Life is getting more and more sedentary, as reflected clearly in the figures that show a continuous rise in the number of critical illnesses surfacing in present times. We all know that getting them treated costs a fortune. Hence, a critical illness plan for yourself and/or your family members is imperative, especially with the medical expenses skyrocketing.
Life is unpredictable, and there may be instances when your family needs more financial support than what you have managed to save up. A critical illness cover makes getting through such difficult times trouble-free, at least financially. Health insurance surely acts as a reliable financial aid when you need it the most.
Before contemplating purchasing it, let us skim through the pros and cons of a typical critical illness health insurance plan.
What Is a Critical Illness Health Insurance Plan?
Critical illness health insurance policies are synonymous with health insurance policies. While a health insurance policy covers general medical requirements with specific exclusions, a critical illness insurance policy covers only a set list of critical illnesses and surgical procedures.
Before getting into the pros and cons of a critical illness policy, you must know of some unique pointers associated with it. Some of the pointers are listed below:
- List of critical illnesses covered: The set list for critical diseases that are covered under the policy.
- Procedures for filing claim: How to file for a claim and the claim payout options. E.g., there can be a lump sum payout or a staggered payout option or both under a critical illness cover.
- Renewal benefits: Benefits that are made available to you upon renewal of the policy.
- Age eligibility: The eligible age to enter the policy.
How It Differs from Regular Health Insurance
Critical illness insurance differs significantly from standard health insurance. While regular plans reimburse hospitalisation expenses, critical illness plans provide a fixed payout upon diagnosis of a listed illness. This payout is not linked to actual treatment costs and can be used for any purpose, including lifestyle expenses or income replacement.
Lump Sum Payout Feature Explained
One of the defining features of critical illness insurance is the lump sum payout. Upon diagnosis of a covered illness and meeting policy conditions, the insurer pays the entire sum insured at once. This helps cover treatment costs, recovery expenses, and even loss of income during the recovery period.
Illnesses Typically Covered Under Critical Illness Plans
Cancer, Heart Attack, and Stroke Coverage
Most plans cover major illnesses like cancer, heart attack, stroke, kidney failure, and coronary artery bypass surgery.
Kidney Failure, Organ Transplant, and Other Major Conditions
Advanced conditions such as organ transplants, paralysis, and multiple sclerosis are often included, depending on the policy.
Pros of Critical Illness Health Insurance Plans
The pros and cons listed below will provide you with a better understanding of a critical illness plan. Let’s check them out:
The Pros:
Critical illness covers can help you in paying off costly medical expenses for a particular set of diseases. If any illness gets diagnosed and meets policy requirements, you receive a lump sum or staggered payout to meet the medical condition.
As a critical illness policy covers specific critical illnesses, it offers a more significant cover at a price lower than other comprehensive medical insurance plans.
Critical illness payouts are exempt from taxes under Section 80D of the Income Tax Act.
A critical insurance policy covers you even when you avail of the treatment in a foreign country. This means that the policy can assist you also if you need to go abroad for further medical treatment.
Lump Sum Benefit to Cover Non-Medical Expenses
The payout can be used for expenses beyond hospital bills, such as travel, home care, or daily living costs.
Income Replacement During Recovery
It acts as a financial cushion if you are unable to work due to illness.
Affordable Premiums Relative to Coverage Amount
These plans often provide high coverage at comparatively lower premiums than comprehensive plans.
Tax Benefits Under Section 80D
Premiums paid qualify for tax deductions, reducing your overall taxable income.
Flexibility in Using the Payout
Unlike traditional insurance, there are no restrictions on how the payout is used.
Cons of Critical Illness Health Insurance Plans
Limited to Specific Listed Illnesses
Coverage applies only to illnesses explicitly mentioned in the policy.
Survival Period Clause Before Payout
Most policies require the insured to survive a specified period (e.g., 30 days) after diagnosis to receive the payout.
Waiting Period and Exclusions
Initial waiting periods and exclusions may delay eligibility for claims.
No Coverage for Routine Hospitalisation
Regular hospitalisation and minor treatments are not covered under these plans.
One-Time Payout with Policy Termination After Claim
After the payout is made, the policy typically terminates, ending further coverage.
Who Should Consider Buying a Critical Illness Plan?
Only after carefully weighing the pros and cons should you select a critical illness insurance plan for yourself or your family member. Read the terms and conditions of the critical illness plan document carefully before signing it. Ensure that you read the exceptions and exclusions to get the right cover. Also, go for a plan that fulfills the maximum requirements with minimum exclusions.
Individuals with Family History of Critical Illnesses
Those with genetic predispositions should strongly consider this coverage.
Self-Employed and Those Without Group Insurance
Individuals without employer-provided insurance benefit greatly from the financial protection offered.
People in High-Stress or High-Risk Occupations
Professionals in demanding or hazardous jobs may face higher health risks.
Critical Illness Plan vs Regular Health Insurance: Key Differences
Coverage Scope
Regular insurance covers hospitalisation expenses, while critical illness plans cover specific diseases only.
Payout Mechanism
Regular plans reimburse bills; critical illness plans provide a fixed lump sum.
Suitable Use Cases
Critical illness plans are ideal for income protection, while regular plans handle routine medical costs.
Should You Buy a Critical Illness Plan as a Standalone or Rider?
Standalone Plan Benefits
Standalone plans offer higher coverage and broader illness lists.
Critical Illness as a Rider: Pros and Cons
Riders are cost-effective but may offer limited coverage compared to standalone policies.
How to Choose the Right Critical Illness Insurance Plan
Checking the List of Covered Illnesses
Ensure the plan includes illnesses relevant to your health risks.
Evaluating the Sum Insured
Choose a sum insured that can cover both treatment and recovery expenses.
Reading the Survival Clause and Waiting Period
Understand policy conditions to avoid claim rejections.
Conclusion
ManipalCigna offers the Lifestyle Protection Critical Care plan to cover you against around 30 critical illnesses. While the basic plan offers protection against 15 critical illnesses, the enhanced ManipalCigna Lifestyle Protection Critical Care plan offers coverage for close to 30 different critical illnesses. You receive the entire payment of your sum insured on first diagnosis of any of the listed illnesses.
Frequently Asked Questions
What is covered under a critical illness insurance plan?
It covers major illnesses like cancer, heart attack, stroke, and organ failure as specified in the policy.
Is critical illness insurance worth buying?
Yes, it provides financial support beyond medical bills, especially during income loss.
What is the survival period in critical illness insurance?
It is the minimum duration the insured must survive after diagnosis to be eligible for payout.
Can I have both regular health insurance and critical illness insurance?
Yes, both complement each other by covering different types of medical and financial risks.
What is not covered in a critical illness plan?
Routine treatments, minor illnesses, and conditions not listed in the policy are not covered.
