Pick right policy to remain insured

Insurance is the most important part of your financial planning as it helps you avoid erosion of your hard-earned savings in the event of emergencies. but, for this, you need to choose the right product.

One of the best things you can do for the financial safety of your family is to get insurance early in life. Getting a combination of life, health, accident, and critical illness covers would help safeguard you from most of life’s vagaries. With a health and critical illness cover, your savings would be protected if you suffer from an illness needing hospitalisation. In case of your untimely death, a life and accident cover would protect the financial interests of your family members in the long run.

You should get these insurance covers when you become financially independent, and keep upgrading the values of your covers as your income, and your family's dependencies on you, increase. Naturally, it’s easier to get these covers when you are young and healthy. Your premium costs would also be lower. With age, your health risks increase and so do your premium costs. But it becomes particularly difficult to buy insurance once you’ve had a critical illness.

If you’re experiencing this difficulty, what are your options? Can you still buy life, health and critical care insurance covers? Let's take a look.

Buying life insurance after critical illness

An insurer reserves the right to provide a life insurance cover to a person who has been diagnosed with a serious illness. If the insurance seeker is seen to be at higher risk, he may be denied insurance or be charge a higher premium. For example, smokers pay a higher life and health insurance premium than non-smokers due to their greater exposure to carcinogens.

As a person diagnosed with a serious illness, your life insurance options are limited. Broadly, you have three options.

1.  You can avail a low sum assured and a low policy term. This way, you are at lower risk in the eyes of the insurer, and thus have better chances of being provided a cover. However, you would be subjected to medical testing processes. If the results of your test are favourable as defined within the rules and regulations of an insurer, you may receive your coverage. However, if you are found to be at high risk in the results, you may be turned down.

2.  Be part of a group insurance cover. This would be either through your employer or through the employer of a family member who could list you as a dependent. For example, you may be a senior citizen who can be listed under your son’s employer-provided group insurance. Such insurance covers remain in force till such time as the insured is employed. At the end of the employment, the insured has the option of continuing the coverage by converting it into a retail policy whose premium he must pay.

3.  You could buy a personal accident cover. Such covers do not require medical check-ups and can be bought even if you have a pre-existing ailment. Accident policies can cover death, permanent or partial disability, and also temporary disability.

Buying health insurance after critical illness

If you are trying to buy a health insurance plan after suffering from a critical illness such as cancer or a heart attack, you will face challenges. Firstly, a critical illness is defined differently by each insurer. One insurer may have a list of only 10 critical illnesses while another may have 20. Some critical illnesses may be more severe than other. For example, a cancer of the lung may be more serious than skin cancer.

How insurers cover someone who has had a critical illness is subjective. A terminally ill person won't be able to get a cover. A person who has had multiple occurrences of a critical illness like a heart attack is also unlikely to get it.

However, ano-ther candidate who has had, for example, a heart surgery, has recovered substantially from it, is on a minimal regime of medicines, exercises regularly and has a healthy diet has a higher likelihood of getting a health cover.

However, insurers arrive at the decision to grant or not to grant a health cover following a thorough examination of the applicant’s hea-lth. If the tests reveal the applicant to be at high health risk, it is unlikely he would get a cover.

Health policies also allow waiting periods for pre-existing diseases. For example, you may not make a claim for four years for any hospitalisation caused by diabetes.

To avoid these assortment of difficulties in buying insurance after having a life-threatening disease, it is advisable to secure yourself when you are young and healthy. Not only would your premiums be lower, you would also be able to avoid extensive medical testing and enjoy longer tenures in your coverage.