illness cover in health insurance plan can provide a significant lump sum payout to help cover the treatment expenses and post-hospitalisation care to ensure a fast recovery.
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Acts as an Income Replacement Support
Serious critical illnesses require months or even years of proper rest for full recovery. Now, if the earning member of the family is affected, it can lead to a sudden income loss, which in turn can drain savings and even lead to debt.
A regular health insurance plan may cover hospitalisation expenses, but it won’t cover the loss of income or household expenses during that time. In that case, the lump sum payout of a critical illness cover can act as an income replacement to help you run your household expenses smoothly.
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Covers Non-medical Expenses
Apart from the hospitalisation bills, there are several other non-medical expenses like travel for treatment, medications, post-operative therapy, and home care. The standard health plan may not cover these expenses, but the lump sum amount received under a critical illness insurance cover can help manage these costs for a smoother recovery.
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Covers up for Limits
Your regular health plan can have sub-limits, such as room rent caps, or may not cover all kinds of modern treatments associated with a critical illness. A critical illness cover can help you bridge these gaps by providing a lump sum amount to invest in the required areas to ensure proper recovery of the insured.
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Tax Savings
You can claim deductions for the premiums paid under a critical illness insurance cover under Section 80D. Individuals under 60 years can save up to ₹25,000 per year, and senior citizens (above 60 years of age) can save up to ₹50,000 per year.
Who Should Prioritise Critical Illness Cover in India?
The following groups should ideally opt for a critical illness rider to reap maximum benefits:
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Primary Earning Members
In the event of a critical illness, even the best health insurance in India will cover the hospital bills up to a certain limit, which may not be enough to cater to long-term care needs. Additionally, if you are the sole earning member, it can lead to income loss, which can put your family in financial distress.
Having a critical illness insurance plan helps, as it provides a lump-sum payout that can serve as income replacement, cater to household costs, and facilitate recovery with peace of mind.
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Individuals with a Family Medical History
If your family has a medical history of critical illnesses like cancer, stroke, or kidney disease, then the chances of developing them are higher. Therefore, it is crucial to choose a critical illness cover to ensure quick access to funds in the event of unexpected medical situations.
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Younger Individuals
When you’re young, you are less likely to be diagnosed with any critical illness. Hence, buying a critical illness cover will be much cheaper. You can opt for maximum coverage at lower premiums and get the benefit of a no-claim bonus as well.
If you are planning to buy critical illness cover, choose a plan that encompasses a wide range of conditions and provides an adequate payout. Also, be sure to select an insurer with a high claim settlement ratio to increase your chances of receiving a settlement when you need it the most.