While awareness of the importance of inculcating healthy lifestyle habits has been on the rise, increasing levels of lifestyle-related stress, environmental pollution, and erratic sleep schedules have contributed to an elevated risk of many critical illnesses such as diabetes, cancer, cardiovascular, and renal disorders. This has underscored the crucial need to protect oneself and one’s family from the financial uncertainties that may emerge from medical treatment and hospitalisation costs. Towards this end, there are life insurance products that provide a fixed financial benefit on detection of such critical illnesses, in lieu of a nominal premium amount that is substantially lower than the cost of hospitalisation and medication that would be needed. With the policyholder receiving lump sum monetary support on being diagnosed with any of the covered critical illnesses, these specialised insurance products can prove extremely crucial when dealing with life-threatening disorders and help affected patients cope with the associated financial stress.
Need for critical illness insurance and who can buy it
Contrary to popular perception, even healthy individuals with no past or familial history of contracting critical illnesses ought to protect themselves with a regular health or life insurance product that can provide financial support in times of need. While having a comprehensive health insurance policy that covers a wide range of critical illnesses is highly recommended, nearly 400 million Indians continue to be devoid of health insurance in any form, largely due to a lack of awareness about its importance. Moreover, opting for an insurance product post-diagnosis of a critical illness may result in higher premium rates and limited coverage being offered due to the increased risk.
In such a scenario, one can purchase a critical illness cover with a lifetime renewal option, complementing any existing health insurance with its added financial protection net. Not only do such covers provide longer protection against such illnesses, but also come with the added flexibility of selecting from different premium paying frequencies- monthly, quarterly, half-yearly, or annually, based on individual preferences. Moreover, customers can purchase critical illness insurance as an add-on cover that supplements a term life insurance policy or even as a standalone insurance product.
How does a Critical illness add-on differ from regular health insurance
While a regular health insurance policy pays for the actual expenses incurred for medical treatment or hospitalisation, critical illness insurance pays the policyholder a lump sum amount on the diagnosis of the covered critical illnesses. Some life insurers offer up to two instances of claim benefit for minor and moderate conditions, with the lump sum benefit calculated as a defined percentage of the sum insured (SI) and dispensed immediately upon diagnosis. Thus, it gives the policyholder an upfront financial buffer that can be utilised to pay for treatment or hospitalisation expenses, with the added advantage of a premium waiver for up to 5 years and an in-built death benefit that can be availed from day one, i.e., without any waiting period. Such critical illness insurance products can be availed from an entry age as low as 18 years till a maximum maturity age of 75 years, deeming them very useful as a tool in attenuating the financial impact of being diagnosed with such diseases and are well suited for those who would like to have larger insurance coverage.
Benefits and flexibility offered by critical illness insurance plans
Chief Operating Officer & Chief Technology Officer,
Future Generali India Life Insurance Company Ltd
Apart from the cost advantage, longer policy tenures and flexible premium payment options afforded by critical illness covers, there are additional benefits that are provided by many life insurers for those availing such insurance products. These include the flexibility to choose the extent of coverage provided, where customers can select from only heart-related diseases or go for a more extensive coverage that includes 50+ critical illnesses and surgical procedures including Heart and Cancer related ailments. Additionally, they could opt for a return of premium option where the sum of all instalment premiums paid (excluding taxes, rider premium, modal loadings, and extra underwriting premiums) minus any critical illness benefits paid during the policy period are returned to the policyholder on maturity. Other benefits include enjoying a free look period where the policy premium can be refunded if the policyholder disagrees with the terms and conditions immediately after purchasing the product, with a grace period for paying premiums beyond the due date as well as having the flexibility to change the premium payment frequency. What’s more, one can also avail an added tax benefit applicable on premiums paid under Section 80D of the Income Tax Act, 1961, making it a wise addition in any portfolio to improve the overall risk protection. Choosing a critical illness insurance cover is therefore one of the smartest decisions one can make in order to lessen the financial impact of being detected with one of many critical illnesses.
