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Why to Include Critical Illness Insurance In Health Insurance Portfolio?

Given that life is unpredictable and misfortune could befall anyone, it is always advisable to stay one step ahead and secure your future with health insurance policies. 

In this case, we are talking about critical illness insurance. Here’s why critical illness insurance is necessary for everyone:

  • Safety 
  • Benefits to the breadwinner 
  • Benefits in times of inflation 
  • Claim process 

Due to the “n” number of diseases that one is at risk of developing, disease-specific insurance policies are called critical illness plans. The idea is to safeguard yourself and stay stress-free by being prepared for such a situation.

What is a critical illness insurance plan? 

Critical illnesses are dreadful diseases that cause a direct impact on the physical, emotional, and internal of a person. It not only drains you physically and mentally but also impacts your earning capacity to a great extent. A critical illness policy provides financial support to protect you from these conditions. The treatment of critical illnesses is very expensive and may not be affordable. Using up all your savings by spending them for treatment and disturbing the house budget is not fair and can put your financial future in danger. 

In some situations, the payment of treatment costs leads to bankruptcy as the costs involved here are very high. Critical illness insurance provides the necessary coverage and guarantees lumpsum pay-out on the diagnosis of the diseases. The policy protects you from financial burden if such a situation arises thereby guaranteeing you safety and self-sufficiency.

Why should I buy a critical illness policy? 

Let me answer this question with an example – Suppose you go to a shop and want to buy 5 ice creams. I have 7 ice creams. I deny the request of you buying 5 ice creams by saying that I can offer you only 2 as that is your limit. In such a situation, it would be unfair to you that even though there was an availability you could not get what you demanded. 

In the same way, regular health insurance includes the clause of sub-limits. Under this clause, the insurance company that is providing you overall coverage sets limits to each disease costs that can be incurred. Now to understand it, use the above example and substitute the number of ice creams I had with the sum insured you will have and the number of ice creams you required to the treatment expenses incurred, and finally, the ice creams offered to the usable coverage. In short, it means that you may end up footing some part of the medical bill from your personal savings.

If you have critical illness insurance, the coverage offered or the sum insured guaranteed will be used completed for the particular disease, and no sub-limit will be set.

Features of critical illness plan:

  1. Waiting period –

Every insurance policy has an initial waiting period of 30 to 90 days. Within the initial waiting period, if any illness occurs within 90 days or if the insured witnesses death within 30 days, then the insurance company is not liable to cover any losses. The occurrence of any event after the initial waiting period will be entertained.

  1. Death bonus –

With every claim being made the insurance company will keep deducting the death bonus that was originally offered. Lesser claims help safeguard the death bonus for the insured’s loved ones.

  1. Lump-sum pay-out 

After serving the initial waiting period, the insurance company will guarantee to protect the insured’s interest. If the insured is diagnosed with the critical disease for which coverage is offered then the insurance company will hand out a lump-sum payment to cover the treatment cost. The insurer will also be available for the insured on every stage of recovery thereby, providing the promised support.

  1. Tax exemption –

The purchasing of a critical illness insurance plan allows an individual to enjoy tax benefits under section 80D of the Income Tax Act, 1961. The tax deduction extends from Rs.25,000 at the lower end to Rs1 lakh at the upper, subject to actual expenditure, of course.

  1. Pre-medical tests –

The logic of regular health insurance is applicable here. It means that an individual opting for critical illness plans below the age of 45 years does not need to compulsorily undergo pre-medical tests. It stays optional. But if the person is above 45 years and is opting for the plan, then undergoing a pre-medical test is absolutely mandatory.

  1. Pre-existing diseases –

If the policy purchaser has already been diagnosed with the disease, then the individual will stay uncovered. Critical insurers do not provide coverage to an individual who is already suffering from the said disease. It is like insuring a burning house.

  1. Day-care procedures –

While undergoing treatment if the insured needs to get admitted for a short-term treatment like in cancer insurance, chemotherapy is considered as a day-care procedure. Critical insurance plans cover day-care procedures under their policy.

The final decisions needed to be taken by the policy purchaser is: 

  1. The sum insured that is required by the policy purchaser.
  2. The diseases to be covered.
  3. The method of paying the premium; whether periodic or lump sum.
  4. The company of their choice.

Why does one need to purchase a critical illness insurance plan?

  1. Safety –

If one’s family has a history of a particular disease, buying a critical illness plan helps them to protect themselves from the financial burden that may arise shortly. Critical illness insurance plans provide financial safety to the insured.

  1. Breadwinner –

If the bread earner or winner of the family is diagnosed with such a dreadful disease, then to treat them the costs incurred need to be borne by themselves. While getting treated, the insured may need to take many leaves and may need to rest. In such a situation the office at which he is working will not agree to give paid leaves for months thereby losing the only source of income. In case of the death of the breadwinner, the insurance company provides a death bonus that helps cover the family expense for a stipulated period.

  1. Inflation –

Soon, the treatment costs of diseases will increase at a very rapid pace and such costs will get accentuated. It is safe to say that it may become unaffordable to receive quality treatment, and thus having a disease-specific or critical illness policy will help. The policy will provide the necessary financial protection.

  1. Claim process –

The claiming process under the critical illness policy is very simple. The insured needs to just inform the insurance company about the diagnosis, and the insurer will release a lump sum pay-out. On exhaustion of the money, further claims can be made. The insurance company will be there to provide the safety and security guaranteed while purchasing the policy. The lump-sum payout can be used for treatment or any other purpose.


Are hereditary issues the only way that one can suffer from critical illness insurance?

No, there are other ways and means through which an individual can suffer from critical illnesses. Few of them can be, having an unhealthy lifestyle, increasing age is also a reason, some diseases can also transfer due to sexual contact. Hereditary issues are the most common way of transmitting critical illnesses although there is no such study that guarantees this transmission. Having a healthy lifestyle helps in protecting oneself from getting exposed to such conditions.

What are the coverages offered under critical illness policies?

For receiving coverage under critical illness plans, one needs to complete the serving of the initial waiting period that lasts between 30 to 90 days. Post the initial waiting period, the insurance company will provide coverage for various diseases such as:
Heart attack.
Kidney failure
Organ transplant
Bypass surgery

And more. One can choose a policy based on their decision.

What are the various documents that need to be submitted while filing for a claim?

To file a claim, the insurance company needs to keep proof of the various expenses incurred to submit. The claim needs to be filed within 45 days after the insured is informed about the condition they are undergoing. The documents required are:
The claim form needs to be duly completed.
The discharge summary provided by the hospital/care center (Original only)
Treatment or consultation papers.
The various tests that have been undertaken and their reports. If the doctor has given a signed requisition slip, then that too needs to be submitted.
Final hospitalization bill that includes the break-up of various expenses (Original only)
If any purchase of medicines has been made, the bills need to be provided.

Apart from these, if the insurance company demands any documents they need to be submitted. Once the insurance company receives the aforesaid documents, the claim will then be accepted, and funds will be transferred after authentication.

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