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Critical Illness Insurance
Oct 20, 2023

Critical Illness Insurance: Understanding and Importance

Cold, cough, or fever can be described as common illness due to the how people can easily contract them. These are easy to describe as well as relatively easy to deal with. However, there are also critical illnesses such as cancer, diabetes, and cardiovascular conditions which are severe and are expensive to treat. Going for health insurance as a financial backup for these illnesses may not be enough. In this article, we will learn about critical illness insurance and how it can act as an alternative to a regular insurance.

Benefits of Critical Illness Insurance

Here are some benefits that may convince you to purchase critical illness insurance for yourself and your loved ones to tackle critical illnesses which may plague them in the future.
  1. Back up for your health insurance

Generally, critical illness insurance is sold as a standalone insurance. However, some insurers offer it as an add-on to their regular health insurance plans. If your insurer offers the policy as an add-on, including it with your existing insurance can prove to be much more beneficial. While your primary policy can cover regular healthcare requirements, the critical illness aspect can cover a range of critical conditions.
  1. Covers major illnesses

Medical insurance policy usually covers basic illnesses. However, critical illness insurance covers diseases related to the heart, lungs, kidneys, as well as surgeries related to these. Often times, health insurance in India may not offer coverage for critical illnesses, which poses as a major disadvantage if you or your family member were to be diagnosed by it. Opt for critical illness insurance to avoid having to pay out of pocket for the treatment in such situations.*
  1. Acts as a source of income

Often times, critical illness might cause a person to get affected in such a manner that they might not be able to work again for a brief period or permanently. Losing a source of income can cause problems in paying for the medical expenses as well. The pay-out you receive from the critical illness health insurance policy can be used not just for paying for the treatment costs, but it can also be used as an financial support to take care of household and other vital expenses.*
  1. Provides tax benefits

Another added benefit of going for critical illness insurance is the tax benefits offered with the policy. These benefits are:
  • Tax deduction of Rs.25,000 on premium paid for self, partner, and children. Additional deduction of Rs.25,000 on premium paid for parents under the age of 60 years.**
  • If the parents are above the age of 60 years, the tax deduction limit increases to Rs.50,000. This allows you to avail total deduction of Rs.75,000.**
  • If you, your partner, and your children are above the age of 60 years, the deduction limit is Rs.50,000. Additional deduction of Rs.50,000 can be claimed on premium paid for parents above the age of 60 years.**

What to Consider When Purchasing Critical Illness Insurance?

-  Coverage Amount

The coverage amount of a critical illness insurance policy is the maximum amount the insurance company will pay in the event of a critical illness. It's essential to consider the coverage amount before purchasing a policy. The coverage amount should be based on your financial needs and the cost of medical treatment for the illnesses covered under the policy.

-  Illnesses Covered

Different policies cover different illnesses, so it's important to choose a policy that covers the illnesses that are most relevant to you. It is also important to consider the waiting period for the policy, which is the time between purchasing the policy and the coverage becoming active.

-  Premiums

The premium of a critical illness insurance policy is the amount paid by the policyholder to the insurance company for coverage. It's important to choose a policy that provides adequate coverage at a reasonable premium. The premium amount may vary based on your age, health, and other factors. It's also important to consider the frequency of payment, as some policies may require payment in monthly, quarterly, or annual instalments.

-  Exclusions

Exclusions refer to the medical conditions or procedures that are not covered by the critical illness insurance policy. It's important to carefully review the policy documents and understand the exclusions. Some policies may have exclusions for certain pre-existing conditions or procedures.

Conclusion

With critical illness insurance, you get all-round protection from the risks posed by critical illnesses. Before you go ahead and purchase the policy, you should connect with an insurance agent to know more about the policy and how it can serve you better. You can also compare plans online. If you opt for a regular health plan, use the health insurance premium calculator to get a quote for your policy.   *Standard T&C apply ** Tax benefits are subject to change in prevalent tax laws Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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