Critical illnesses such as cancer, heart attack, stroke, kidney failure, and others impact a large number of people. These conditions not only affect a patient’s health but also impose a heavy financial burden on them because of the expensive treatment and long recovery times.
Critical illness insurance has been created to offer a safety net against such unexpected medical bills. It pays a lump sum when the insured individual is diagnosed with one of the covered critical illnesses, allowing them to concentrate on getting well without being concerned about lack of finances.
What is Critical Illness Insurance?
Critical illness coverage is a form of health insurance policy that offers financial assistance to those suffering from life-threatening diseases. Standard health insurance, which mainly covers the cost of hospitalization and medical expenses, provides a lump sum amount to the policyholder upon diagnosis with a critical illness, provided that the disease is included in the policy’s terms.
The lump sum payment can be utilized for any purpose, be it medical interventions, recovery expenses, or even to cover lost income while in recovery. The coverage usually consists of illnesses such as cancer, heart attack, stroke, organ failure, and others, subject to the conditions of the policy.
Why is Critical Illness Insurance Important?
Below are some key reasons why critical illness insurance is essential:
- Increasing Healthcare Expenses
With improvements in medical technology, treatments for critical diseases have improved. However, they come at a very expensive price. Hospitals, surgeries, medical tests, and follow-up care costs can go up to lakhs of rupees. Even with people having standard health insurance, it might not be sufficient to meet the high cost of treating critical conditions. Critical illness insurance steps in to help cover the difference.
- Income Protection
Critical illness may interrupt one’s ability to work. For some, this means loss of income, and if recovery takes several months or years, this can result in additional financial strain. Critical illness cover can offer a one-time payment that can be used to fund lost wages, so the policyholder is able to sustain their finances while concentrating on recovery.
- Helps Focus on Recovery
The psychological and emotional stress caused by critical illnesses is already overwhelming. Having a critical illness insurance policy, however, helps individuals alleviate the added pressure of worrying about finances. The lump sum payment can be used to pay for treatment, medical expenses, and other costs so the patient can concentrate only on their health and recuperation.
- Flexible Coverage
Most critical illness insurance policies provide versatile coverage, allowing policyholders to choose the diseases they wish to cover. Some of the plans cover a wide range of illnesses, while others can provide coverage for certain illnesses such as heart disease, cancer, and strokes. This personalization allows individuals to customize their insurance according to their health risk.
- Tax Benefits
In India, premiums for critical illness insurance are tax-deductible under Section 80D of the Income Tax Act. Individuals can claim up to ₹25,000 tax benefits within a financial year, while for senior citizens, this limit rises to ₹50,000.
Types of Critical Illness Insurance Policies
Critical illness policies can also be classified based on the structure of the coverage. These will generally fit into two broad categories:
- Standalone Critical Illness Policy
This policy is specifically designed to pay for critical illnesses. It is independent of any other health or life insurance policy and pays a lump sum in case of a critical illness diagnosis. Standalone policies provide comprehensive coverage for a variety of diseases, but the premium is a bit higher than add-on plans.
- Critical Illness Rider
It is a rider that can be added to a life insurance policy or a health insurance policy. This enables the policyholder to add critical illnesses to their current insurance coverage. The rider provides a further layer of coverage, paying out the lump sum amount when a critical illness is diagnosed while still paying the benefits of a normal life or health insurance policy.
How Does Critical Illness Insurance Work?
Critical illness policies are relatively simple. When you buy a policy, you pay premiums, which are dependent on factors such as age, medical conditions, coverage amount, and policy type. The policy will define the critical illnesses covered. Conditions typically include cancer, heart attack, stroke, organ failure, and others.
In the case of diagnosis with one of the covered illnesses, you can file a claim with the insurance firm. It will analyze your case based on medical diagnosis and records. Once the claim has been processed, the insurance company will disburse a lump sum, which you can utilize at your own discretion.
It should be noted that critical illness insurance usually only pays once for any covered condition. If the policyholder recovers from an illness and then experiences a recurrence, the plan might not pay again for the same medical condition. Some policies, though, do have a restoration benefit, which reinstates the coverage amount after payment for a specific illness.
How to Choose the Right Critical Illness Insurance?
When selecting a critical illness insurance policy, it is essential to evaluate several factors to ensure that the policy meets your needs. Here are some tips to help you choose the right coverage:
- Understand the Coverage: Make sure that the policy covers a broad spectrum of critical illnesses. Carefully read the terms and conditions to determine which diseases are included and whether there are any exclusions.
- Policy Benefits: Look for additional benefits like a restoration clause, extra riders, and access to wellness programs. A few policies even provide coverage for hospitalization charges and post-treatment care.
- Claim Settlement Process: Be aware of the insurer’s claim settlement process. Opt for a company which is renowned for fast and smooth claim settlement.
- Premiums: Browse various plans from multiple insurers to identify one that suits your financial situation. Ensure that the premiums are reasonable and maintainable in the long term.
- Customer Service: A prompt and courteous customer service department can be a real asset when submitting claims and clearing queries. Select an insurer with a reputation for good customer service.
Critical illness insurance is a vital resource for anyone looking to protect themselves and their loved ones from the financial impact of life-threatening medical conditions. Getting a lump sum payout upon diagnosis prevents individuals from being overwhelmed by healthcare costs or lost income during the recovery phase.
Companies such as Star Health provide flexible critical illness insurance plans that cater to specific needs, offering financial reassurance during emergencies caused by health uncertainties.
Check out the Star Critical Illness Multipay Insurance Policy today!
