As wise investors, most of us get life insurance policies to protect our loved ones financially or to pay off obligations in the event of a tragedy like death. However, relatively few people prepare for life-threatening events like illness, which could restrict you from functioning normally and ultimately cease your steady income flow. Medicare and healthcare innovations have increased life expectancy, which suggests that more individuals are surviving illnesses that may have taken their ancestors. However, treating such a condition comes with costs that might severely deplete your finances.
Plans for critical illness insurance policies are financial instruments created for such circumstances. They offer financial assistance when the cost of medical and long-term care puts a strain on a family's finances until the patient recovers.
Describing the Critical Illness Insurance Plan
The critical illness insurance policy is a long-term strategy that covers particular grave illnesses listed in terms of the policy. If you become ill, the insurance will provide a lump sum payment to help you with:
- Hospitalization expenses
- The cost of medicine
- Recovery tools
- Daily costs such as school fees, EMIs, and bills
- Any medical-related debts owed
- Any income lost as a result of a declining ability to earn
The primary underlying requirement for a claim is that the insured individual must endure for at least 30 days after receiving a critical illness diagnosis for the claim to be accepted. This comes on top of the initial 60-90 day waiting period that most insurance policies provide.
What is Covered by Critical Illness Policies in India?
Heart attacks, multiple sclerosis, strokes, cancer, major organ transplants, kidney failure, paralysis, etc., are a few of the ailments covered by these plans. Health insurance companies include additional conditions due to increased competition, including severe burns, deafness, and speech loss. The sickness that will be covered is typically specified in the insurance documentation, which can vary from business to company. In contrast to MAX BUPA, Bharti AXA, and Care, HDFC ERGO offers protection against just eight ailments. The illness coverage offered by ICICI Lombard and Tata AIG is 9 and 11, respectively.
Which Critical Illnesses are Not Covered by Insurance?
The following are the principal exclusions for all critical illness insurance policies in India:
- The policy covers any pre-existing problems, illnesses, or injuries at purchase.
- HIV-related illnesses such as AIDS and other diseases with a similar symptomatology.
- Joint replacement, excluding accidental damage.
- Critical sickness brought on by a hereditary condition.
- Rehabilitation following drug or alcohol use or willful self-harm.
What is the Price of Critical Illness Insurance in India?
Most insurance firms offer critical illness plans ranging from a minimum of INR 2.5 lakhs to INR 20 lakhs. Some businesses, including Care and Bajaj Allianz, offer coverage for up to INR 50 lakh/ 1 crore. For most insurers, the standard premium for a 40-year-old with a sum assured of INR 5 lakh will fall between INR 2500 and INR 4000.
Is Having a Critical Illness Insurance Policy a Good Idea?
You should buy sufficient critical illness insurance at a reasonable cost if you have a family history of illnesses like cancer, coronary artery bypass, etc., or lifestyle illnesses like diabetes. The insured's age, income, and location should determine the amount covered. Treatments for serious diseases can take a long time. Therefore, if you must refrain from working to recover, the insurance claim should fund the family's monthly needs and the cost of hospitalisation and medications. Long-term financial obligations like debts and children's education costs should also be considered.
The following are the key elements that define the necessity for critical care:
- The younger generation in India is more susceptible to lifestyle disorders like diabetes, heart attacks, obesity, and hypertension due to work stress, an uncontrolled lifestyle, and poor eating habits.
- Any halt in money flow might send your finances spiraling out of control, regardless of your line of work (company or service).
- The cost of critical illness treatment is high. Health insurance policies and personal resources alone might not be enough to cover the cost.
- A tax exemption of up to 25,000 INR is also available for critical illness insurance under section 80D.
After assessing your needs, you should compare all available critical illness insurance options and pick the best option. The details of the illnesses, the amount of coverage, the simplicity of filing claims, and the insurer's acceptance rate for claims are a few crucial factors to consider.
How Shall You Buy It-Standalone or Rider?
Ideally, one should purchase it as standalone insurance because a rider's limit on the sum insured will equal the base policy's limit. However, a standalone policy's premium will be more than a rider's.
Conclusion
Up to a certain point, a typical health insurance policy (mediclaim policy) can offer coverage. However, in the event of illness, it might not be sufficient to replace your income or way of living. For instance, a person in the age range of 25 to 30 who has a medical insurance policy worth INR 5 lakh might increase it to a critical illness insurance policy for INR 10–INR 15 lakh to safeguard himself and his family entirely.
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