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Waiting Period in Critical Illness: What You Should Know

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While buying critical illness insurance, we tend to focus on the list of critical illnesses covered, inclusions and exclusions, and the cost of the policy. While these are important factors, we should not overlook another crucial factor – the waiting period in a critical illness policy. During the waiting period, we cannot raise any claims for a diagnosed critical illness. So, understanding the waiting period is essential as it will help us manage financial planning effectively and understand why there’s a waiting period in critical illness insurance.

Understanding Critical Illness Insurance

Critical illness insurance is a type of health insurance that provides lump sum compensation to the policyholder on being diagnosed with a critical illness covered in the policy. A health insurance policy will cover the actual expenses incurred on hospitalisation, but a critical illness insurance plan will offer a lump sum amount to the policyholder, irrespective of the medical expenses. The amount can be used for medical as well as non-medical purposes, such as paying off debts, paying for children’s education, and compensating lost income. Due to the prolonged treatment of critical illness, the policyholder may suffer a loss of income, and this payout can make up for the loss.

What is a Waiting Period?

Most health insurance plans have waiting periods for pre-existing conditions, specific ailments, and critical illnesses. Waiting period, here, refers to the period during which you cannot raise a claim. If you file a claim during the waiting period, your claim will be denied. Suppose you have to undergo cataract surgery, then you have to wait 1 to 2 years (depending on the insurance provider) to claim the coverage benefits. However, emergency hospitalisation due to an accident is covered from day one.

What is the waiting period in a critical illness policy?

A critical illness policy comes with a waiting period of 90 days from the date of policy purchase. So, if you have been diagnosed with any covered critical illnesses, like cancer, stroke, paralysis, or kidney failure, before purchasing the policy, you have to wait until 90 days to avail of the benefits.

In addition to the waiting period, critical illness insurance has a survival period of up to 30 days. This means you have to survive this period after being diagnosed with a critical illness to be eligible for the compensation.

Importance of Waiting Periods in Critical Illness Policies

Critical illness policies have waiting periods for many reasons –

1. For insurers, a critical illness waiting period helps manage the risk. In the absence of a waiting period, people can purchase a policy on being diagnosed with a critical ailment or, if they show symptoms of the disease, and immediately claim the benefits. This can mean significant financial loss for the insurers.

2. It reduces the risk of fraud or misuse of the policy by individuals who buy a health plan with the sole intention of claiming expenses on being diagnosed with a pre-existing ailment.

3. Insurers can maintain a stable and affordable premium due to waiting periods. If they have to pay lump sum compensation immediately after issuing a policy, they have to increase the premium to cover these costs.

4. Waiting periods help insurers maintain a corpus fund from the premiums paid by policyholders.

5. When there is a waiting period, individuals at risk of critical illnesses can plan to buy critical illness insurance well in advance, thus encouraging early financial planning and better health management.

Factors Influencing Waiting Periods

Some key factors which influence waiting periods include –

• The duration of the waiting period depends on the type of illness. For instance, while pre-existing conditions have a waiting period of 1 to 3 years, the waiting period for maternity insurance can range between 2 and 4 years.

• Younger people may have shorter waiting periods because the risk of filing claims is lower as compared to older individuals.

• If you opt for long-term policies, the insurer may reduce the waiting period as the risk is spread over an extended period.

• Some insurers offer to reduce or remove the waiting period, but the premium will be high.

• Some insurers may allow policyholders to choose the waiting period if they want plans tailored.

FAQs

1. What is the difference between standard health insurance and critical illness insurance?

A standard health insurance plan covers your medical expenses due to an emergency such as an accident, illness, injury, or planned treatments, but critical illness insurance is meant only for covering a critical illness listed in the policy.

2. Can I claim critical illness coverage benefits from day one?

No, you cannot, as there’s a waiting period of 90 days from the date of policy issuance. Critical illness insurance also has a survival period of up to 30 days, which means you have to survive this duration after being diagnosed with a critical ailment like cancer, stroke, paralysis, multiple sclerosis, etc., to avail of the coverage benefits.

Conclusion

If you or any family member has been diagnosed with a critical illness or is at risk of getting it, then investing in a critical illness insurance plan is a must to stay financially prepared against the exorbitant treatment costs. However, this policy should be in addition to a comprehensive health plan or Mediclaim policy.

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

RELATED ARTICLES

Types of Waiting Periods in Health Insurance

Are there Health Insurance Plans with No Waiting Period?

Waiting Period in Pre-Existing Disease (PED)

What is the difference between Waiting Period and Survival Period in Health Insurance?

Understanding Waiting Period In Cancer Insurance

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