Individuals with a family history of diseases such as cancer or coronary artery bypass should opt for adequate critical illness cover. While a comprehensive health insurance policy provides coverage for expenses like hospitalisation, a critical illness policy will provide a lump sum benefit upon diagnosis of a covered critical illness, regardless of medical expenses.

The payout can help the policyholder manage various costs associated with critical illnesses such as medical treatments, specialised care, alternative therapies, and even for outstanding payments such as home loans, car loans, etc. Insurance companies cover around three dozen critical illnesses such as cancer, kidney failure, major organ transplant, etc.

On diagnosis of any of the listed critical illnesses, the insurance company will pay the full sum insured which will cover the cost of the specific treatment. The cost of a critical illness policy varies depending on one’s age, health condition, coverage amount, and the illnesses covered.

Evaluate the premium

It is essential to evaluate the affordability of the premiums and compare them to the potential benefits provided by the policy. Buy it as a standalone policy and not as a rider with a life insurance policy where there’s a limit on the sum insured.

“If one has a critical illness plan, in case of a critical disease, the policyholder receives a lumpsum payment. A comprehensive health insurance covers hospitalisation costs,” says Rakesh Goyal, director, Probus Insurance Broker, explaining why one should have a comprehensive plan as well as critical illness coverage.

Points out Chirag Nihalani, general manager, Insurance Samadhan, “Outstanding payments like mortgages can be taken care of through the payout.”

Waiting period

Most critical illness policies have a waiting period ranging from 30 to 90 days from the policy inception. Ashish Lath, business head, InsuranceDekho, an online insurance aggregator, says once the policyholder completes the waiting period, he can claim for an enlisted illness in the policy. “You can only claim for a critical illness only once under the plan. If you are diagnosed with another critical illness in the future, you will need a new policy,” he says.

What to look out for

Critical illness policies are typically more expensive for older people and people with pre-existing medical conditions. If you are in good health, you may be able to get a lower premium. “In critical illness insurance, inclusions and exclusions are vital since the policyholder will know exactly which illnesses are covered and which are not. The policy with the most ailments covered should be chosen,” says Goyal.

There are two types of critical illness policies: lump sum and recurring. Lump sum policies give a one-time payout in case of a covered illness diagnosis. Recurring policies pay a smaller amount on a monthly or quarterly basis. “Make sure you understand the claim process before you buy a policy as you may need to provide medical documentation to support your claim,” says Lath.

When the claim is settled, the coverage ends. The terms and conditions of the renewal of the policy may be subject to review by the insurance company. For renewal, the insurer may adjust the premium, impose coverage limitations, or modify the policy terms depending on the circumstances.

SAFETY NET

* Comprehensive plan covers hospitalisation costs while a critical illness plan offers financial support on diagnosis of a critical illness

* You can claim for a critical illness only once under the plan

* Understand the claim process as you may need medical documentation to support your claim