You are scrolling through your social media feed and a news post pops up saying one of your favorite celebrities has passed away due to health complications. What makes the news worse, is that the person wasn’t even too old. Well, there are enough statistics to suggest that such cases aren’t just one-off and rather regular occurrences.
According to the numbers that insurance companies have, about 40% of patients with heart-related ailments are within the age group of 25 to 35 years. It begs us all a simple question, should we opt for a critical illness cover?
What is Critical Illness Insurance?
As the name might give away a bit, any disease that is life-threatening is put in the category of critical illness. And Health insurance offers you coverage for some of the most prominent critical illnesses.
Anyone who has been to a hospital in the past couple of years would attest to the fact that health care has only become more expensive. Thus, treatment of life-threatening diseases or conditions can easily burn a hole in your pockets. In some cases, you might even need to visit a doctor or the hospital several times.
A critical illness policy offers a lump sum amount that you can then utilize for the treatment of these life-threatening conditions. And the best part being, critical illness cover is in addition to any health insurance plan that you might already have.
How is a Critical Illness Insurance Plan different from a regular Health Insurance Plan?
A critical illness insurance plan pays the entire sum insured to the insured person as soon as he is diagnosed with any of the listed critical illnesses within the policy tenure. It would be paid out to him on survival of about 30 days from the date of diagnosis irrespective of the amount spent on treatment. On the other hand, a regular health insurance plan would pay for the expenses incurred on treatment for the same when he is hospitalized.
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So, a critical illness plan provides coverage for pre-existing disease covered from day 1, without any waiting period and there are no underlying conditions for hospitalization.
Benefits of Critical Illness Cover
- Since the policy offers a lump sum amount, you can entirely shift your focus on the treatment rather than worrying about the expenses.
- On the diagnosis of a critical illness, a critical illness policy offers a fixed amount. The hospitalization expenses could be taken care of by the indemnity health insurance plan. Thus, a critical illness plan can be taken along with a regular indemnity health insurance plan for complete coverage.
- The payout of a critical illness health insurance plan is non-taxable under the Income Tax Act’s Section 80D.
- Critical illness can badly impact the finances of a household. However, you can utilize the payout of the policy towards medical as well as household expenses.
- Depending on the insurance company that you choose, you can get coverage against 30+ critical illnesses.
Workings and Sum Insured
A critical illness policy is quite easy to understand, as compared to some of the other insurance plans out there. If a policyholder is diagnosed with a critical illness, the insurance company will pay the entire sum insured as a lump sum amount. Depending on the seriousness of the medical condition, you can utilize the funds for other expenses as well.
As is the case with most insurance policies, there is no standard sum insured that you should opt for. There are various factors that come into the picture such as age, lifestyle, family medical history, income, etc.
However, given the fact that critical illness insurance is usually a one-time activity, having coverage of INR 10 lakhs or more would add a lot of value. Irrespective of your age, it is advisable to opt for a critical illness insurance policy to ensure financial freedom towards the later stage.