What is Critical Illness insurance?
Critical illness insurance provides protection against major terminal illness/illnesses. It offers a lump sum amount if the policyholder is diagnosed by any one of the critical illness listed in his/her policy document.
Things you should know before you buy a Critical Illness policy:
Most of us have term and health insurance. Now let us know the difference:
In Term insurance plans the policyholder’s nominee receives a lumpsum amount on the death of the insured. One year after policy is issued most insurance companies are entitled to pay in case of the demise of the policyholder, irrespective of the nature of death. Term insurance is a pure protection plan which one has to consider so that his/her family members are secured.
Health insurance policies cover hospitalization cost, except for a small subset of treatments listed in the policy document. Health insurance policies are important as it covers all illnesses whether major or minor. So if one is hospitalised for Malaria or a minor surgery he/she will still get cover for it. Now most health insurance policies require hospitalisation bills some have conditions that you have to be hospitalised atleast for 24 hours.
Critical illness policies pay when a critical illness diagnosed itself. If the policyholder is diagnosed by a critical illness that is ‘listed’ in the policy document, he/she can claim for the amount by the insurer. Under a critical illness policy one gets a fixed sum assured on the diagnosis and the policy holder can use this amount the way he/she wishes to. For example, pay his EMI, Loans, Daily expenses, etc.
Many a times, people misunderstand a critical illness insurance policy with health insurance policy. But the both cover different things, the former covers only the hospitalisation costs for all illnesses whereas the later covers the loss of income, your hospitalisation or advance treatment costs that may be incurred only for critical illnesses. This is because critical illnesses can hamper one’s standard of living as it impacts one physically, emotionally and financially. So considering some amount of cover from both would be ideal. Let’s say you already have a health cover, then you can opt for a critical illness cover of around 25 lakhs to 30 lakhs, the premium for the same will not be very high and you will also be secured from critical illnesses.
This critical illness cover can serve as an emergency fund. Not all of us have enough savings to combat critical illnesses and even if we do, should you spend it on overcoming from an undesired critical illness? Wouldn’t you prefer spending it for something you always wished for like new car, child’s education, etc. If you are covered under CI insurance, you can be rest assured that your savings won’t be impacted and you’re financially prepared to fight against major terminal illnesses. There are many critical illness plans and riders in the market. Some stand- alone plans provide cover only against one critical illness like cancer whereas there are riders that provide critical illness coverage but they have to be purchased with another plan. Some critical illness plans have limitation on the sum assured whereas some do offer a sum assured as high as Rs 1 crore. One critical illness plan which covers 17 critical illnesses and provides a sum assured of Rs 1 crore is Edelweiss Tokio Life – CritiCare+. What distinguishes this plan from the others? This plan provides a multi claim option where the policyholder can claim thrice. So if he/she is diagnosed by a second critical illness the cover will be provided and the premium is waived off after the first claim. Edelweiss Tokio Life – CritiCare+ seems to be a good plan that can help one bounce back from a critical illness.
