Why Should You Buy Critical Illness Add-on Cover?

Posted on: Feb 20, 2024 | 3 mins | Written by: HDFC ERGO Team

Why Should You Buy Critical Illness Add-on Cover?

What Is a Critical Illness Add-On Cover? Who Should Buy it?

There would have been situations in which you would worry about your family’s future in case of your death. You may also wonder if you could get diagnosed with cancer because your grandfather suffered from it. Many such thoughts could keep you up at night. Well, to find some peace of mind, you should consider buying a critical illness add-on cover. A critical illness, like cancer or kidney failure, requires extensive treatment that can drain the finances of the family, especially when medical inflation is on the rise. Let’s understand what this add-on cover offers and who should opt for it.

What is critical insurance coverage?

Critical illness insurance is a fixed benefit plan which provides a lump sum compensation to the insured if diagnosed with any of the critical or life-threatening illnesses (as listed in the policy), such as cancer, stroke, heart attack, kidney failure, etc. Critical illnesses generally require long-term treatment, which is expensive. A basic health insurance policy may not provide adequate coverage if a person gets diagnosed with a critical illness; hence, it is prudent to opt for a plan specifically meant to cover such illnesses. The best thing about critical illness coverage is that you can use the payout to cover medical as well as non-medical expenses, such as paying off debts or mortgages, children’s education, compensating for loss of income, etc. The regular health insurance policy will cover only medical-related costs and the actual expenses incurred.

But in the case of critical health insurance, you will receive a lump sum amount, irrespective of the costs incurred when diagnosed with a critical illness. Suppose your critical insurance cover has a sum insured of Rs 30 lakh; you can claim the entire sum insured if diagnosed with a critical illness covered by your policy.

When to take it as an add-on?

Adding critical illness cover to your base health plan depends on various factors, such as —

• Family history

You may be at risk of developing a critical illness if you have a family history of certain critical illnesses which are genetic. Having a critical illness add-on cover can give you financial security.

• Inadequate employer-provided coverage

If the health insurance provided by your employer seems inadequate or doesn’t cover critical illnesses, you can consider buying this add-on for added protection.

• Medical conditions

It’s worth investing in a critical illness add-on plan if you have existing or chronic health issues, as in some cases, these ailments can lead to a critical illness.

• High out-of-pocket expenses

The regular healthcare plans may not be sufficient to cover treatment costs of critical illnesses, leading to high out-of-pocket expenses. Critical health insurance can help cover these additional costs.

Who should think about this add-on?

• Those with a family history of critical illness

Some critical illnesses are hereditary. If such a critical illness runs in the family, there’s a high risk of other family members developing it. So, it’s essential for people with a family history of critical illness to buy critical illness insurance and stay financially prepared.

• Those above the age of 40

After the age of 40, there’s a greater risk of developing critical illnesses. One should consider buying this add-on in his/her late 30s. Investing in such a policy when in your thirties will also help you complete the waiting period and avail of the coverage when needed.

• Those with high-risk jobs

As per some studies, people working in high-pressure jobs have a high risk of getting infected with critical illnesses. It’s advisable for people working in such environments to buy a critical illness policy for financial security.

• Sole earning member

If you are the sole earning member, it’s recommended that you buy critical illness insurance as soon as possible to ensure your family’s financial security.

Benefits of having this add-on

Here are some reasons why having a critical illness add-on cover is beneficial —

• Covers a range of critical illnesses

Critical illness add-on covers a wide range of ailments as specified in the policy, such as cancer, stroke, kidney failure, paralysis, etc.

• Financial security

A critical illness add-on will help cover the exorbitant treatment costs.

• Provides lump sum payment

When diagnosed with a critical illness, the policyholder will receive a lump sum payout equal to the sum insured, irrespective of the treatment cost. This helps to meet your medical and other miscellaneous expenses, such as compensating lost income while you are recovering, children’s education, food and travel expenses of relatives visiting the hospital, paying off debts, loans, etc. The insurer will not ask for any bills or how you spend the money.

• Tax benefit

In addition to the extensive coverage, a policyholder aged below 60 years can also avail of a tax deduction of up to Rs 25,000 on the premium paid for critical illness add-on as per Section 80D of the Income Tax Act. For senior citizens, the deduction is up to Rs 50,000.

• No separate medical test

If you opt for this add-on along with your regular health insurance plan, you may not have to undergo a separate medical test. However, this depends on the insurance provider.

• Affordable premium

Premiums are affordable and cost-effective compared to the high costs of treatment associated with critical illnesses.

• Substitute lost income

If the insured and sole earning member gets diagnosed with a critical illness, it can cause financial distress due to the inability to earn during treatment and recovery. The lump sum compensation can substitute for the loss of income.

• Peace of mind

Having a critical illness add-on can give you peace of mind by lessening your financial burden. You don’t have to stress over arranging funds for treatment-related costs of any critical illness.

Conclusion

Health insurance provides financial protection during medical emergencies. And when you add critical illness coverage to your individual health insurance , you will get added financial protection. If you run the risk of developing a critical illness, it is wise to buy the add-on at the earliest and stay financially prepared. Before buying the add-on cover, assess your needs and check the list of covered critical illnesses, waiting periods, and other policy terms and conditions.

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

Important Features to Check Before Buying Critical Illness Insurance

IRDAI’s Guidelines on Standardization of Critical Illness in Health Insurance

What is the Difference between Critical Illness Rider and Standalone Critical Illness Plan?

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