Protection against critical illness is a crucial benefit which should be added to any insurance policy, especially term plans. Critical illness can be taken as a rider or as an independent insurance plan, wherein the policy holder receives lumpsum pay-outs on diagnosis of major terminal illnesses like cancer, heart attach or organ failure. Treatment for the critical illness can suck into a person’s finances in ways that one cannot imagine, especially due to the fact that these kinds of illnesses come without any warning.
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What is critical illness
Any illness which has a long lasting physical effect is termed as critical illness. These illnesses can be fatal and require long term intensive treatments. Naturally, the cost of such treatments is usually very high.
Some of the common critical illnesses are:
- Kidney failure, which can lead to dialysis
- End stage liver failure
- Cancer
- Coma
- Aplastic Anemia
- Permanent paralysis
- Stroke, which can lead to permanent damages
- Open chest CABG
- Sclerosis
- First heart attach
- Aorta graft surgery
- Open heart replacement, heart valve repair, etc.
Benefits of a critical illness insurance plan/rider
Critical illness insurance plans/riders benefit a policy holder in a variety of ways. They act as income replacements which becomes extremely beneficial when there is a loss of income due to a critical illness. The premium paid on critical illness is quite low. They attract tax benefits under Section 80 D of the Income Tax Act, 1961 and provide coverage for medical and day to day expenses.
Critical illness insurance plan
Critical illness plans are health insurance plans which cover specified critical illnesses mentioned in the policy. It is often termed as a fixed benefit plan since it pays a lump sum amount to the policyholder when he/she is diagnosed with a critical illness. Each critical insurance plan covers a certain set of illnesses. Once the policyholder is diagnosed with one of these critical illnesses, he/she gets the specific lumpsum insurance payout, in terms of sum insured, irrespective of the actual treatment cost.
Some of the features of critical illness insurance plan include the following:
- Upon diagnosis of the disease, the policyholder has to survive a certain tenure to be eligible for this benefit which is known as the ‘Surviving Period’. The tenure is usually 30 to 60 days after diagnosis of the disease.
- The policyholder will get the benefit upon diagnosis of the covered critical illness itself. The policy holder might or might not take treatment for the disease.
- The benefit can be used for availing the treatment or for any other purpose like reclaiming loss of pay, travel and lodging expenses for availing medical treatment, etc.
Additional Reading: Should You Opt for The Terminal Illness Benefit?
Critical Illness Rider
Instead of buying a separate insurance plan for covering critical illness, one can add a critical illness rider to a life insurance policy. A rider is like an additional benefit that can be added to an insurance policy to cover critical illness. This enables someone to avail an additional coverage in addition to the base life insurance coverage.
The features of a critical insurance rider are almost same as the critical illness plan, but entails a lesser premium outflow and policy coverage. It covers the illnesses covered under this rider and if the policy holder is diagnosed with any one of the illnesses listed, the additional sum assured is paid.
Critical illness as a rider, attract lesser premiums than a critical illness insurance plan. However, stand-alone plans are better than riders since they offer more benefits and broader policy coverage.
Critical illness coverage is that friend who stands by you when you need the most amount of support. It may not seem a worthwhile investment while purchasing such insurance, but it has long term benefits which come in extremely handy in times of emergencies.