What is Critical Illness Insurance & What’s Covered?

Most of us already have health insurance plans, so the question that hits every mind is what is critical illness insurance, what is covered by critical illness insurance, who needs it, and when do I need to take critical illness insurance, and isn’t my existing health insurance plan enough to cover everything? Well, here is all you need to know about critical illness insurance.

What is Critical Illness Insurance?

Critical illness insurance, also known as catastrophic illness insurance, is insurance that pays you a lump sum amount on being diagnosed with a disease that could prove fatal. A list of such diseases covered for the purpose of critical illness insurance is provided in the policy. Generally, it covers cancer of certain stages and types, Alzheimer’s disease, Parkinson’s disease, major head trauma, and other severe illnesses. It is also referred to as dread disease, which falls under the predetermined list as a part of an insurance policy. A critical illness policy is contracted to the policyholder and is made a lump-sum cash payment when the policyholder is diagnosed with one of the specific illnesses. It is also known as critical illness cover.

What does Critical Illness Insurance offer?

Critical illness insurance cover offers financial security against various life-threatening diseases. The list of critical illnesses covered is given by the company, which ensures the coverage of all the expenses that are incurred if a person is suffering from severe health conditions. This cover has been designed especially to give protection against several life-threatening diseases or sicknesses. These types of health insurance covers ensure that the diseases do not burn a hole in our pocket. Therefore, it would be a smart move to add a critical illness cover or insurance to your health insurance policy. Some of the major examples of critical illness are kidney failure, heart attack, paralysis, cancer, and many more. Below is the list of critical illnesses for which the company significantly offers to pay the expenses of the patient with serious health problems. Though the coverage of diseases may differ from one insurance company to another, it generally covers the following list of diseases:

• Permanent paralysis
• Last stage lung disease
• Cancer beyond a certain stage
• Kidney failure requiring regular dialysis
• Alzheimer’s disease
• Parkinson’s disease

Diseases Covered in Critical Illness Insurance

The 36 critical illnesses are as follows:.

• Heart attack
• Heart valve replacement because of abnormalities or defects in the body.
• Aorta surgery with the help of laparotomy or thoracotomy.
• Kidney failure
• Stroke
• Cancer
• Major transplantation of an organ such as the heart, kidney, lungs, liver, or bone marrow
• Fulminant viral hepatitis, which is massive necrosis of the liver caused by a virus that may lead to liver failure
• Multiple sclerosis
• Primary pulmonary arterial hypertension
• Paralysis with the complete and permanent loss of one or all the limbs, also known as paraplegia
• Permanent or total deafness
• Permanent or total blindness
• The permanent loss of speech
• Parkinson’s diseases
• Coma
• Degenerative brain disorder, or Alzheimer’s disease
• Third-degree burns or major burns on the body covering at least 20% surface of the body
• Terminal illness
• Motor neurone disease
• Chronic lung disease
• Chronic liver disease
• A major head trauma
• Muscle dystrophy
• Chronic persistent bone marrow failure, which leads to anemia
• Benign brain tumor
• Encephalitis
• Poliomyelitis
• Bacterial meningitis due to an inflammation of brain membranes or the spinal cord
• Craniotomy or brain surgery
• Full-blown AIDS
• AIDS contracted by medical staff, where it is caused due to an injury or an exposure to the contaminated blood
• If the victim has contracted AIDS due to the blood transfusion when receiving infective blood
• The universal necrosis of the brain cortex, or Apallic syndrome
• Various other serious coronary heart diseases are caused by the narrowing of the lumen of the three major arteries: the circumflex, RCA (right coronary artery), and LAD (left anterior ascending artery).

The above-mentioned diseases fall under the category of critical illness insurance. If the person wants to claim this insurance, they should have their diseases verified with blood tests, an MRI, or a CT scan as per the requirement. It must be done under the supervision of a certified medical professional. With all these procedures, the factor of transparency is a must. Wherein it is essential to disclose any existing illness, deficiency, or disorder that the person might be suffering from during that time period.

Who needs critical illness insurance?

Needless to say, insurance is something everyone should buy. It’s a cover against potential risk, and when we are talking about something that is life-threatening, it’s something that shouldn’t be ignored. We can say the following people are advised to definitely take up this insurance:

• Having a family history of any such disease
• Sole financial supporters of the family
• Involved in high-pressure jobs
• Anyone above the age of 40 years

Benefits of Critical Illness Insurance

Here are some benefits that may convince you to purchase critical illness insurance for yourself and your loved ones to tackle critical illnesses which may plague them in the future.

1. Back up for your health insurance

Generally, critical illness insurance is sold as a standalone insurance. However, some insurers offer it as an add-on to their regular health insurance plans. If your insurer offers the policy as an add-on, including it with your existing insurance can prove to be much more beneficial. While your primary policy can cover regular healthcare requirements, the critical illness aspect can cover a range of critical conditions.

2. Covers major illnesses

Medical insurance policy usually covers basic illnesses. However, critical illness insurance covers diseases related to the heart, lungs, kidneys, as well as surgeries related to these. Oftentimes, health insurance in India may not offer coverage for critical illnesses, which poses a major disadvantage if you or your family member were to be diagnosed by it. Opt for critical illness insurance to avoid having to pay out of pocket for the treatment in such situations.*

3. Acts as a source of income

Oftentimes, critical illness might cause a person to get affected in such a manner that they might not be able to work again for a brief period or permanently. Losing a source of income can cause problems in paying for the medical expenses as well. The pay-out you receive from the critical illness health insurance policy can be used not just for paying for the treatment costs, but it can also be used as a financial support to take care of household and other vital expenses.*

4. Provides tax benefits

Another added benefit of going for critical illness insurance is the tax benefits offered with the policy. These benefits are:

• Tax deduction of Rs.25,000 on premium paid for self, partner, and children. Additional deduction of Rs.25,000 on premium paid for parents under the age of 60 years.**
• If the parents are above the age of 60 years, the tax deduction limit increases to Rs.50,000. This allows you to avail total deduction of Rs.75,000.**
• If you, your partner, and your children are above the age of 60 years, the deduction limit is Rs.50,000. Additional deduction of Rs.50,000 can be claimed on premium paid for parents above the age of 60 years.**

Factors considered before taking critical illness insurance?

Sum insured: The total sum insured is the maximum amount that will be paid by the insurance company in case of a claim made for any critical illness. This amount is usually 10–15 lakhs. Waiting period: The waiting period is the time the policyholder has to hold on before he can make a claim under critical illness insurance. Survival period: This is the period the claimant has to survive after being diagnosed with the disease. Number of diseases covered: The larger the coverage, the better it is for policyholders. But the premium amount also varies based on coverage of diseases. The higher the number of diseases covered, the higher the premium will be. Renewability age: There are some companies that have a bar over the age of policyholder for this specific insurance, like critical illness insurance, which might not be available beyond the age of 60 years. Choose a critical illness policy or rider: Rider means the critical illness insurance is dependent on the base policy. Like if the health insurance or Mediclaim is for Rs. 50000, then the critical illness rider shall also be for Rs. 50000 only. On the other hand, the policy can have wider coverage.

Why do you need critical illness insurance?

The need for critical illness insurance arose mainly because we all know that life expectancy has increased with the passage of time. But something that also rose with life expectancy is the cases of such severe life-threatening diseases that too are among the middle-aged population, and the medical expenses are shooting up. A cover for such exorbitant expenses could give a sense of relief.

Conclusion

In conclusion, critical illness insurance is a crucial financial safeguard against unexpected health challenges. It offers a lump-sum payout that can help cover medical expenses, lost income, and other associated costs. By understanding the coverage, benefits, and eligibility criteria, you can make informed decisions to protect yourself and your family. *Standard T&C apply ** Tax benefits are subject to change in prevalent tax laws Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.