Most people believe that investing in a medical insurance plan is good enough to meet all their medical needs. However, considering the number of life-threatening diseases that are on the rise, a simple health insurance plan is just not enough anymore. Treating a critical illness can add a financial strain in your monthly expenses. This is where a critical illness policy comes into play.
A critical illness plan acts as a financial cushion that helps in combating the financial difficulties one may face while treating a critical illness. It helps with huge medical bills as well as the daily expenses that increase while getting a critical illness treated. In short, a critical illness policy stands by you and makes sure you do not have to borrow from anyone in times of a medical emergency.
Knowing the difference between a medical insurance policy and a critical illness insurance plan will help us understand why the latter is the need of the hour.
Medical insurance plan
- If you have a medical insurance plan, most of your hospital and medical expenses are reimbursed. However here, hospitalisation is mandatory for you to be able to get reimbursed.
- Most medical insurance plans have an initial waiting period of about a month. Most pre-specified diseases are covered only after the waiting period of your policy is over. However, this may differ from one insurance provider to another.
- Most medical insurance plans have an annual contract.
Critical illness policy
- A critical illness plan pays you the entire sum assured as a lump sum in case you are diagnosed with a pre-specified critical illness.
- These plans usually give parts of the sum assured as the critical illness reaches different stages, to meet the costs being incurred
- Most critical illness policies have a waiting period of about 90 days from the purchase date of the policy and 30 days after the illness has been diagnosed.
- A critical illness plan generally has a longer duration of about 15-20 years.
Who should invest in a critical illness policy?
- Someone with a family history of critical illness – high risk
- A critical illness policy is beneficial for those who do not have any savings to fall back on.
- It is also useful to invest in a critical illness plan if your employee benefit package does not cover the time taken off work while combating critical illness.
What does a critical illness policy cover?
A critical illness policy generally covers diseases like:
- Heart attack
- Coronary artery bypass graft (CABG)
- Transplant of organs like pancreas, liver, heart, and lungs
- Kidney failure
Although medical insurance plans have gained popularity owing to the vast number of diseases they cover, here’s why you should invest in a critical illness plan:
Increase in lifestyle-related illnesses
Today, illnesses like cancer, stroke, paralysis, and others are on the rise. The treatments of such illnesses are also very expensive. Thus, investing in a critical illness insurance policy ensures that you are safeguarding your finances, in case a major illness strikes.
Ready access to lump sum money
A critical illness is one of the uncertainties of life that can eat into your savings. A critical illness policy pays you a lump sum amount upon diagnosis of a critical illness, thereby ensuring that you do not need to affect your savings.
Takes care of your finances
In most cases, a critical illness may leave you home-bound. That’s when regular expenses, children’s fees, utility bills, and others can be affected. The lump sum amount from a critical illness policy ensures that all of these needs are taken care of.
Apart from the treatment, other costs like regular visits to the hospital and availing services of a nurse for private or home care will also cost a lot of money. The funds received from your critical illness insurance policy will help managing these expenses.
The premiums towards a critical illness policy are generally lower as compared to the premiums you pay towards a regular medical insurance plan. This is because, while a regular health plan covers a wide number of illnesses, a critical illness plan cover activates only when a major illness is diagnosed as listed in your plan.
All premiums paid towards a critical illness policy are tax deductible under Section 80D of the Income Tax Act.
Although the basic benefits of a critical illness plan are similar, different insurance providers cover different critical illnesses. For example, Aegon Life’s iCancer insurance plan covers all types of cancers (except skin cancer) and pays you:
- 25 percent of the sum assured in case you are diagnosed with minor stage cancer
- 100 percent of the sum assured in case you are diagnosed with major stage cancer
- 150 percent of the sum assured in case you are diagnosed with critical stage cancer
It waives off further premium payments if you are diagnosed with critical stage cancer. It also gives you the flexibility to pay premiums monthly or annually, depending on what best suits you.
A medical emergency does not come with a pre-warning. This is why investing in a critical illness insurance policy is the best way forward to safeguard your finances against any medical emergency that might catch you unaware.