Why Critical Illness insurance is important?

Shraddha Shitut

21 Jul 2017

Just imagine, you are heading towards home and suddenly you meet with a heart attack? Doctor’s informed your family members to go for angioplasty which will cost you approximate to Rs. 4 lacs. Arranging money by your family members at one go is it really easy? What if you are the only earning person in your family? How will they manage?

For all these questions you have a simple solution so that you will be at least relieved in terms of financial part and that is “Critical Illness Policy”.

What is critical illness?

Critical illness means life threatening disease like Cancer, Kidney failure, Major Organ Transplantation, Paralysis, Coma, etc. Critical Illness is an insurance product in which the insurer has to make a lump sum cash payment if the policyholder is diagnosed with any of the specified illnesses.

Why do I need Critical Illness?

  • Survival benefit: If the insured person suffers from certain specific critical conditions then the insurance company provides a lump sum, tax free payment to a policy holder. The policy holder needs to survive a minimum number of days from when the illness was first diagnosed which can also be called as Survival period.

  • Cost of critical illness is very high: Cost of critical illness is very high. There might be possibility that cash to pay for medical treatments are not covered by your health plans. So you might need Critical Illness insurance policy to cover all the expenses related to the listed critical diseases.

  • Financial downfall: Cost of critical illness is pretty high. Affording those treatments is not everyone’s cup of tea. It’s not necessary that your health insurance policy might support for such critical illness as the treatment cost is much higher.

  • Lump sum benefit: The insurance company makes a lump sum cash payment if the policy holder is diagnosed with one of the specified illnesses on a pre determined list.

List of Critical Illness included in the policy

Following are the list of diseases which might vary from company to company

  • Cancer

  • Stroke

  • Heart Attack

  • Coronary Artery Bypass Surgery

  • Kidney Failure

  • Major Organ Transplant

  • Multiple Sclerosis

  • Coma

  • Paralysis

  • Dismemberment

  • Loss of Independent Existence

  • Aortic surgery

  • Blindness

  • Deafness

  • Muteness (loss of speech)

  • Major Burns

  • Benign Brain Tumor

  • Occupational Injury - HIV

  • Motor Neuron Disease

  • Alzheimer’s Disease

  • Parkinson’s Disease

  • Cystic Fibrosis

  • Heart Valve Replacement

Exclusions in Critical Illness Policy

Following are the exclusions for which your insurance company will not provide you the cover:

  • HIV/AIDS infection

  • Death within 30 days of diagnosis of critical illness

  • Any illness due to smoking, tobacco, alcohol or drug intake

  • Treatment done outside India

  • Critical conditions or consequences due to pregnancy or childbirth, including Cesarean

  • Infertility treatment

  • Critical Illness diagnosed within 90 days from the inception of the policy.

  • Any dental care or cosmetic surgery

  • War, terrorism, civil war, navy or military operations

  • Illness occurring due to internal or external congenital disorder

  • Things to remember while purchasing Critical Illness Insurance Policy

Things to remember while purchasing Critical Illness Insurance Policy

  • Lower your age; lower the premium and higher the Sum Insured: While purchasing the critical illness policy, you need to ensure your coverage should be 5 times double your annual income. Lower is your age; lower will be the premium and you can get higher sum insured.

  • Maximum Number of diseases covered: In Critical Illness Policy, maximum number of diseases covered. It depends upon company to company, how many diseases can be covered.

  • Claim process: Before you purchase the policy, you need to understand the claim process for critical illness policy.

  • Maximum Age for Renewal: Always prefer buying policy that does not have any age limit for renewing your policy. Choose that company who provides you lifelong renewal cover.

  • Inclusions and Exclusions: Before you buy the policy you need to understand what all diseases included in the policy and which are excluded. There might be possibility that one insurance company might provide you 19 Critical Illness and other company might provide you 30 Critical Illness. So, compare and decide which suits you the best.

  • Standalone Critical Illness Policy or a Rider: The coverage provided in standalone policy is more in comparison to the rider. Even though the rider provides the same set of critical illness policy the coverage amount might be less. This is because the rider has been dependent on base policy with which it has been clubbed.

How can you claim?

If policy holder is diagnosed or underwent with surgical procedure under Critical Illness Policy then the policy holder should immediately inform insurance company. Further communication will be communicated to policy holder through various modes like email/telephone/fax/in person or may be via letter or any other suitable mode. Upon receipt of information, insurance company will register the claim under a unique claim number.

Insured person needs to submit the below mentioned documents for the processing of Critical Illness Claim:

  • Identity proof of the Claimant

  • Duly filled claim form

  • Copy of Hospital summary/Discharge card/treatment advise/Medical reference

  • Copy of Medical reports/records

  • Copy of Investigation reports

  • Copy of Doctor’s Certificate

  • Any other relevant document as requested by the company

Critical Illness v/s Health Insurance

Rahul was diagnosed with Cancer. After coming to know about his major disease, he was completely collapsed. He thought his health insurance policy of Rs. 3 lacs might take care of expensive treatment that he would require on regular basis. As the severity of his illness was pretty high and he was not able to focus on his work, he started facing losses in his business. There are lot of people who fail to understand difference between Critical Illness Policy and health insurance policy. Let us now understand the difference.

Critical Illness v/s Health Insurance

Features Critical Illness Health Insurance
Definition Life threatening diseases like cancer, heart attack, stroke, paralysis, etc. Covers all hospitalization expenses.
Advantage Basis on first diagnosis, an insured person can claim for the entire sum insured. Hospitalization is not mandatory. Cashless and reimbursement option available. Hospitalization is mandatory
Waiting period 90 Days waiting period 30 days waiting period
Coverage Restricted coverage as it covers specified list of diseases. Extensive coverage, including hospitalization expenses.
Tenure Generally, 10-20 years policy 1 year policy and customer can renew every year

Best Critical Illness Insurance Policies in India

Insurer Name Plan Name No of diseases covered Sum Insured Available Key Features
Religare Assure 20 5 lacs till 1 cr
  • Critical Illness, Medical Events and Surgical Procedures – 100% Sum Insured
  • Survival Period – Zero Days
  • Tax benefit
Cigna TTK Enhanced 30 1 lac to 3 cr
  • First 90 days waiting period
  • 30 days Survival Period
  • Tax Benefit
HDFC Ergo Critical Illness - Silver Plan 8 2.5 lacs till 10 lacs
  • First 90 days waiting period
  • Tax benefit
  • 30 days survival period
Apollo Munich Optima Vital 37 1 lac till 50 lacs
  • E-opinion
  • 30 Days Survival Period
  • First 90 days waiting period
  • Tax Benefit
Star Health Criticare Plus 9 Rs. 2 lacs till Rs. 10 lacs
  • 30% Co pay above 60 years of age
  • No Survival Period
  • First 90 Days Waiting Period

How much it will cost you?

Insurer Name Plan Name Premium (in Rs.)*
Religare Assure 3,367/-
Cigna TTK Enhanced 2,368/-
HDFC Ergo Critical Illness - Silver Plan 2,950/-
Apollo Munich Optima Vital 3,250/-

*Note: Premium is calculated for the Age between 25-30 years and Sum insured 10 lacs.

Conclusion

Treating a critical illness takes time and money. If you are an earning member and are diagnosed with a major illness, you will have to skip work to get treatment for it. This leads to a big trouble:

  • You lose your monthly income

  • Expenses will increase because of frequent visits to the hospital, expensive medical tests and medicines that will be required for complete recovery

In this case, a health insurance plan will only reimburse your hospitalisation costs. A critical illness not only cover just hospitalisation costs but helps you cover other expenses like doctor consultation fees, cost of medicines etc. In addition to this, let us assume you have taken 20 lakhs cover in critical illness and you are diagnosed with heart attack. The cost of your hospitalization and surgery goes around Rs. 5 lakhs. As you have purchased Critical Illness policy you will be receiving lump sum amount of Rs. 20 lakhs. This will help you to focus on getting better rather than worrying about expenses. This is one of the important benefit because let us assume if you have any outstanding loan like a home loan or a car loan, the critical illness pay-out can help with dealing with the outstanding EMIs. If you do not have Critical Illness cover, your hard earned money might get affected. It might be possible you may need to break your savings. The high cost of treatment can destroy years of savings in just a few months.

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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Why Critical Illness insurance is important?

Shraddha Shitut

21 Jul 2017

Just imagine, you are heading towards home and suddenly you meet with a heart attack? Doctor’s informed your family members to go for angioplasty which will cost you approximate to Rs. 4 lacs. Arranging money by your family members at one go is it really easy? What if you are the only earning person in your family? How will they manage?

For all these questions you have a simple solution so that you will be at least relieved in terms of financial part and that is “Critical Illness Policy”.

What is critical illness?

Critical illness means life threatening disease like Cancer, Kidney failure, Major Organ Transplantation, Paralysis, Coma, etc. Critical Illness is an insurance product in which the insurer has to make a lump sum cash payment if the policyholder is diagnosed with any of the specified illnesses.

Why do I need Critical Illness?

  • Survival benefit: If the insured person suffers from certain specific critical conditions then the insurance company provides a lump sum, tax free payment to a policy holder. The policy holder needs to survive a minimum number of days from when the illness was first diagnosed which can also be called as Survival period.

  • Cost of critical illness is very high: Cost of critical illness is very high. There might be possibility that cash to pay for medical treatments are not covered by your health plans. So you might need Critical Illness insurance policy to cover all the expenses related to the listed critical diseases.

  • Financial downfall: Cost of critical illness is pretty high. Affording those treatments is not everyone’s cup of tea. It’s not necessary that your health insurance policy might support for such critical illness as the treatment cost is much higher.

  • Lump sum benefit: The insurance company makes a lump sum cash payment if the policy holder is diagnosed with one of the specified illnesses on a pre determined list.

List of Critical Illness included in the policy

Following are the list of diseases which might vary from company to company

  • Cancer

  • Stroke

  • Heart Attack

  • Coronary Artery Bypass Surgery

  • Kidney Failure

  • Major Organ Transplant

  • Multiple Sclerosis

  • Coma

  • Paralysis

  • Dismemberment

  • Loss of Independent Existence

  • Aortic surgery

  • Blindness

  • Deafness

  • Muteness (loss of speech)

  • Major Burns

  • Benign Brain Tumor

  • Occupational Injury - HIV

  • Motor Neuron Disease

  • Alzheimer’s Disease

  • Parkinson’s Disease

  • Cystic Fibrosis

  • Heart Valve Replacement

Exclusions in Critical Illness Policy

Following are the exclusions for which your insurance company will not provide you the cover:

  • HIV/AIDS infection

  • Death within 30 days of diagnosis of critical illness

  • Any illness due to smoking, tobacco, alcohol or drug intake

  • Treatment done outside India

  • Critical conditions or consequences due to pregnancy or childbirth, including Cesarean

  • Infertility treatment

  • Critical Illness diagnosed within 90 days from the inception of the policy.

  • Any dental care or cosmetic surgery

  • War, terrorism, civil war, navy or military operations

  • Illness occurring due to internal or external congenital disorder

  • Things to remember while purchasing Critical Illness Insurance Policy

Things to remember while purchasing Critical Illness Insurance Policy

  • Lower your age; lower the premium and higher the Sum Insured: While purchasing the critical illness policy, you need to ensure your coverage should be 5 times double your annual income. Lower is your age; lower will be the premium and you can get higher sum insured.

  • Maximum Number of diseases covered: In Critical Illness Policy, maximum number of diseases covered. It depends upon company to company, how many diseases can be covered.

  • Claim process: Before you purchase the policy, you need to understand the claim process for critical illness policy.

  • Maximum Age for Renewal: Always prefer buying policy that does not have any age limit for renewing your policy. Choose that company who provides you lifelong renewal cover.

  • Inclusions and Exclusions: Before you buy the policy you need to understand what all diseases included in the policy and which are excluded. There might be possibility that one insurance company might provide you 19 Critical Illness and other company might provide you 30 Critical Illness. So, compare and decide which suits you the best.

  • Standalone Critical Illness Policy or a Rider: The coverage provided in standalone policy is more in comparison to the rider. Even though the rider provides the same set of critical illness policy the coverage amount might be less. This is because the rider has been dependent on base policy with which it has been clubbed.

How can you claim?

If policy holder is diagnosed or underwent with surgical procedure under Critical Illness Policy then the policy holder should immediately inform insurance company. Further communication will be communicated to policy holder through various modes like email/telephone/fax/in person or may be via letter or any other suitable mode. Upon receipt of information, insurance company will register the claim under a unique claim number.

Insured person needs to submit the below mentioned documents for the processing of Critical Illness Claim:

  • Identity proof of the Claimant

  • Duly filled claim form

  • Copy of Hospital summary/Discharge card/treatment advise/Medical reference

  • Copy of Medical reports/records

  • Copy of Investigation reports

  • Copy of Doctor’s Certificate

  • Any other relevant document as requested by the company

Critical Illness v/s Health Insurance

Rahul was diagnosed with Cancer. After coming to know about his major disease, he was completely collapsed. He thought his health insurance policy of Rs. 3 lacs might take care of expensive treatment that he would require on regular basis. As the severity of his illness was pretty high and he was not able to focus on his work, he started facing losses in his business. There are lot of people who fail to understand difference between Critical Illness Policy and health insurance policy. Let us now understand the difference.

Critical Illness v/s Health Insurance

Features Critical Illness Health Insurance
Definition Life threatening diseases like cancer, heart attack, stroke, paralysis, etc. Covers all hospitalization expenses.
Advantage Basis on first diagnosis, an insured person can claim for the entire sum insured. Hospitalization is not mandatory. Cashless and reimbursement option available. Hospitalization is mandatory
Waiting period 90 Days waiting period 30 days waiting period
Coverage Restricted coverage as it covers specified list of diseases. Extensive coverage, including hospitalization expenses.
Tenure Generally, 10-20 years policy 1 year policy and customer can renew every year

Best Critical Illness Insurance Policies in India

Insurer Name Plan Name No of diseases covered Sum Insured Available Key Features
Religare Assure 20 5 lacs till 1 cr
  • Critical Illness, Medical Events and Surgical Procedures – 100% Sum Insured
  • Survival Period – Zero Days
  • Tax benefit
Cigna TTK Enhanced 30 1 lac to 3 cr
  • First 90 days waiting period
  • 30 days Survival Period
  • Tax Benefit
HDFC Ergo Critical Illness - Silver Plan 8 2.5 lacs till 10 lacs
  • First 90 days waiting period
  • Tax benefit
  • 30 days survival period
Apollo Munich Optima Vital 37 1 lac till 50 lacs
  • E-opinion
  • 30 Days Survival Period
  • First 90 days waiting period
  • Tax Benefit
Star Health Criticare Plus 9 Rs. 2 lacs till Rs. 10 lacs
  • 30% Co pay above 60 years of age
  • No Survival Period
  • First 90 Days Waiting Period

How much it will cost you?

Insurer Name Plan Name Premium (in Rs.)*
Religare Assure 3,367/-
Cigna TTK Enhanced 2,368/-
HDFC Ergo Critical Illness - Silver Plan 2,950/-
Apollo Munich Optima Vital 3,250/-

*Note: Premium is calculated for the Age between 25-30 years and Sum insured 10 lacs.

Conclusion

Treating a critical illness takes time and money. If you are an earning member and are diagnosed with a major illness, you will have to skip work to get treatment for it. This leads to a big trouble:

  • You lose your monthly income

  • Expenses will increase because of frequent visits to the hospital, expensive medical tests and medicines that will be required for complete recovery

In this case, a health insurance plan will only reimburse your hospitalisation costs. A critical illness not only cover just hospitalisation costs but helps you cover other expenses like doctor consultation fees, cost of medicines etc. In addition to this, let us assume you have taken 20 lakhs cover in critical illness and you are diagnosed with heart attack. The cost of your hospitalization and surgery goes around Rs. 5 lakhs. As you have purchased Critical Illness policy you will be receiving lump sum amount of Rs. 20 lakhs. This will help you to focus on getting better rather than worrying about expenses. This is one of the important benefit because let us assume if you have any outstanding loan like a home loan or a car loan, the critical illness pay-out can help with dealing with the outstanding EMIs. If you do not have Critical Illness cover, your hard earned money might get affected. It might be possible you may need to break your savings. The high cost of treatment can destroy years of savings in just a few months.