How Does Critical Illness Insurance Works?

Posted on: Apr 26, 2019 | | Written by:

How Does Critical Illness Insurance Works?

If a mere thought of contracting disease such as heart attack, cancer or even stroke scares you, then it’s time you buy critical illness insurance policy. Being diagnosed with a critical illness cannot just disrupt your health, but also your family life and your savings. What if your health insurance plan does not offer you enough coverage and you don’t have enough savings to fade off the hefty medical bills? So, what could be a way out of this situation? You can very well live longer and provide your family with the required financial assistance if you have a critical illness insurance policy in hand. Let’s understand how critical illness insurance can help you.

What is critical illness insurance?

To put it simply, a critical illness insurance policy provides you coverage for specific illnesses covered by the insurer. On diagnosis of life-threatening diseases during the tenure of the policy, this type of insurance plan pays out a lump sum amount that you can use for the treatment of the illness, to pay off debts or to take care of your family expenses. Understanding that the loss of income is caused due to your inability to work due to illness, the insurer makes the payout on diagnosis of the illness.

Importance of a critical illness insurance policy

With the kind of lifestyle we live, there has been a constant rise in the number of critical illnesses that we are likely to encounter. Every day we hear stories of how people succumb to death due to cancer, heart attack, kidney failure or any such critical illness as they are left with no money for treatment. It is important to know that being diagnosed with a critical illness not just affects your health but also leads to loss of income due to your inability to work well. This also means that your family members would be the ones who would have to bear the repercussions of your illness. And even if you have a health insurance plan in place, then the coverage provided under the same would be limited and unlike a critical illness plan, you would not get any lump sum amount to take care of the treatment as well as any other additional expenses. Hence, having a critical illness insurance policy helps during such times.

You should ideally be opting for a critical illness insurance policy if you do not have enough savings in hand and if your health individual or group health insurance plan is not enough to provide you with the desired coverage.

How does critical illness insurance work?

A critical illness insurance policy works differently from a health insurance policy. A health insurance policy pays for the medical expenses incurred upon hospitalization, pre and post hospitalization expenses and may come with certain limitations in terms of co-pay, room rent limit and others. A health insurance policy indemnifies you to the extent of the expenses incurred upto the sum insured opted. But on the other hand, critical illness insurance pays out a lump sum, irrespective of the hospitalization factor. The lump sum amount is paid out equal to the sum insured opted for. However, the payout is made after a survival period of 30 days from the date of the first diagnosis.

Coverage provided under critical illness insurance policy/ Inclusions of critical illness insurance policy

A critical illness insurance coverage provides coverage for the treatment of the below illnesses (Note: The coverage for below illnesses depends on the type of plan opt for).

Heart attack (Myocardial Infarction)
Coronary Artery Bypass Surgery
Stroke
Cancer
Kidney Failure
Major Organ Transplantation
Paralysis
Aorta Graft Surgery
Heart Valve Replacement
Multiple Sclerosis
Benign Brain Tumor
Parkinson’s disease
End-stage liver disease
Alzheimer’s disease
Primary Pulmonary Arterial Hypertension

The coverage for the above illnesses is provided to individuals aged between 5-65 years and no medical check-up is required up to 45 years of age.

Exclusions of critical illness insurance policy

Critical illness caused due to an act of war, invasion, public defense or use of chemical and biological weapons.
Act of self-inflicted injury
An illness that is a result of participation or involvement in the naval, air force of military operation or adventure activity such as scuba diving, parachuting, rock or mountain climbing.
Illness arising due to the consumption of alcohol or drugs
Critical illness caused due to pregnancy, miscarriage or congenital disease
Illnesses such as AIDS or HIV condition is not provided coverage for
Treatment of obesity or cosmetic surgery is not provided coverage for

The above list is generally excluded from the coverage provided under a critical illness insurance policy. Always refer to the policy documents to know the exact list of exclusions.

Benefits of critical illness insurance policy

If you are still wondering about why you should be purchasing a critical illness insurance policy, then it is important you read on to know about the benefits of investing in this type of health insurance.

You don’t have to deplete your savings: A critical illness has the power to deplete your savings-all of it that you would have saved for your marriage, child’s education, marriage or even for other purposes. Your savings will get depleted as you would lose your source of income due to the illness and would have to utilize your savings to take care of the day-to-day expenses as well as the medical costs. Hence, at such times, critical illness insurance coverage can be of great help.

Ward off your debt: The lump sum payout that is made on the diagnosis of the critical illness can be used to ward off your loans and liabilities such as personal loan, home loan and other EMIs.

Increases your chances of survival: With enough funds in hand, you can avail the required medical treatment for curing the illness, thus you can live long.

Now that you know what critical illness insurance is and its coverage, it is imperative that you purchase this plan today. Remember, it’s always better to be safe than sorry. HDFC ERGO offers you three critical illness insurance plans covering a wide range of illnesses including paralysis, stroke, heart attack and other medical conditions.

Disclaimer: The above information is for illustrative purpose only.For more details, please refer to policy wordings and prospectus before concluding the sales.

Learn How to Choose Between Disease-Specific and Critical Illness Insurance Plans

Why a Critical Illness Cover for Serious Diseases is a Must-have to Avoid Heavy Expenses

Age to BMI – Factors that Can Affect Critical Illness Insurance Premium