16 Oct, 2021 | Health Insurance

What Does A Critical Illness Policy Cover?

Team Beshak
By Team Beshak
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“Heart disease rising amongst young Indians” 

“Cancer on the rise amongst Indian women” 

Any life-threatening illness or serious medical condition that requires immediate medical attention can be termed as a Critical Illness. Some common critical illnesses you would have heard of include Cancer, Kidney failure, Heart attack, Illnesses leading to coma or paralysis, and so on. 

A critical illness can happen to anyone at any point in life and it requires timely help. The changes in our lifestyle i.e. the food that we eat, lack of sleep, polluted air that we breathe, stressful work environment, etc have increased our risk of falling sick. More than ever, we are getting diagnosed with BP, Diabetes, and cholesterol variations early in life and poor management of these conditions can lead to a more serious/life-threatening affliction of organs. The cost of living with these critical illnesses can be very high as they require ongoing/long treatment, changes in our lifestyle & work patterns, and sometimes absence from work. 

This can seriously damage your finances. However, if you do not want to put your and your family’s financial stability in jeopardy, then you should consider purchasing Critical Illness Insurance. Let’s take a quick look at the importance of Critical Illness Insurance and some of its benefits.

What happens when you get a Critical Illness? 

While a critical illness can seriously impact your health and your ability to perform routine jobs, etc you should also remember the adverse impact a critical illness can have on you and your family’s finances. 

All of us at some point in life may have come across situations where young to middle-aged persons (such as a friend or a colleague) suffer from a critical illness like cancer and are forced to take a break from their jobs as most of their time is spent on treatment & recovery from the critical illness. Imagine yourself in the place of that person and you’ll realize the stress that the person and his family go through during such tough times. Their stress is compounded if they also have to provide for the cost of treatment from their pockets in the absence of a suitable health insurance or critical illness cover.

In a country like India where more than 80% of people are uninsured, such critical illnesses often bring with them great humiliation for the family as the family often ends up selling its precious assets and in net debt to meet the high expenses.  

More difficult are medical conditions like paralysis, temporary and permanent disabilities that force us to quit our jobs & be completely bedridden. This could cause us to experience complete or partial loss of income. Further, our families are required to arrange money for additional expenses like a wheelchair, a ramp installation, an automatic bed that helps us with movements, a full-time nurse, and so on. Your health insurance will not help you to cover such additional/non-medical expenses and you will be required to pay from your own pocket. 

What is a Critical Illness policy? 

A critical illness policy pays your family a lump sum amount of money if you get any of the serious diseases listed in the policy document. You can use this money to make up for the lost income during your illness and recovery, as well as fund your additional expenses that your health insurance will not pay for that we discussed above. 

What does a Critical Illness Policy cover? 

Every critical illness policy provides you with a list of illnesses it covers - and often, these lists across insurers look different from each other. Some give a broad cover (for example they could simply cover, ‘Cancer’), while some provide specific details of the type of the disease (Blood cancer stage 3 or 4, advanced Lymphoma stages 3 or 4, etc.). So, a long list of illnesses doesn’t essentially mean a better cover. 

In fact, we spoke to a seasoned actuary about the significance of the number of illnesses and learned that the top 6 diseases account for more than 90% of critical illness claims. Further, when you look beyond the top 10 diseases listed in any plan - the claims are rare. This means that a majority of these ‘comprehensive’ covers are often puffed up with rare medical conditions.

Generally, insurers do this so they can charge hefty premiums for covering an impressive list of illnesses. As mentioned above, you should consider the likelihood of these conditions occurring, and not worry too much about the very rare conditions. 

Remember - as long as the most commonly occurring serious diseases such as stroke, heart disease, cancer, kidney disease, paralysis, lung disease, etc. are covered- you should be sorted. The additional list is only a bonus! 

List of Illnesses Covered in Critical Illness Insurance Policy

Here are some major conditions that account for 90% of critical illness claims and that are covered across most plans. 

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

Which Critical illnesses are not covered? 

When you consider buying any insurance policy, it is very important for you to understand what the policy does and does not cover. For example - you buy a critical illness policy and get diagnosed with chronic liver disease due to alcoholism. However, according to your policy, it is mentioned that if your illness is caused as a result of alcohol abuse, the cover will not be valid. So, this condition will not get paid for as it is an exclusion. 

In our opinion, understanding the exclusions is as important as, (if not more than) learning the list of diseases and treatments covered. You should refer to your critical illness policy document, to get the detailed list of such exclusions applicable to your policy. 

Here are some examples of exclusions. 

  • Illnesses as a result of self-injury or attempts of suicide
  • Conditions caused by ionizing radiation or contamination by radioactivity from nuclear fuel 
  • Congenital external diseases, defects, or anomalies
  • Medical conditions occurring as a result of substance abuse, use of illegal drugs, narcotics (unless prescribed by a medical practitioner), intoxicants, alcohol, hallucinogens, etc.

The bottom line is that you shouldn’t get swayed by the number of illnesses alone - and should get a deeper view into what is actually covered (the inclusions), and what might not be covered (exclusions), in the plan you’re looking at. 

Doing deeper research on everything you need for a critical illness cover - so you can make a final decision with confidence? We’ve got the perfect resource for you! 

Download - The Most Definitive Guide To Critical Illness Insurance

Got specific questions related to critical illness policy that you want expert responses to? Post them on the Beshak Insurance Forum, and get answers within 6-8 hours!

Key takeaways
  1. Getting diagnosed with a critical illness could cost your family even more than your death.
  2. The cost of curing a critical disease is very high - not only will you lose your earnings, but you will also see a rise in other medical expenses that your health insurance will not pay for.
  3. A critical illness policy will pay you a lump sum amount that can be used to replace your lost income and support your long-term medical needs, without compromising on your family’s lifestyle or dreams. 
  4. Every critical illness policy comes with a list of diseases covered, but this list could be misleading. So, do not get swayed by the number of illnesses covered alone.
  5. Instead, carefully analyze the list of inclusions and exclusions to arrive at a policy that covers all the important conditions you want protection against.
Team Beshak
Written by,
Team Beshak, We breathe insurance :)

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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