Critical Illness- How to plan for it
What is critical Illness ? How to plan for it?
Critical Illness means an illness, sickness or a disease or a corrective measure like Cancer, Kidney failure, Coronary Artery (Bypass) Surgery, Heart Attack (Myocardial Infarction), Heart Valve Surgery, Major Organ Transplantation, Multiple Sclerosis, Primary Pulmonary Arterial Hypertension , Aorta graft surgery, Paralysis, Coma, Total Blindness and Stroke etc. which requires treatment by a Medical Practitioner.
Critical Illness insurance is the insurance bought for covering the above mentioned life-threatening ailments one can be diagnosed with. This specialized insurance provides a lump sum payment should a policy holder suffer from certain specific critical conditions mentioned in the policy document.
Unlike an indemnity policy which covers hospitalisation, a critical illness plan pays a lump sum on diagnosis of serious ailments which are listed in the policy document.
The lump sum that one gets can be used for various purposes such as to pay for expensive treatments or recuperation aids, making up for the loss of income due to fall in the ability to earn or pay off debts as a result of serious ailment.
A critical illness plan acts as a supplement to the health insurance portfolio.
Critical Illness insurance – Do you need it?
Critical Illness Insurance is needed under the following circumstances
- The regular comprehensive health plan or, a group cover from the employer has a limit on doctors’ fees and will not cover the full cost of treatment in case of a critical ailment.
- A person is diagnosed with a critical ailment that requires specialised care and which the regular health plan does not cover.
- There is a limit on specific expenses like those for medicines, intensive care unit, prosthetics etc and the bill is more than what the insurer will pay.
- Serious illness leads to loss of income, total or partial disability and a drastic change in regular lifestyle. The financial burden could be far more than what an indemnity health plan, which pays hospital bills, will cover.
Buying a critical illness plan is the best way to overcome the above shortcomings.
How to choose the best critical illness plan
Critical illness covers are fixed benefit plans. One gets the full sum insured irrespective of whether one is hospitalised or not or what the treatment expenses are.
However, details may vary from plan to plan. For example, most plans have a survival period clause which states that the insured must survive for at least 30 days after he or she is diagnosed with any critical illness to file the claim. But a few plans, such as ICICI Lombard’s Critical Care, do not have this clause.
The number of critical illnesses covered also varies from plan to plan. For instance, ICICI Prudential’s Crisis Cover covers 35 critical illnesses . Bharti AXA’s Smart Health covers 20 illnesses while Aviva’s Health Secure pays for 12 ailments.
The built-in coverage also differs from policy to policy. While some insure accidental death and partial or total disability due to accidents, some policies do not cover the same.
One should evaluate and compare a few different plans to decide which suits one the best.
Some important points which must be considered while deciding on the critical illness policy are mentioned below :
1.Coverage : One needs to check for the critical illnesses are covered by the policy.
2.Exceptions : One has to check which critical illnesses are not covered by the policy. Also, if a person is diagnosed with a disease before taking the policy, it will not be covered.
3.Claims procedure : One needs to understand the procedure of filing claims and the necessary formalities and documentation involved in advance.
4.Renewal : The benefits a person will get at the time of renewal in case any claims have not be filed needs to be taken care of.
5.Sum assured: The below factors need to be considered while arriving at the required sum assured.
- Cost of treatment and future liabilities that one may incur due to the sudden loss of income caused by a critical illness.
- Age and medical history of the person to be insured.
- The average cost of treating major illnesses to decide the cover size.
- Inflation
6. Standalone or Rider : One may choose to take a separate critical illness cover or simply add a rider to a life or health insurance plan. Usually, the former offers more flexibility in terms of sum assured and a larger cover compared to the later. However, critical illness cover will cost more than a critical illness rider.
- Survival and Waiting Period : The survival and waiting period clauses and the insurance provider’s claim settlement history should be taken into account before making the final decision.
Benefits of Critical Illness Insurance
If a person’s critical illness requires specialised, expensive treatment and causes loss of income, this kind of insurance can come to the rescue.
A health plan usually puts a ceiling on doctor’s fees, hospitalisation bills and medical expenses.
The critical illness cover grants a lump sum when the claim is cleared, leaving one free to use the money to meet any expenses that he or she may want. For instance, in case the critical illness causes loss of income, one may use the lump sum disbursed to pay off an outstanding debt.
Besides, health plans are usually more expensive than critical illness ones.
A prudent combination of the two – Critical Illness Insurance and Health insurance will ensure financial help for a person and the family just when one needs it the most.
Debalina Roy Chowdhury
Para Planner- Dilzer Consultants
Sources
https://www.irda.gov.in/ADMINCMS/cms/Uploadedfiles/Critical%20Illness%20Insurance%20Policy.pdf
http://profit.ndtv.com/news/your-money/article-how-to-choose-the-best-critical-illness-cover-374595
30 Sep 2016