Importance of Critical Illness Insurance

WHAT IS CRITICAL ILLNESS INSURANCE ?

Critical illness insurance covers specified illnesses viz. cardiac arrest, coronary artery bypass surgery, cancer, multiple sclerosis, kidney failure, major organ transplant, etc. Policies for such illnesses are issued by life insurance and general insurance companies. This is available as a separate product or as a rider in a normal medical insurance policy. The person insured pays an extra premium (between Rs.3000 to Rs.8500), depending upon the term, age, coverage and desired sum assured.

FEATURES & BENEFITS

• It covers specified number of illnesses (10 in some cases of rider policies and 30 in case of most stand alone policies)



• There is a premium guarantee for a certain number of years for most policies (can change subject to approval of the Insurance Regulatory and Development Authority)



• Average age of entry is 6 years, but varies widely from product to product



• Coverage term and age up to which covered (up to 75 years is considered to be optimum) varies from policy to policy



• Survival condition expressed in number of days (example 30 days) in some policies for claim admittance



• Waiting period for claims in almost all cases (typically 3-6 months)



• Claim payments made as per pre-decided payouts (as a percentage of the sum assured are typically 50% to 100%.) Some policies limit the claim for particular illnesses



• After the claim payout is made for an illness, balance sum assured can be carried forward for other illnesses (offered by some policies - this is a very useful option)



• Benefit amount is paid over and above the other medical policy claims, as this is a defined benefit policy



• Tax benefits available under section 80D or 80C of the Income Tax Act, depending upon the plan structure

ANALYSIS - DO YOU NEED ONE?

Well, do you need one? The answer is yes. At times like these, one does not need the additional stress of worrying about expensive treatments.

We are of the opinion that the policy is not a replacement for a medical insurance - it is an additional coverage, for a specific need .

Here are some check points to enable you to take the decision:

• Assess your family health history, nature of work, financial capacity to absorb such an expense, etc.
• Take a view on the age up to which the cover is sought
• Study your policy benefit details
• Study the claim history of your insurer