Critical illness insurance is designed to support you when life takes an unexpected and serious turn. A major diagnosis does more than affect health. It can interrupt income, alter daily routines, and create financial pressure that lasts long after hospital discharge. While regular health insurance takes care of medical bills, it may not address the wider impact of a critical illness.

This cover offers a lump-sum payout on the diagnosis of specified serious conditions. The amount can be used freely, whether for treatment, recovery, household expenses, or lifestyle adjustments. There are no usage restrictions, which provides much-needed flexibility during a stressful phase.

Understanding how critical illness insurance works, what it covers, and when it pays out helps you make informed decisions. This guide breaks down every key aspect in a clear and practical way, helping you evaluate whether this protection fits into your long-term financial planning.

What is Critical Illness Cover?

A medical condition that typically translates to a longer-term treatment course, which can be life-threatening or fatal, is defined as a critical illness. The road to recovery from such an illness can often be long, hard, and riddled with high costs and uncertainties. Plus, you may be required to undergo surgery or other forms of treatment for an unknown period of time. Cancer, for instance, is considered a critical illness since a patient diagnosed with cancer may need surgery, chemotherapy, and radiation.

With its extensive treatment period, the diagnosis of a critical illness like cancer can be physically and mentally draining for the patient, emotionally draining for their loved ones, and financially draining for the family member funding the treatment costs. However, your health insurance provider allows you to eliminate this last aspect of the equation by offering a critical illness cover.

A critical illness cover or policy essentially enables you to manage the costs of treating a critical illness. Under this policy, the insurer provides the financial compensation, typically a lump sum amount, that you can use to fund the treatment costs. Insurers may offer critical illness cover as an additional rider to an existing health insurance policy, or as a standalone policy.

How does a Critical Illness Policy work?

Let’s assume your relative has been diagnosed with a critical illness, say cancer. Their doctor has recommended surgery, followed bhow-does-a-critical-illness-policy-work?y six rounds of chemotherapy, and possibly, radiation treatment. The patient must start the first round of chemotherapy 21 days after the surgery and maintain a gap of 21 days between each chemotherapy session. As such, the treatment period is inconclusive.

To enable the patient to concentrate on their treatment, the insurer typically provides the sum insured as a lump sum or as a staggered payout to the policyholder. In case of the latter, the insurer pays a fixed percentage of the sum insured as a lump sum (generally 25%), and the remaining amounts in EMIs spread across a specific duration.

So, if your relative has a critical illness policy worth ₹20 lakhs, the insurer pays the sum insured amount, depending on their chosen payout model. However, the policyholder can file a claim only after riding out a waiting period and an initial survival period after being diagnosed with a critical illness. The policyholder can use the insurance payout to pay for the treatment costs, as and when they come up.

Why is Critical Illness Insurance important?

Investing in critical illness insurance proves to be a wide, prudent decision for many reasons:

A critical illness policy helps cover the costs of a wide range of illnesses that are designated as critical by the IRDAI. Such a policy helps you bear the high costs associated with treating long-term illnesses, which could otherwise burn a huge hole in your pockets. The sums insured under these policies are usually high, and you can choose to get a lump-sum payout, so you don’t have to keep filing claims at regular intervals.

Since a critical illness diagnosis can impact your ability to work and provide for your dependents, you can use the sum insured amount to cope with your everyday expenses. The high sums insured under a critical illness cover empower you to afford the best medical treatment, without having to compromise. The premiums charged against critical illness insurance policies are usually low, especially if you purchase the policy when you are young, fit, and healthy. You can save money further since any investment in health insurance plans makes you eligible for tax deductions under Section 80D of the Income Tax Act.

List of Diseases Covered Under a Critical Illness Policy

The best critical illness insurance plans typically cover you against up to 30 ailments and resulting medical conditions classified as critical by the IRDAI. The commonly covered illnesses include:

Remember to check the list of diseases covered under your health insurance with critical illness cover before purchasing the policy to ensure you are eligible for coverage against the maximum illnesses.

If you wish to buy the best critical illness insurance plan with the best coverage options, you should consider the factors listed below.

Check the Sum Insured

Since critical illnesses result in long-term, expensive treatment, you must ensure you purchase a policy with a high sum insured. You can find policies with sums insured ranging from ₹1 lakh to ₹25 Crore.

Assess the Coverage Terms

You can never really predict which illness you may be diagnosed with in the future. As such, the wise thing to do is to select a policy that covers the maximum number of critical illnesses.

Evaluate the Inclusions and Exclusions

Every insurance policy has a list of ailments, treatments, and costs, which the insurer covers or excludes from coverage. It is thus vital to evaluate the inclusion and exclusion criteria under your chosen plan.

Review The Survival Period

To file a critical illness insurance claim, you first need to survive an initial period to receive the claim amount. It thus makes sense to choose a policy with a considerably lower survival period.

Verify the Exit Age

Most critical illness plans come with an exit age (usually 50 years), after which your coverage ceases. So, it is best to choose one with a high exit age or opt for a policy with lifelong renewability benefits.

Critical Illness Insurance: The Ideal Customers

As they say, illnesses see no caste, gender, or age. Therefore, anyone who can afford it should buy a critical illness policy. However, if you identify with any of the scenarios mentioned below, you should most definitely invest in medical insurance with critical illness cover.

If you have a family history of critical illnesses

If your parents/their siblings have had any critical illnesses, you must invest in a critical illness plan, as these illnesses usually have genetic components, enhancing your chances of being diagnosed with them.

If your lifestyle habits are not ideal

Studies have shown that critical illnesses are common among people who work, eat, and sleep at odd hours. If this is what your daily life looks like, you must certainly invest in critical health insurance plans.

If you work a high-pressure job

Do you often work erratic hours or have a job that requires you to meet unattainable targets or stringent deadlines? If yes, you could be susceptible to critical illnesses, so you must get insurance.

How to Buy a Critical Illness Plan Online?

Today, you can buy critical illness insurance plans online. The steps to do so are incredibly simple, as mentioned below.

1. Research different insurers and choose the one offering the best critical illness cover.
2. Shortlist your preferred plan, submit scanned copies of the requested KYC documents, and make the payment through the insurer’s online portal.
3. Fill out the proposal form sent by the insurer and provide truthful, accurate details about your lifestyle habits (smoking, drinking), medical history, etc.
4. If requested by the insurer, be prepared to undergo a medical check-up or certain tests scheduled by them.
5. The insurer will assess whether you are eligible for critical illness insurance coverage and communicate the decision to you.

If you are deemed eligible, the insurer will send the policy documents to your email and/or registered home address. If not, they will refund the premium paid by you during the purchase process.

You can also buy health insurance with critical illness cover offline by visiting your chosen insurance provider’s office or nearest branch, or through an insurance agent. The steps are more or less the same as the online process, except agents may charge a non-refundable fee/commission for their services.

Filing a Critical Illness Insurance Claim – The Steps To Follow

In the unfortunate event that you are diagnosed with a critical illness, your first reaction may be to panic or be grief-stricken. However, if you have medical insurance with critical illness cover, you can at least stop worrying about the expenses and follow these steps to file a claim.

1. Check if the critical illness you are diagnosed with is covered under your critical illness policy.
2. Inform your insurer about your need to file a claim, along with other necessary details such as the illness diagnosed, the date of diagnosis, etc.
3. Fill out the claim form and submit the requested documents, including those proving that you have ridden out the survival period of the diagnosed illness.
4. Wait for the insurer to verify the legitimacy of your claim. It typically takes insurers anywhere from 30 days to 8 weeks to release the claim amount.
5. The insurer approves or rejects your claim based on the evidence presented, after which you will receive the claim amount in your bank account, per the details provided in the claim form.

The claim amount you shall receive will depend on whether you are eligible for a lump sum payment or a staggered payout plan.

Exclusions Under Critical Illness Insurance Policy

Although your critical illness policy offers extensive coverage against various life-threatening illnesses, claims filed under the following circumstances are outside the scope of coverage:

• Illnesses resulting from lifestyle habits like smoking, drug abuse, alcohol consumption, etc.
• Illnesses caused by congenital disorders.
• Critical illnesses are diagnosed before the policyholder rides out the waiting period.
• Claims filed before riding out the survival period after a critical illness is diagnosed.
• Illnesses/medical conditions resulting from incidents of human strife like war, terrorism, etc.
• Reproduction-related assistance, fertility, and hormone replacement treatments.
• Cosmetic enhancement surgeries are not deemed medically necessary.
• Treatments for critical illnesses obtained outside Indian borders

Prepare For the Unexpected – Invest in Critical Illness Plans with Manipal Cigna Health Insurance

The odd thing about critical illnesses is that we often know someone suffering from a critical disease, but seldom expect ourselves to be in their situation. But there’s no telling when such an illness can creep up on you. So, it is always best to prepare in advance and invest in a good critical illness policy. At Manipal Cigna, we offer some of the best critical illness insurance plans with sums insured ranging from ₹1 lakh to ₹25 Crores. What’s more, we provide online services – from buying policies to filing claims. You can visit our website and choose from a range of critical and general health insurance plans.

Conclusion

Critical illness insurance is designed to support you during serious health events where medical bills are only part of the burden. A major diagnosis can disrupt income, exhaust savings, and require long recovery periods. In such situations, a lump-sum payout can offer meaningful financial relief and stability.

Unlike standard health insurance that reimburses treatment costs, a critical illness plan provides complete flexibility. The payout can be used for medical care, travel to specialised hospitals, home nursing, recovery-related expenses, or everyday household needs. This freedom is especially valuable during emotionally and financially stressful times.

Selecting the right plan depends on personal factors such as age, medical history, family responsibilities, and financial commitments. What feels sufficient today may fall short in the future as healthcare costs rise. Reviewing coverage amount and illness lists periodically helps ensure the policy stays relevant.

Awareness plays a key role. Many assume all major illnesses are covered, which is rarely the case. Definitions and eligibility conditions vary across insurers, making it essential to read policy wording carefully. When chosen thoughtfully, critical illness insurance works as a reliable financial cushion, allowing individuals and families to focus on recovery rather than expenses.

FAQs

• What illnesses are typically covered under a critical illness policy?

Critical illness policies cover a fixed list of serious medical conditions. While coverage varies by insurer, most plans include cancer, heart attack, stroke, kidney failure, and major organ transplants. These illnesses are covered due to their high treatment costs and long-term impact.

Common categories include cancer-related conditions, heart and neurological disorders, organ failure, and major surgeries. Some policies may also cover advanced conditions such as Parkinson’s disease, Alzheimer’s disease, paralysis, or loss of limbs. Coverage depends on how the illness is defined and the severity specified in the policy terms.

• How much payout can I expect from a critical illness plan?

The payout is a fixed lump sum based on the sum insured selected at purchase. It is paid once the diagnosis meets policy conditions. Coverage amounts can range from a few lakhs to several crores.

The final payout depends on factors such as the chosen sum insured, type and severity of illness, policy structure, and whether coverage reduces after a claim. Once approved, the entire amount is paid at once, without the need to submit hospital bills, allowing flexible usage.

• Is there a waiting period before critical illness coverage begins?

Yes, most plans include a waiting period, usually between 30 and 90 days from policy start. Claims are not accepted for diagnoses made during this period.

In addition, a survival period applies, requiring the insured to survive for a set number of days after diagnosis, commonly 14 to 30 days. These conditions are standard and help set clear expectations for coverage activation.

• Are pre-existing critical conditions covered under these plans?

Pre-existing critical illnesses are not covered immediately. Insurers usually apply a waiting period of two to four years for such conditions. Full disclosure of medical history is mandatory, as non-disclosure can result in claim rejection. Some conditions may also be permanently excluded, depending on the policy.

• What documents are required to file a critical illness claim?

Claims require documents that confirm diagnosis and policy validity. These typically include a completed claim form, policy copy, identity proof, medical reports, diagnostic test results, and a doctor’s certificate. Some insurers may request additional hospital records or specialist opinions. Submitting complete documents helps ensure faster claim processing.