All about Critical Illness Insurance and How to Identify the Best One?

The risk of falling prey major illnesses is indeed increasing by the day and although much of it is the result of our current lifestyle, most find themselves unable to do anything about it as our work and personal issues can be both physically and emotionally taxing in today’s day and age. It has been estimated that on an average, one out of every four Indians might die of cancer of cardio-vascular diseases before the age of 70 and may contract a critical illness after the age of fifty-five. A critical illness insurance is an absolute must and even if one already has a medical or a health insurance plan, it is a good idea to have a critical illness insurance as well to take care of the life-threatening illnesses, as without quick and proper treatment, they might soon turn fatal.
How does a Critical Illness Plan work?
To start with, a critical illness policy is different from a Mediclaim plan. A CI Plan would pay a lump sum amount which is equal to the sum insured to the policyholder in case he is diagnosed with a critical illness like cancer or is inflicted with similar life-threatening issues like a cerebral stroke. A critical illness cover would provide a lump sum benefit which would allow the insured person to meet the expenses of care and treatment, the recuperation expense and also pay off any debts that he might have incurred. The full sum insured is paid regardless of the hospital expenses. In other words, they are defined- benefit plans as the insured person can expect a fixed amount and the added advantage being that one can have more than one CI plan in place as well. In that case, every policy would pay. A Mediclaim, on the other hand, is more of an indemnity plan which would reimburse the expenses only after they have occurred.
Critical illness policy covers 8 to 20 critical illnesses and the coverage amount is above 1 lakh. However, any illness diagnosed within the first 90 days, or 30 days in case of death, of starting the policy is not generally covered.
A Critical insurance cover is usually bought from a non-life insurance company, life insurance company or from a standalone health insurance company. It could be bought independently or as a rider to a base plan, in which case, the cost could be lower. Separate Critical Illness Plans of Life Insurance companies are quite complex and there are conditions attached to them, which the prospective policyholder must read very carefully before signing on the dotted line. CI Plans can be bought individually or also as family floaters and there are women-specific CI plans as well. However, some private companies have certain in-house rules and regulations and it is best to clarify any doubts so as to avoid rejection while making a claim.
Another advantage of having a critical illness plan is that it also offers tax benefits and under Section 80D of the Income Tax Act, up to Rs 25,000 for individuals below the age of 60 and up to Rs 30,000 for senior citizens can be waived off. One could easily check if the plans can be bought online and today most online CI Plans allows the purchase of such plans without having to undergo a medical test.