Critical Illness Cover- Features, Benefits & More

What is Critical Illness Insurance?

Critical illness is a type of health insurance cover that provides a lump sum payout if you are diagnosed with a severe medical issue covered under your policy. These conditions generally include life-threatening illnesses such as cancer, heart attack, stroke, kidney failure, and paralysis.

Unlike a standard mediclaim policy that reimburses hospitalisation expenses, critical illness insurance offers a fixed payout upon the first diagnosis of a covered condition. This amount can be used not only for medical treatments and ongoing care but also for non-medical expenses such as lost income, household needs, etc. Moreover, you can buy critical illness cover as a standalone policy or add it as a rider to your existing mediclaim plan.

Key Features of Critical Illness Cover

Take a look at some of the key features of critical illness cover in mediclaim insurance:

• Coverage for Major Illnesses- Critical illness plans cover a wide range of life-threatening medical issues, including cancer, heart attacks, strokes, kidney failure, brain surgery, and more. The number of illnesses covered can vary from insurer to insurer, but some plans cover up to 100 different illnesses.
• Lump Sum Payout- Upon the first diagnosis of a covered illness, health insurance companies provide a lump sum payout. This amount can be used for medical treatment and recovery expenses, helping to reduce the financial burden during a health crisis.
• Waiting Period- Most critical illness plans generally include a waiting period of 90 days before which you are not eligible for coverage. However, this waiting period may vary between insurers.
• Survival Period- Critical illness plans often come with a survival period clause, which means that to qualify for the payout, the insured person must survive for at least 30 days after being diagnosed with a critical illness.
• Coverage for Non-medical Expenses- A part of the payout from a critical illness insurance plan can be used to cover non-medical expenses during recovery. This helps ease the financial burden of everyday expenses while you are focusing on getting better.
• Hassle-free Claim Process- Claiming the benefit under a critical illness cover is hassle-free. Most insurance providers require basic medical documents, such as diagnosis reports, and once verified, the claim is processed quickly.

Benefits of Critical Illness Insurance

Check out the top benefits of buying critical illness insurance:

• Extends Financial Support: A critical illness cover provides a lump-sum payment upon diagnosis of a covered critical illness. This is a significant advantage because it gives you immediate access to funds when you are facing a health crisis.
• Eases the Financial Strain on Your Family- In the event of a serious illness, your family may have to deal with not just medical expenses but also the loss of income if you are unable to work. In such situations, critical illness insurance ensures that your family do not face financial hardship, as the insurance payout can be used to cover household expenses during your recovery.
• Helps Afford Expensive Treatments- Treatments for critical illnesses can be incredibly expensive, and even with good health insurance, significant out-of-pocket costs can arise. The lump-sum payment from a critical illness policy can help you afford the best possible care without being limited by cost.
• Tax Benefits- The premiums you pay for critical illness coverage are eligible for tax deductions under Section 80D of the Income Tax Act, 1961. Individuals can claim tax benefits of up to ₹25,000, and senior citizens can claim tax benefits of up to ₹50,000 under the same act.

How to Claim a Critical Illness Policy?

The steps to claim a critical illness insurance policy are as follows:

Step 1: Contact your insurance provider and register your claim on the diagnosis of a critical illness covered under your policy.

Step 2: Submit the required documents, such as an accurately filled claim form, discharge summary, photocopy of ID card, medical certificate confirming the diagnosis of critical illness, etc., to the insurer. These documents may vary based on the insurer and the claim.

Step 3: Upon receiving the documents, the claims team of the insurance company will verify the submitted details.

Step 4: On the basis of the verification, your claim will be approved or rejected.

Step 5: If the claim is approved, you will receive the claim payout.

Clauses for Use of Critical Illness Cover in Health Insurance

Before you can use the critical illness cover for dealing with the medical situation in your family, it is necessary to understand its related clauses:

• You cannot use a critical illness plan to cover any congenital condition or pre-existing diseases (PEDs).
• Almost all critical illness plans have a specific waiting period of up to 90 days, after which you become eligible to make the most of the inherent benefits.
• Most critical illness plans have a survival period of up to 30 days. The insured must survive this period to be eligible for a claim. If the insured passes away during this time, no claim amount is paid.

What to Look for While Buying a Critical Illness Cover?

Here's what you should consider while buying a critical illness cover:

• Ensure the policy covers a wide range of critical illnesses, including those you may be at higher risk for.
• Evaluate your needs and budget to decide between a critical illness rider and a standalone policy.
• Choose an adequate sum insured that would sufficiently cover treatment costs and living expenses during recovery.
• Check the waiting period before claims are accepted.
• Look for a shorter survival period, as it determines when you can receive the payout after diagnosis.
• Opt for a policy with a simple and hassle-free claim process, ensuring quick access to funds when needed.
• Choose an insurer with a high Claim Settlement Ratio (CSR) for reliability.
• Carefully review the policy document for any exclusions or limitations that may affect your coverage.