Critical Illness Insurance
Key Highlights
- Pays for the expensive treatments and much cheaper than an indemnity plan.
- These plans offer fixed benefit coverage and insured will get full sum insured irrespective of whether hospitalized or not.
- Most plans may have survival clause and the insured must survive for at least 30 days after diagnosed with critical illness to file claim.
- The details of coverage and number of critical illnesses covered can vary from insurer to insurer.
- Balancing between comprehensive health insurance policy and critical illness plan can give a good coverage.
- pay for the costs of the care and treatment;
- pay for recuperation aids;
- replace any lost income due to a decreasing ability to earn; or even
- fund for a change in lifestyle
The table below will shed some light on the need for every individual to have a Critical Illness plan, especially given the prevalence of such a lifestyle for the average Indian:
| Critical Illness | Data Points (India) | Some of the Causes |
|---|---|---|
| Heart Disease |
|
|
| Cancer |
|
|
| Alzheimer’s Disease |
|
|
| Kidney Ailments (Chronic Kidney Disease – CKD) |
|
|
| Stroke |
|
|
What are the factors to keep in mind while buying a Critical Illness Plan?
What are some of the key Critical Illnesses Covered?
Some of the most covered Critical Illnesses across the insurance companies in India include:
- Cancer
- First Heart Attack
- Open Heart Coronary Artery Bypass Grafting (CABG)
- Open Heart Replacement Or Repair Of Heart Valves
- Coma
- Kidney Failure
- Stroke
- Major Organ Transplant
- Bone Marrow Transplant
- Permanent Paralysis Of Limbs
- Motor Neuron Disease
- Multiple Sclerosis
- Aplastic Anaemia
- Bacterial Meningitis
- Loss Of Speech
- End-Stage Liver Disease
- End-Stage Lung Disease
- Fulminant Viral Hepatitis
- Major Burns
- Muscular Dystrophy
- Alzheimer’s disease
- Aortic surgery
- Aplastic anaemia
- Benign Brain tumour
- Blindness
- Deafness
- Paralysis
- Parkinson’s disease
- Severe burns
This list is not an exhaustive list of all covered Critical Illnesses by all insurers. Insurance companies cover different critical illnesses under different plans within their product offerings. Different insurance companies also have a different set of Critical Illnesses they cover…please go through their covered illnesses before deciding on the optimum plan for your requirement.
So what are some of the Features of Critical Illness Insurance Plans?
There are quite a few important features of Critical Illness insurance plans that one must note: Critical Illnesses (CI) Defined – The most important feature is that under the CI Plan Coverage, there are defined number of illnesses only covered. All insurance companies provide a list of the illnesses/ailments that are covered so that the applicant will be aware of what’s covered. Kindly note that any ailment/illness other than those named/listed by the insurance company will not be covered. Some important ones that all insurance companies cover include First Heart attack, Cancer, Kidney Failure, Stroke etc.
Survival Period – Every CI policy comes with a survival period benefit, this means that post detection of the critical illness, the insured will need to survive this period in order to ensure the claim becomes payable. This is normally 30 days. Hence for example, if one has suffered a Stroke, he/she will need to survive 30 days and then the claim is payable. This is important to note, so incase the insured unfortunately passes away during the survival period, then there is no claim paid by the insurer.
Single Lump-sum Payment – The insurer pays the sum insured as a single lump sum payment for the treatment of covered illnesses, subject to crossing the survival period. What is important is that since this is a fixed benefit plan, the sum insured is p aid in full, irrespective of the expense incurred. For example, if the Sum Insured of the policy is ₹5 lacs and the treatment expenses are only ₹3 lacs, the entire SI of ₹5 lacs will be paid to the insured.
Simple Claim Processing – The documentation at the time of a claim under the plan is very minimal given that the policy covers defined illnesses/conditions for which supporting documentation needs to be provided for the claim to be settled The claim can be easily settled based on the diagnosis report(s) submitted by the insure
Income Tax Benefits under a CI Insurance Policy – The policyholder can avail tax deductions under the Income Tax Act, 1961. Tax exemption can be claimed upto ₹15,000 under Section 80D of the Income Tax Act, 1961. Senior citizens can avail tax benefit up to ₹20,000 under the same section.
Loss of Job / Income – Following a critical illness, it is most likely that the insured may need to stay away from work for a period of time or may even have to give up his/her job based on their health condition. Hence the claim is used as an income replacement for the insured.
Policy Termination on Claim Payment – Unlike a regular Indemnity based health insurance plan, in a CI policy, once the claim is settled on detection of a covered critical illness and crossing the survival period, the CI policy will automatically cease to be in force.
What are the factors to keep in mind while buying a Critical Illness Plan?
There are quite a few factors to keep in mind while investing in a Critical Illness Plan:
| Factor to be kept in mind | Remarks |
|---|---|
| Should you buy a Standalone Critical Illness Insurance Policy or Critical Illness Insurance Rider? | A standalone CI has a higher premium when compared to a rider, since it offers more comprehensive coverage when compared with the latter. |
| Number of Critical Illnesses Covered (Range from 6 – 40) | The insurance company lists the exact illnesses covered under their plan. Important to note that no other illnesses/ailments will be covered |
| Sum Insured | There are CI plans which offer coverage for even upto ₹100 lacs, one must opt for an optimum sum insured depending on their age, family history, pre existing medical conditions etc |
| Age of Insured | This is an important factor which determines the coverage / premium for the CI plan. |
| Survival Period / Waiting Period | All CI plans come with a survival period, normally 30 days, post which claims are settled. There is also a mandatory waiting period of 30 days from the start of the policy during which no claims are payable at all. |
| Maximum Entry Age | Each plan has a maximum entry age after which the applicant will not be able to apply for a CI policy, this is normally 60-65 years. |
Health Insurance Plans vs Critical Illness Plans
These type of plans are also known as Fixed Benefit plans (Critical Illness) and Indemnity Based plans (Health Insurance) and the table below highlights the important differences between the two plan from an individual’s perspective. It is recommended that since both these plans are complimentary to each other, every individual should ideally have both plans for their protection.
| Critical Illness Plans | Health Insurance Plans |
|---|---|
| Pays a lumpsum upto Sum Insured on the occurrence of the covered event. Even if the actual expenses are less than the Sum Insured, the amount is settled in full. | Reimbursement/cashless settlement only upto the actual expenses incurred irrespective of the Sum Insured |
| These plans cover only a limited / fixed set of benefits which are defined in the plan | Most indemnity based health insurance plans offer wide ranging coverage for sickness to the insured |
| Policy / Plan expires in the event of a claim and the Sum Insured being settled to the insured | Policy continues even after a claim is paid, coverage will remain upto the balance remaining Sum Insured (or back to 100% SI with Restore Benefit plans) |
| Fixed Benefit plans normally do not have a co-pay or deductible. Full Sum Insured settled to the insured | Indemnity plans have a co-pay / deductible based on the plan chosen by the insured |
| Some Fixed Benefit Plan like Critical Illness have Survival periods (normally 30 days) after which expenses / SI becomes payable | No Survival Period. Expenses from Day 1 of hospitalisation are payable under this plan. |
| Premium for these plans are relatively higher | Premiums based on coverage/SI chosen, but cheaper when compared to Fixed Benefit plans |
| Normally chosen for covering Critical or Life Threatening ailments | Purchased to cover more routine medical expenses following a sickness/accident |
The WWWWWH of Critical Illness Cover?
| Who Should buy CI? | Ideally everyone needs this policy but let’s look at a few customer profiles:
|
| Why Should you buy CI? | Given today’s lifestyle led by most Indians and given that we are unfortunately leaders in the world in terms of diabetes, cardiac issues, hypertension, increasing stress levels, pollution, having a CI policy to protect individuals financially is important |
| When Should you buy CI? | At the earliest given opportunity, but most definitely if one is in the age group of 35-65 years. |
| What CI policy Should you buy? | Do a market survey of the products and opt for a plan with the following:
|
| Where should I buy CI from? | If one would like to review and compare all the available CI plans in the market, visit a comparison website that provides information specific to Critical Illness plans. |
| How should I buy CI? | One can purchase the same online following a simple three step process:
|
What are the documents that are required to be submitted for a Critical Illness claim?
The Insured will need to submit the below mentioned documents for the processing of Critical Illness Claim:
- Identity proof of the claimant
- Dully filled Claim form
- Copy of Hospital summary/Discharge card/treatment advise / medical reference
- Copy of Medical reports/records
- Copy of Investigation reports
- Doctor’s certificate
- Any other relevant document as requested by the Insurer.
On receipt of claim documents from Insured, Insurer shall evaluate the admissibility of claim as per Policy terms and conditions. Upon satisfactory completion of assessment of the claim, the Insurer will make the payment of benefit as per the contract. In case if the claim is repudiated Insurer will inform the Insured about the same in writing with reason for repudiation. Lack of documents or medical certificates confirming the diagnosis of illness or undergoing of medical/surgical procedure will result in forfeiture of the claim.
In the event of any doubt regarding the appropriateness or correctness of the diagnosis, the Insurer shall have the right to call for an examination of the Insured in concurrence with Insured or his legal representative on the evidence used in arriving at such diagnosis, by a Medical Specialist appointed by the Insurer and the opinion of such Specialist as to such diagnosis shall be considered binding on both the Insured and the Insurer.
In the event of death of the Insured post the survival period, the immediate family member/relative of the Insured and claiming on Insured’s behalf must inform Insurer in writing immediately and send Insurer a copy of all the required documents to prove the cause of death within 14 days. Insurer upon acceptance of the admission of claim under the Policy shall make payment to the Insured or Nominee/legal heirs of the Insured, in case of the death of the Insured post the survival period.
Exclusions under the Critical Illness Policy
Some of the major exclusions under the CI policy are as follows. However go through the entire set of exclusions as available in the policy wordings received from the insurance company along with the policy kit.
- Benefits will not be available for any Pre- Existing conditions or related condition(s) or any complications arising thereof for which Insured has been diagnosed, received medical treatment, had signs and / or symptoms, prior to inception of Insured’s first Policy, unless such a condition is stated in the Proposal form and specifically accepted by the Insurer and endorsed thereon
- Insurer shall not be liable to make any payment under this Policy in connection with or in respect of any Insured Event during the Waiting Period as defined under the Policy
- Any diseases causing the death of the Insured within the stipulated Survival Period, measured from the date of incidence of the illness
- Any medical procedure or treatment, which is not medically necessary or not performed by a Medical Practitioner
- Any congenital Illness/Conditions
- Any Covered Critical Illness arising from Birth control procedures and/or hormone replacement therapy and any complications arising thereof from
- Any treatment/surgery for change of sex or any cosmetic surgery or treatment/surgery /complications/illness arising as a consequence thereof
- Any Covered Critical Illness arising from Treatment by a family member and self medication or any treatment that is NOT scientifically recognized and any complications arising thereof / there from
- Attempted suicide (whether sane or insane) or intentionally self inflicted Injury or Illness
- Sexually transmitted conditions, mental or nervous disorder, , Acquired Immune Deficiency Syndrome (AIDS), Human Immune deficiency Virus (HIV) infection
Critical Illness Mediclaim
TATA AIG
Bajaj Allianz
Max Bupa
Care(formerly Religare)
Reliance
Cholamandalam
HDFC ERGO
Universal Sompo
SBI
