How to choose between Disease-Specific and Critical Illness insurance plans
Critical Illness Plan
A critical illness policy pays a fixed sum equal to the sum insured if the policyholder suffers from one of the 20-30 specified diseases, including cancer , kidney failure, stroke, heart attack, organ transplant, severe burns and many more.
Features
- It covers an array of critical illnesses.
- This gives customers more value for their investment.
- This enables customers to take care of expenses arising due to the illness, which can be related to renting a room near the hospital or taking a second opinion or just travelling.
- The idea behind critical illness plans is to compensate the life assured for future loss of income that may arise due to the critical illness.
Coverage
- The number of critical illnesses covered by the insurers may vary. However, most insurers generally cover 8 to 20 major critical illnesses, including cancer, stroke, heart attack, organ transplant, kidney failure, aorta surgery, heart valve replacement, paralysis, loss of limbs, and loss of speech.
- The coverage amount is generally anywhere from Rs 1 lakh upwards.
How much to be insured?
In general, it is suggested to take a cover of or above Rs 20-40 lakhs considering the current healthcare costs.
Waiting period
Generally, the policyholder needs to survive for 30 days after the diagnosis of the critical illness to make a claim. However, some companies even provide policies with zero or 28 days surviving period.
The waiting period is mostly the first 90 days after the policy is issued. Claims made within 90 days are not covered under the policy.
Here is a competitive analysis of the yearly premium for a CI cover of Rs 10 lakh for a 30-year-old non-smoker male residing in a metropolitan city.
*Source: www.policybazaar.com
Disease-Specific Plan
Insurance policies that cover a single disease like cancer or heart ailment are becoming popular, given the high incidence rates of these ailments and the ensuing expensive treatment. These seem to be replacing critical illness policies which were, typically, used to enhance the cover of a person who already had a standard health insurance policy.
Features
- A disease-specific plan provides cover for the cost of entire treatment of a specific disease at all stages including diagnosis stage to advanced treatment.
- The key highlight of a disease-specific plan is that unlike a critical illness plan, it waives future premium of the insured under certain circumstances.
- These plans are comparatively cheaper than critical illness covers as they are precisely designed for individuals looking for a low-cost insurance to cover a specific disease they may feel they are most prone to.
- People with a family history of a particular critical disease must buy a disease-specific plan along with a regular health insurance plan.
Coverage
- A disease-specific plan provides coverage for a specific disease .
- Such diseases include cancer, diabetes, kidney ailments, cardiac ailments, hypertension, stroke and even dengue at all stages — early or advanced.
- Such a plan helps in saving significantly on premium and takes care of the financial burden in case of a life-threatening situation.
- The insured is paid a lump sum amount or the medical expenses are indemnified.
How much to be insured?
Although generally, a Rs 50 lakh sum assured is sufficient for most diseases, one may go for a higher amount to be mentally and financially secure.
Waiting period
The waiting period in case of the disease-specific products is completely waived.
Enclosed below is a competitive analysis of the yearly premium for a disease specific cover of Rs 10 lakh for a 30-year-old non-smoker male residing in a metropolitan city.
*Source: www.policybazaar.com
Disease-specific plans offer affordable premium
One cannot predict the illnesses that one may contract during the course of life. A critical illness plan that covers 13-30 critical illnesses provides better protection. Wide coverage, however, also impacts the premium which may make it unattractive to many. A disease-specific plan bridges this gap by offering an affordable premium and by keeping the focus on 1-2 deadly illnesses—cancer and heart ailments. These disease-specific plans offer to pay a part of the lump sum in the early stages of specified illness, compared to critical illness (CI) plans.
These plans are thus popular for those whose genetic background indicates a high risk of either cancer or heart issues. While these plans are a great way to start, one must expand this coverage to all critical illnesses to be well protected.
One can consider a new class of indemnity-based CI and disease specific (DS) plans that offer (i) cover from stage zero (ii) life-long renewability even after claim and (iii) sum insured year-on-year. These plans don’t offer lump sum but pay for hospitalisation.
Critical Illness Plan v/s Disease-Specific Plan
| Key Features | Critical Illness Plan | Disease-Specific Plan |
| Purpose | It is designed for 10-30 life-threatening diseases. | It is the supplemental insurance that works in case of only one specific disease. |
| Waiting Period | It has a survival period generally of 30 days. | It has a waiting period of 30 days. |
| Coverage | It provides coverage for in-patient hospitalization, diagnosis, and medication. It also bears the expenses related to air ambulance cost, chemotherapy & radiotherapy cover, dialysis cover, organ donor cover, second opinion, and annual health check-ups. | It provides coverage for pre and post hospitalization, domiciliary hospitalization, daily allowance, domestic ambulance cover, and annual health check-ups. |
| Premium | It has a higher premium amount. | Its premium amount is comparatively less. |
| Diseases covered | Cancer
End-Stage Renal Failure Multiple Sclerosis Benign Brain Tumour Motor Neuron Disorder End-Stage Lung Disease Major Organ Transplant Coronary Artery Bypass Graft Stroke Paralysis Myocardial Infarction Coma Blindness End-Stage Liver |
Cancer
Diabetes Hypertension Kidney ailments Cardiac ailments Hypertension Stroke Dengue |
| Who can buy | Individuals looking for protection against above listed critical illnesses or people with pre-existing diseases. | Individuals who have the risk of inheriting specific diseases or family history of any above disease. |
Debalina Roy Chowdhury
Dilzer Consultants
Sources :
9 April 2020