How Do I Buy Critical Illness Insurance?

by SMCIB on Thursday, 16 February 2023

How Do I Buy Critical Illness Insurance?

It is no secret that diseases are on the rise today. And, the number of people affected by critical illnesses such as cancer, cardiac, stroke, and paralysis is surging every day. For instance, the reported cancer incidence in India in 2022 is estimated to be 19 to 20 lakhs.

Several factors contribute to the incidence of such diseases, including an ageing population, sedentary lifestyles, pollution, and inadequate access to healthcare. However, an improved healthcare system has enabled doctors and researchers to develop treatments and cures for a variety of diseases, helping reduce the prevalence of infectious and chronic diseases. For example, new treatments such as gene therapy and immunotherapy are being developed to treat diseases that were previously regarded as untreatable.

Now, let’s address the biggest problem when it comes to such diseases - the cost! Yes, the cost of associated treatments can be prohibitively high, making it a major challenge for many patients. For example, the cost of radiotherapy for cancer treatment in India costs from Rs 4.75 lakhs to Rs 22 lakhs.

You may have the right health insurance plan for you, but it will pay you only for the expenses associated with hospitalisation. What about other expenses that you may incur for long-term treatments, making lifestyle changes, etc in case of a diagnosis of a serious illness? How do you cover such costs?

This is where critical illness insurance comes in handy. With critical illness insurance, you can be assured that you will have the financial security you need - should you be diagnosed with a critical illness.

What exactly is critical illness insurance? How do you buy it? All these questions and more will be answered in this article.

Let’s first begin by understanding what a critical illness is

Any serious illness, sickness, or disease that permanently impacts a vital organ can be classified as a critical illness. For example, heart disease, stroke, cancer, kidney failure, liver transplant etc. There is a risk for anyone to develop critical illnesses, especially if the disease runs in the family, and the associated treatment can be expensive and long-term.

A critical illness diagnosis is the last thing anyone wants to hear. It can be frightening for anyone. And, if you are diagnosed with a critical illness, you may have to deal with an extra layer of anxiety - if your family members are dependent on you for their income.

  • First, the disease will entail medical expenses like consultation fees, treatment costs, test expenses, check-up costs, etc.

  • Then, you may have to undergo changes to ease your living like using a wheelchair, installing ramps or automatic beds, appointing nurses and other paramedic staff, etc. This also costs quite a bit of money!

  • Since you will have to take time off to undergo treatment, you may have to quit your job. The inability to earn a living during treatment can have a severe financial impact on your family. So, not only can the emotional toll be immense, but the financial implications can be life-altering with a critical illness diagnosis.

To cope with this additional stress, it is important to find financial support and security to tide you and your family through this difficult time. This is where critical illness insurance comes to the rescue.

Critical Illness Insurance - A Saviour!

If you are diagnosed with a serious illness like cancer, heart attack etc, critical illness insurance provides a valuable source of support while you can focus on your recovery. In the event of a critical illness diagnosis, you will receive a lump sum payout.

The lump sum can help you cover -

  • Medical expenses such as doctor consultation fees, medicine costs, tests, etc.

  • Lifestyle changes and home modifications, such as incorporating an oxygen tank or wheelchair into your home.

  • Family's financial needs by serving as an income replacement.

Critical Illness Insurance - Associated Conditions

If you intend to purchase critical Illness insurance, here are some conditions you need to be aware of -

  1. Covered Illnesses

    Critical illness insurance covers a variety of illnesses. Depending on the insurer, the list of illnesses covered may vary. Generally, most critical illness insurance policies cover the following illnesses:

    • First heart attack (of specific severity based on the policy)
    • Cancer (of specified severity based on the policy)
    • Open chest Coronary Artery Bypass Grafting (CABG)
    • Major organ transplants, like liver and heart valves
    • Permanent paralysis of the limbs
    • Stroke resulting in permanent symptoms
    • Bone marrow transplant
    • Kidney failure requiring regular dialysis
    • Open heart replacement or repair of heart valves
    • Multiple Sclerosis with persisting symptoms

    For example, Ria buys critical illness insurance with a sum assured of Rs 10 Lakhs. She suffers a massive stroke a few years later, which is one of the listed critical illnesses covered under her policy. The cost of treatment comes to around Rs. 8 lakhs. She will receive a lump sum of Rs. 10 lakhs since she has critical illness insurance. This amount will cover Ria's treatment needs and other financial needs.

    Critical illness insurance will not provide coverage for -

    • Self-injury or suicide attempt.
    • Medical conditions or illnesses caused by ionising radiation or contamination by radioactivity from nuclear fuel or Combustion of nuclear fuel, nuclear, chemical or biological attack.
    • Medical conditions or illnesses due to substance abuse, use of illegal drugs, narcotics (unless prescribed by a medical practitioner), intoxicants, alcohol, hallucinogens, etc.
    • Medical conditions or illnesses caused by participating in naval, military or air force operations.
    • Congenital abnormalities or defects.
    • STDs including AIDS, HIV, etc.
    • Medical conditions as a result of engaging In any act of a criminal nature with criminal intent.
    • Medical conditions because of flying, except as a passenger in a commercial airline
    • Medical conditions caused by manmade disasters like riots, wars, acts of terrorism, etc.
    • Treatments associated with pregnancy or childbirth.

    Note: You can view a detailed list of your policy's exclusions in the policy's document.

    For example, Ron buys critical illness insurance with a sum assured of Rs 15 lakhs. A few months later, he experiences frequent vomiting and severe back pain. Following a medical consultation, he undergoes a series of tests. The results reveal that Ron suffers from kidney failure due to his prolonged use of illegal drugs. However, his policy stipulates that if the illness is caused by illegal drugs, no coverage will be provided. So, critical illness insurance will not offer a payout in this case.

  2. Period of Survival

    A majority of critical illness insurance plans pay the sum assured only if you get diagnosed and survive the illness for a specified period, such as 30 days or 15 days. (This period will vary across insurers.) The claim amount is intended only to cover lifestyle changes, healthcare costs, loss of income, and other costs associated with survival. So, if you pass away before the survival period ends, critical illness insurance won't pay anything.

    For example, Raghav buys critical illness insurance with a sum assured of Rs 15 lakhs. A few months later, he gets diagnosed with 2nd stage blood cancer. His policy states that the sum assured will be given only if the policyholder survives 30 days from the day of diagnosis. Raghav did live through the stipulated 30 days survival period and so, he received a lump sum of Rs 15 lakhs from his policy.

  3. Waiting Periods

    The waiting period for critical illnesses can range from 90 to 180 days, depending on the insurer.

    Note: A waiting period is a period during which the insurer will not provide coverage.

    For example, Naren buys critical illness insurance with a sum assured of Rs 10 lakhs. His policy has a waiting period of 90 days. Five months later, he gets diagnosed with liver failure - which is listed in his critical illness policy document. Since he crossed the waiting period of 90 days, Naren will receive the lump sum of Rs 10 lakhs from his policy as soon as he informs the insurer about his diagnosis.

  4. Coverage Validity

    Lifetime coverage is not available under critical illness insurance. The coverage is applicable only up to a certain age or year and terminates when a claim is submitted for a listed illness.

    For instance, Manish, 35, buys critical illness insurance with a sum assured of Rs 15 lakhs that is valid until he turns 50. At the age of 45, he gets diagnosed with multiple sclerosis, which is a listed condition inh= his policy document. The insurer will pay the lump sum of Rs 15 lakhs as soon as Manish informs them about the diagnosis. After the payout is made, the policy will terminate.

How Do You Buy Critical Illness Insurance?

Purchasing critical illness insurance can be done offline or online. You can buy it offline by visiting the insurer’s branch office. If you want to buy it online, you can visit the insurance platform of your choice. In case there are numerous options for you to choose from, make sure you conduct a proper comparison.

While comparing, you need to look into several factors.

  1. First, you need to check the number of illnesses covered by each plan.

  2. Next, look at the sum assured levels. Critical illness plans will provide coverage only up to specified levels and so you need to choose a plan which offers the coverage amount you require.

  3. Another important point is to make sure the premium you choose fits your budget and offers the coverage you need.

Overall, make sure you zero in on a policy that offers comprehensive coverage and covers a wide range of critical illnesses. Once you have chosen, ensure you enter all the relevant details. You need to specify your desired sum assured, policy duration, etc. After that, you can proceed with the application.

Wrapping up!

There is no doubt that a critical illness diagnosis will result in substantial medical expenses. To mitigate these costs, it is important to have sufficient financial resources in place. This is where critical illness insurance comes in. It will give you peace of mind and the assurance that you are financially prepared if an unexpected diagnosis of a critical illness arises. Before investing your hard-earned money, make sure you fully understand the terms and conditions of the policy.

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