16 Aug, 2022 | Health Insurance

8 Key Things You Should Know About Critical Illness Insurance

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A critical illness diagnosis could wipe out your entire savings, especially if you’re the sole earning member of your family. Not only will it lead to a rise in expenses but there will also be a loss of earnings as you might need to leave your job. And, if you have health insurance, it won’t cover every expense that you’ll have to incur as a result of the disease; it’ll only cover hospitalisation-related costs. 

Hence, buying critical illness insurance has become a must today. It will pay a lump sum amount if you get diagnosed with any disease mentioned in the policy document. In this article, we discuss some key things you should know about critical illness insurance. 

So, let’s begin.

Important Things About Critical Illness Insurance You Should Be Aware Of

1️⃣ Not All Illnesses Covered

A critical illness insurance policy will not cover any and every illness. Every insurance company will provide you with a list of illnesses that will be covered. In this list, some insurance companies directly mention the name of the disease, whereas some others mention micro-level details of the disease. So, a long list of illnesses doesn’t essentially mean a better cover. 

If the list mentions the stage and type of the disease, the number of treatments covered is bound to go up. For instance, some insurance companies might mention ‘cancer’ while others might specify the type and stage of cancer like ‘Skin cancer - Stage 2’. As long as the policy covers the most common conditions such as cancer, heart disease, kidney disease, paralysis, stroke, lung disease, etc., you can opt for it. 

2️⃣ Exclusions

Along with a list of illnesses that the policy will cover, the insurance company will also give you a list of illnesses that the policy will not cover and these will be listed under ‘exclusions’. While these exclusions may vary from insurer to insurer, some common exclusions under a critical illness policy are - 

  • Self-injury or suicide attempts. 
  • Alcohol or narcotics-abuse. 
  • Congenital external diseases, defects, or anomalies. 
  • Adventure sports like bungee jumping, parasailing, parachuting, skydiving, etc. 
  • Participation in naval, military, or air force operations during peacetime.

3️⃣ Waiting Period

If you’re diagnosed with a critical illness listed in the policy document right after purchasing the plan, there are chances you won’t receive the claim. Because a critical illness insurance plan will not cover illnesses for a certain period - called the ‘waiting period’. It might range from 90-180 days, depending on the policy and insurance company you buy it from, and you can claim it only after the waiting period is completed. 

4️⃣ Lump-sum Payout 

A critical illness insurance plan is a fixed benefit insurance product. Meaning, regardless of the expenses incurred, you’ll be paid the full claim at once if you get diagnosed with a disease listed in the policy document. 

5️⃣ Survival Period

The payout under a critical illness cover will only be done if you survive the illness for a specified period, say, 15 or 30 days after the illness is diagnosed. If you pass away before the survival period, the claim amount will not be paid. This is because the main purpose of a critical illness insurance plan is to cover the expenses of the person surviving the disease like healthcare costs, loss of income, lifestyle, structural change, etc. 

6️⃣ Available As A Rider 

You can buy the critical illness insurance cover as a rider with your base health or term insurance policy. Riders are cost-effective and can be convenient in the long term. However, compared to a standalone policy, they provide less comprehensive coverage. A critical illness rider might not cover the early stages of some illnesses, and the coverage amount of the critical illness plan can’t be more than your base policy coverage.

Also, if you’re buying a term insurance with a critical illness rider, you should be careful about the type of rider available with the policy you’re purchasing. If it’s an accelerated critical illness rider, it is a part of your base policy. This means if you use the rider for a certain amount, your base policy will get deducted by that amount. If you’re getting a comprehensive rider, it will be an additional cover, and using the rider will not affect your base policy cover at all. 

7️⃣ Available As An Individual Policy 

The critical illness cover is also available as a separate policy. You can opt for it if you’re looking for a more comprehensive cover. A standalone policy will cover even the early stages of certain diseases, and the initial premiums will be similar to that of a rider. However, the premiums will keep on increasing as you get older and could get very expensive in old age.

8️⃣ Must For Every Working Member 

You should seriously consider purchasing a critical illness cover if you’re the sole earning member of your family because a standard health insurance policy will not cover every cost related to the disease you and your family incur. Not only is the risk of getting diagnosed with a critical illness higher, but the cost of curing it is too. Taking health insurance with critical illness cover will ensure there are not many out-of-pocket expenses in case you get a serious disease. 

A good critical illness insurance plan is super important if you want to protect your family from the financial burden a serious disease can cause. Covering for situations beyond what a standard health insurance plan protects from, a critical illness plan can help you bridge the monetary gap that might be created because of a loss of income or sudden increase of expenses - when you get a serious disease. 

So, if you are an earning member of the family, and there are people who rely on your income for their expenses and dreams (short-term or long-term), you must consider investing in a good critical insurance cover today!

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Key takeaways
  1. Only those illnesses mentioned in the policy document will be covered under critical illness insurance.
  2. There are certain illnesses that a critical illness plan will never cover - those are listed under ‘exclusions’.
  3. Critical illness insurance plans come with a specific waiting period. You’ll be able to claim for the illnesses only after the completion of that time.
  4. Regardless of the expenses incurred, a critical illness insurance plan will pay you the entire sum assured when you’re diagnosed with a disease mentioned in the policy document.
  5. A critical illness cover will pay you only if you survive the illness for a specified period, say 15 or 30 days. If you pass away before the survival period, the claim will not be paid.
  6. You can buy the critical illness cover either as a rider or a standalone policy.
  7. If you’re buying the critical illness rider with term insurance, be careful about the ‘type’ of critical illness rider you choose.
  8. While a standalone policy will offer more comprehensive coverage, it might become expensive as you grow old. A rider, on the other hand, might have some limitations in terms of coverage but is more cost-effective.
  9. Every earning member of the family should consider purchasing a critical illness insurance plan.
Team Beshak
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We are a group of young members of the Beshak community. We come together to brainstorm, write relevant and useful content for people (just like us) who want to figure insurance on their own. If you too want to share inputs/write for us - send us a "hey" to info@beshak.org

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