Critical Illness Insurance: For the needs you cannot anticipate

Ram is a forty-seven-year-old married man. He has two children, a job with stable income and a retirement fund in place. He was recently diagnosed with cancer and this diagnosis has taken a huge emotional toll on him and his family. However, Ram is a wise man.  A few years back, unaware of what the future held for him, he had opted for a critical illness insurance policy which was in addition to his health insurance policy. The lump-sum payment from the policy has helped him meet his treatment expenses and also partially supplement his household income, which had slowly deteriorated post his diagnosis. By supplementing his health insurance policy with a critical insurance policy, Ram has been able to reduce the financial stress of his illness on his family. Be wise like Ram.

We live in very testing times. A variety of factors that include a changing lifestyle, unhealthy food habits and increasing stress levels are contributing to an unprecedented increase in critical illnesses. Consequently, critical illnesses such as cancer are becoming increasingly common and having a debilitating impact on the lives of many individuals. As per the Indian Council of Medical Research (ICMR) data, India had 14 lakh cancer patients in 2016 and this number is expected to increase. A critical illness is something that not only attacks your health but also your wealth. With the increasing cost of medical treatment, it is quite possible that a plain vanilla health insurance policy might not be able to cover more than a fraction of the cost. Here is where a critical illness policy helps. In India, two out of five cancer patients need to borrow money and sell their assets to cover the cost of hospitalisation which may cause them financial distress. In life, there are certain things that you can control and certain things that you cannot control. Contracting a critical illness might not be something that you can control. However, protecting wealth and reducing the financial burden of the critical illness on your family is something that you can control by opting for a critical illness insurance plan.

What is a Critical Illness Insurance Policy?

A critical illness policy is a defined benefit plan pays out the entire sum assured on the diagnosis of any of the critical illness that your policy covers. This is different from your usual medi-claim or health insurance policy which will usually just reimburse your hospitalisation expenses. Either you need to submit bills after discharge or if it’s a cashless policy, your insurer settles the bill with your hospital. A critical illness policy, on the other hand, just needs proof of diagnosis. You can choose your treatment and you don’t need to be hospitalised.

The Need for a Critical Illness Insurance Policy

A critical illness can often catch you by surprise. While your standard health insurance plan can cover some of the expenses of your critical illness, it is in no way sufficient.  Standalone critical illness plans are better because their disease coverage is more comprehensive and they also cover diseases that may not require hospitalisation. A critical illness insurance plan can help you cover a host of requirements.

• Treating a critical illness may drain away your savings, restrict you from working and earning and affect your routine lifestyle – the lump sum benefit from the critical insurance policy can help you bridge the income gap

• Payout from the critical insurance policy can help you cover the expenses related to treatment, care and recovery

• Payout from the policy may also be useful in substituting lost income, or even in adapting to lifestyle changes in some cases

• Emotional benefit – the emotional burden of a critical illness diagnosis is compounded by the stress of cost. With a critical illness insurance policy, you can reduce the emotional impact as the payout can help take care of your family

Why is it better to opt for a Critical Illness Insurance policy instead of a regular health insurance policy?

• Can supplement a health insurance policy – a Critical Illness Insurance policy can be taken in addition to your existing health cover or employee health insurance plan. Regular health insurance plans are capable of meeting your medical expenses only upto a certain limit. A Critical Illness Insurance policy can further indemnify you by offering you a lump sum benefit just on first diagnosis or advice issued by a medical practitioner

• Can cover more critical illnesses – instead of opting only for a standalone critical illness like a cancer insurance policy, it is better to opt for an insurance policy that covers multiple critical illnesses.

Important Factors that require your attention

1. Inclusions and exclusions: every critical illness is different and can have a different impact on our lives. Please check how many critical illnesses your policy covers.

2. Waiting and survival period: Critical illness policies carry a survival period clause. Once the policyholder is detected with a critical illness, the assured amount is not credited automatically. The policyholder has to survive for a certain number of days, typically 15-30 days after being detected. However, this may vary from one insurance policy to another.

3. Just like any health policy, critical illness policies come with a waiting period within which if the policyholder gets diagnosed with a critical illness, he/she doesn’t get any benefit. This is usually around 90 days from buying the policy and it may vary from one insurance policy to another.

By Dhirendra Mahyavanshi,Co-Founder,Turlemint.