The critical illness covers are very good and beneficial health insurance products that help people in various ways. A critical illness is a fixed-benefit health insurance cover that pays a lump sum amount of money if the policyholder is diagnosed with a specific health condition such as stroke or cancer. The list of ailments covered is clearly mentioned in the policy wordings. A critical illness plan is a pretty straightforward plan, but still, many people seem to have many misconceptions associated with these plans. In this article, the myths and facts have been listed so take a look so that you will surely have a clearer idea about the critical illness plan you already have or are looking to get.
Myths & Facts about Critical Health Insurance
Myth or fact - Disability is Listed as a Critical Illness
Myth - Many people make the mistake of thinking that disability of any kind is categorised as a critical illness. This is completely false, as disability is not a critical illness covered under the critical illness plans.
Disability insurance is a completely different form of health insurance and is paid because the policyholder loses his ability to earn. In critical illness, there is no such clause and the policyholder is free to use the lump sum he receives.
Myth or fact - Critical Illness Plans only Pay for Certain Conditions
Fact - This is a fact that a critical illness cover will only pay the lump sum if you get a disease that is listed in the plan. It is entirely up to the insurance provider to decide which illnesses are classified as critical illnesses. You do not have the authority to call an illness a critical illness unless the insurance provider has listed it in the critical illness plan you have. The most common list of critical illnesses is cancer of a certain severity, first heart attack, coma, major organ transplant, Coronary artery bypass surgery, paralysis, etc.
Myth or fact - Every Form of the Critical Illness is Covered
Myth - Critical illness plans broadly list ailments such as organ failure and cancer. However, when a claim is made, the insurer will evaluate the diagnosis and see the extent of the ailment. Not every form of cancer in every stage is covered.
For example, a stage - 1 cancer may not be eligible for a claim. Similarly, partial liver damage may also not be eligible for coverage. This is why you need to read the terms and conditions carefully to understand the extent of coverage available on the plan.
However, there is a cancer-specific health insurance plan which covers all stages of cancer, its treatment as well as expenses for diagnosis, chemotherapy, alternate treatment as well as lump sum payment for recovery.
Myth or fact - The critical Plan Covers all Pre-existing Ailments
Myth - Every critical illness plan clearly states that critical illness needs to be diagnosed after the plan is bought. In other words, you cannot buy such health insurance coverage if you already have a critical illness. There is a waiting period, as well as a surviving period clause associated with each plan. Therefore, you need to buy the critical illness plan when you are healthy and then get the benefits of the lump sum payout later when you are diagnosed with the critical illness.
For example, after being diagnosed for any critical illnesses, for most plans, you need to be alive for a minimum of 30 days to claim the amount. That is why a critical illness plan is a survival benefit plan and not a death benefit plan.
Myth or fact - A critical Illness Plan is Cheaper than a Comprehensive Health Plan
Fact - This is a fact - a critical illness is cheaper than a regular health insurance policy. This is because the likelihood of a health insurance claim being made on the critical illness plan is lower than the risk of a claim being made on a comprehensive health plan. The latter offers a wider range of covers and thus the claims made are also wider. The critical illness plans are definitely a cheaper alternative, but their coverage is also different and catering only to the ailments listed.
Let’s see the explanation with an example for a 30-year-old healthy male opting for an INR 10 lakhs of coverage:
|HDFC ERGO Critical Illness Insurance Plan
|HDFC ERGO my: Health Suraksha Silver Smart
|Type of Plan
|Fixed Benefit Health Insurance Plan
|Indemnity Health Insurance Plan
Myth or fact - Young People do not Need Critical Illness Covers
Myth - It is a myth that serious ailments such as heart attacks, organ failures, etc only happen to the elderly people. These days, we hear a lot of stories about young people in their 30s and 40s getting serious ailments such as cardiac arrests and strokes. The faulty lifestyle habits and stress levels cause these diseases among younger people. Then, certain diseases such as cancer, strike people of all ages. This is why everyone benefits from getting critical illness plans, irrespective of their age.
There has been a significant rise of critical illnesses amongst the youth in India as compared to the senior citizens as they are exposed to a lot more pollution, stress, junk food, etc. 43% of claims are between 19-35 years of age. Also, the future costs of treatment also need to be considered with health inflation at 10% per annum. Treatment for cancer is approximately INR 77,000 in 2018-19.
Myth or fact - There are Restrictions on the Way I Use the Sum Assured
Myth - If you are diagnosed with a critical illness and the insurance provider processes your claim, you are not bound in any way to use the money as per any term and condition. Once you receive the sum assured, it is completely your decision about how you spend it. Many people use it to clear loans, to build up education funds for their kids, to travel abroad for treatment or simply use it for their bills and expenses. The health insurance company is not bothered about how you use the claim amount once you receive it.
Critical illness plans are fixed benefit health insurance plans. So, if you are diagnosed with any of the listed critical illnesses, the hospitalisation expenses can be paid by the indemnity health insurance plan. The claim received for the critical illness plan can be used up for associated costs like nursing at home, loss of pay, etc.
To Wrap It Up
A critical illness plan is indeed a very helpful and beneficial health insurance cover to have. However, to ensure you get the best value out of it, you need to read the clauses and understand how the plan works. Stay away from the myths and get informed about the facts and your job will become a lot simpler.