Deterioration in your health is definitely a cause for concern. This is because illnesses disrupt your life. Apart from the inconvenience they cause, some illnesses adversely impact your health and financial situation. Such illnesses are referred to as critical illnesses and you should be well prepared to handle the situation.

Critical illness, life-threatening or severe health conditions, often requires extensive medical care either at home or in the hospital. A standard health insurance plan would not provide adequate protection under such circumstances. You will need critical illness insurance cover. A critical insurance plan does not cover lesser diseases or hospitalisations. It kicks in only when you are diagnosed with a critical condition listed out by your critical insurance policy provider.

How Does A Critical Illness Plan Work?

While a regular health insurance plan reimburses the expenses incurred, a critical illness insurance policy provides you with a lump sum amount. You can utilise the amount to cover the expenses involved while undergoing treatment for the critical illness you are diagnosed with. For example, if you purchased a critical illness policy for Rs. 25 lakh, you can claim the sum assured as soon as the doctor officially diagnoses you with life-threatening disease as per the critical illness list provided by your insurance provider. As the critical illnesses covered vary from insurer to insurer, it is important that you consult with your health insurance provider.

Critical Illness Policy Benefits

A critical illness policy is beneficial in many ways, These include:

Coverage of Medical and Hospitalization Expenses: Medical treatment is very expensive and it often becomes an enormous financial burden if you are diagnosed with a serious illness.

Coverage for Loss of Income: You may have to be off work for several days while undergoing treatment. The critical illness policy covers the loss of income.

Income Replacement: When you are diagnosed with a critical illness, not only you but also your family will be financially impacted. As a critical illness policy pays you a pre-fixed lump sum amount, you can use the funds to meet both medical and household expenses.

Tax Benefits: The payout you receive as part of your critical insurance claim is completely exempted from payment of tax as per Section 80D of the Income Tax Act.

Peace of Mind: If you have a critical illness policy and you are diagnosed with a serious condition, you can focus on treatment without worrying about either the financial implications or the loss of workdays.

Covers a Wide Range of Expenses: If you are diagnosed with any of the ailments listed by your insurers, a lump sum payment is made to you. You have the freedom to use the funds the way you want for hospitalization and treatment, household expenses, loan EMI payments, and children’s school fees, among others.

Covers Treatment Expenses even in Foreign Countries: Critical illness insurance covers expenses even if you are undergoing treatment in another country.

Other Aspects about the Critical Illness Policy

The reasons for buying critical illness insurance cover are different for people of different age groups. However, you need to have a clear idea as to what the benefits are with respect to the premium payment. You can use a calculator to know the critical illness insurance premium. As regards the benefits, you need to clearly weigh the pros and cons. The policy is very helpful when your family is dependent on your monthly income. To arrive at the amount of critical illness cover, you need to calculate your actual monetary losses if you had to stop working due to some illness.

FAQs - Frequently Asked Questions

Q1. Critical illness insurance policies – Are they standalone plans?

In India, critical illness policies can be offered as standalone plans or otherwise. Often they are available as add-on covers along with health insurance. You will have to pay an additional premium to include the same in your health policy. When a critical illness policy is offered as a standalone product, you may be able to buy the same irrespective of whether you have a standard health insurance policy or not.

Q2. Is the premium payable towards critical illness cover exempt from payment of tax?

As regards the premium you pay towards your critical illness policy, you are eligible for income tax deductions as applicable in the case of standard health insurance policies under Section 80D. As per this section of the Income Tax Act, you are eligible for deductions up to Rs. 25,000/year if you are below 60 years and up to Rs. 50,000/year if you are above 60 years.

Q3. Do all health insurance providers cover the same critical illnesses?

No, all health insurance companies do not offer cover for the same list of critical illnesses. They often vary from one insurer to another.

Q4. Who all are eligible to buy critical illness cover?

All individuals from 18 to 65 years can purchase this policy.

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