July 22, 2021

The incidence of critical illness cases in India has been on the rise. Illnesses such as cancers, cardiovascular diseases, chronic respiratory diseases, and diabetes account for 60% of total deaths in India. The number of new cancer cases each year is 12.3 lakhs and this figure is expected to increase 5 times by the year 2025. As per figures released by WHO, the cancer cases are going to multiply by 70% in the next two decades. The cancer disease alone accounts for 7% of deaths in India. With over 12 lakh heart disease cases, India accounts for 60% of heart disease patients worldwide.

These statistics is signaling towards the rising trend of critical/serious illnesses in India and it urges the need to have a critical illness cover that can help to pay the treatment expenses incurred in critical illness. We never know when the health uncertainties will strike us and how to tackle the situation emotionally and financially both. Financial back up to safeguard yourself against the treatment expenditure and other allied expenses is essential. Relying on your savings to encounter such critical illness expenditure is not prudent.

Thus, there is a need for an alternative arrangement to combat financial expenditure in case a critical illness is diagnosed.

What is Critical Illness Insurance Plan & How it works?

A critical illness (CI) insurance plan is a special category of health policy that pays the sum insured as a lump sum amount of acquiring a serious ailment. A CI policy offers ‘fixed benefit’ as a lump sum, on the diagnosis of a critical illness. The lump sum benefit available under this type of plan helps you to cover the cost of care and treatment, recovery expense, paying off debts, compensation for lost income due to decreased earning capacity, etc.

The illnesses which are usually covered as critical illness include cancer, heart attack, stroke, kidney failure, coma, or heart valve surgery, etc. Suppose, you are diagnosed with a heart attack or any other covered critical illness, the insurance company will pay you the lump sum amount irrespective of the cost involved in treatment.

Where to buy from?

A Critical Illness plan is available with a life insurance company, general insurance company, or standalone health insurance company. Also, you may visit an insurance web aggregators website which act s a comparison portal  and help you compare the critical illness plans available in the market. The policy terms for a critical illness insurance cover is more or less same, whether you are buying with a life or non-life insurer. The key aspect to choose between a standalone policy and a rider, depends on your requirement.

Best Critical Illness Health Insurance policies in India

Plan Name Number of Critical Illnesses Covered Sum Insured (min/max) Survival/Waiting Period Premium Entry Age (min/max)
Care Assure Plan 20 major illnesses Rs 5 lakhs to 1 crore Survival Period: Not Applicable
Waiting Period: 90 days
3,367 Min: 18 years
Max: 65 years
HDFC ERGO Health Optima Vital Plan 37 critical illnesses Rs 1 lakh to 50 lakhs Survival Period: 30 & 90 days, depends on illness
Waiting period: 90 days
3,835 Min: Adult: 18 years; Children: 18 years
Max: Adult: 65 years; Children: 25 years
Max Bupa CritiCare Plan 20 major illnesses Rs 3 lakhs to 2 crores Survival Period: 30 days
Waiting period: 90 days
2,368 Min: 18 years
Max: 65 years
Bajaj Allianz Critical Illness Insurance Plan 10 Major Critical Illnesses Rs 1 lakh to 50 lakhs Survival Period: 30 days
Waiting period: 90 days
3,000 Min: Adult: 18 years, Children: 6 years years
Max: Adult: 65 years, Children: 21 years
Star Criticare Plus Plan 9 Major Critical Illnesses Rs 2 lakhs to 10 lakhs Survival Period: Not Applicable
Waiting period: 90 days
(Also covers regular hospitalization)
Min: 18 years
Max: 65 years

(Premium is calculated for 30 years aged individual for sum insured of Rs 10 lakhs)

What is not included under a Critical Illness Health Insurance Plan?

Following are the conditions that are usually not included in a Critical Illness Plan contract.

    • Any Illness, sickness or disease other than those specified as Critical Illness
    • Any pre-existing illnesses/diseases
    • Any claim within waiting period is not covered
    • Treatment received outside India
    • Any Critical Illness directly or indirectly associated with AIDS/HIV
    • Condition arising due to alcohol or drug use
  • Participation in a criminal activity or a breach of law with criminal intent
  • Attempted suicide
  • Intentionally self inflicted Injury, etc.

(Exclusions may vary from one insurer to another and one plan to another.)

Why should you buy a Critical Illness Insurance?

Cover for treatment cost: A prostate cancer surgery requires around Rs 3 to 6 lakhs, kidney transplant costs around 3 to 14 lakhs, cost of bypass surgery varies in between 2 to 6 lakhs, breast cancer surgery cost approximately 2 to 4 lakhs. A critical illness treatment cost is quite huge, which will drain off all your life’s savings and even then you may not be able to pay all the treatment bills. Buying a critical illness (CI) cover will pay a lump sum amount which will help you to pay for the treatment cost without any financial worries.

Serves as a financial backup: The incidence of a critical illness leads to loss of income due to poor health conditions and it becomes tough for you to manage your family’s monthly expenses. With a lump sum amount payable in a CI cover, you need not to worry about your family’s expenses while taking treatment for a serious illness.

Saves you from taking debts: Critical illness patients have to liquidate all of their assets, savings & investments to pay the cost for critical illness treatment. It disrupts the financial stability and they need to take debts for maintaining the finances. A critical illness plan pays a fixed benefit for the treatment and you don’t need to take any loan for meeting the treatment cost or other essential family’s expenses.

Peace of mind: By buying a CRITICAL ILLNESS insurance cover, you know that you will get a fixed amount that will easily cover the treatment cost, in case you are diagnosed with any critical illness. It always gives you a relief.

All about Critical Illness Insurance Plan

What are the benefits under Critical Illness Insurance?

Lumpsum Benefit: Critical illness insurance plans offer a lump sum amount equal to the sum insured amount of being diagnosed with the listed critical illness. This payout helps the insured to pay for the cost of treatment and recovery expenses. Under most of the CRITICAL ILLNESS plans, this benefit is payable subject to the applicable waiting period and survival periods. Some insurers such as Edelweiss Tokio Life and Bharti AXA Life offer cover for multiple claims as well.

Income Benefit: A specific percentage of the sum insured is payable on the monthly basis for a fixed period. This benefit is usually payable for 5 years post diagnosis of the critical illness and mostly, it is applicable under plans offering cancer cover.

Waiver of Premium: The future premiums are waived off upon diagnosis of the covered critical illness for the remaining policy period or for a specified period, as applicable under the policy chosen.

Types in which you can avail a Critical Illness Cover

As a Rider: Critical illness cover can be opted as an add on cover along with your basic health insurance plan or a life insurance plan. Critical illness cover opted as an add on or rider only provides you with a restricted sum insured, not exceeding the basic health policy sum insured. Also, the number of critical illnesses covered may be limited, leading to a restricted coverage.

As a Standalone Insurance Plan: Having a standalone critical illness health insurance policy provides you the flexibility to choose the coverage, as per your need. You will have a vast list of critical illnesses covered with a standalone policy.As far as features are concerned, riders are imposed with restrictions and choosing a standalone critical illness policy will be an advisable move.

Tax Benefits of Critical Illness Insurance Plans

A critical illness policy is basically a health insurance policy and it offers tax benefits towards the premiums paid under section 80D of the Income Tax, 1961.The critical illness rider taken with your life insurance policy also gets the tax deduction under section 80 D.

For the premium paid by you for medical insurance for you, your spouse, & kids, the tax deduction you can avail is up to Rs 25,000 when none of you is aged above 60 years. You can also avail tax benefit up to Rs 25,000 for covering your non-senior parents. For you or parents is exceeding 60 years of age, a tax deduction of Rs 30,000 is applicable till the financial year 2017-18 which will be increased to Rs 50,000 from financial year 2018-19.

Critical Illness Insurance Plan – An essential cover over and above your basic Health Insurance Policy

Merely buying a basic health insurance plan may not suffice to combat the gigantic treatment expenses to treat a critical illness. Your basic health insurance policy is limited to hospitalization expenses maximum up to the limit of the sum insured which may fall short to treat a critical illness and allied expenses. Your basic health insurance plans are plans of indemnity which means whatever is the actual expenditure that much amount is only paid to you subject to the terms and conditions under your basic health insurance cover.

 A Critical Illness health insurance plan acts as a second degree of health protection cover which gives you an additional financial protection to treat the diagnosed critical illness.Critical illness plans are also known as FIXED BENEFIT health insurance plans and does not work on the principle of indemnity. The entire sum insured is payable to you in case of a critical illness diagnosis. It is up to you how to utilize that claim money and the insurance company has nothing to do with  it.Also, it should be opted over and above your basic health insurance plan to avail comprehensive health coverage.

How to choose the best Critical Illness Plan in India?

Size of cover: The size (sum insured) of the critical illness plan varies, depending on the critical illness you may suffer with. The sum insured is chosen in a manner that it should at least cover the cost of diagnosis of illness & recovery expenses. The treatment cost of critical illness is quite hefty and usually, its diagnosis costs around Rs 10 to 15 lakhs. It would be better to opt for a sufficient cover that pays for the entire cost of the diagnosis. Also, don’t forget to consider medical inflation, while opting for a CI cover.

Illnesses covered: The number of critical illnesses covered is also a major determining factor while opting for a policy. It’s better to choose a critical illness insurance policy having the higher number of critical illnesses covered. You must also check whether different organs are covered against critical illnesses, so you would be able to get a wider coverage.Most of the insurers offer coverage for illnesses including cancer, heart attack, stroke, kidney failure, heart valve replacement, major organ transplant, coronary artery bypass surgery, etc. If you have a family history of any major illness, make sure it is covered under the policy.

Survival & Waiting Period: Survival period is the specified number of days during which the insured has to survive post diagnosis of a critical illness to avail the benefits applicable under the policy. The waiting period is the time duration for which the insured has to wait after buying the policy to make the claims admissible under the plan. It is advisable to choose a critical illness plan, which comes with the least or no survival period and waiting period, so you don’t have to wait for availing cover in the event of medical emergency.

Check sub limits: Sublimits place a monetary restriction on the benefits payable for certain critical illnesses, as specified in the plan. You are advised to pick a plan with zero sublimits or least sublimits.

Lifetime Renewability: With lifetime renewability, you have the flexibility to renew your critical illness plan lifelong irrespective to your age. It’s wise to choose a critical illness plan which comes with a lifetime renewability option.

Compare plans: Before you choose a plan for buying, it is essential to compare critical illness plans, benefits online and chose the one that offers maximum benefits. Also, check claim settlement ratio of the insurers and pick the one that has a good claim settlement ratio (95% or above), which increases the probability for settling the claims.


Final Thought

A critical illness is fatal in nature. Taking timely treatment will help you to get rid of the illness. Considering the hefty cost involved in its treatment, it would be a better option to opt for an adequate critical illness cover. Before buying a critical illness cover, it’s essential to read through the exclusions mentioned in the policy document and choose a policy that offers appropriate coverage.

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