ABC - All 'bout Critical Illness Cover

Our last week's article on four pillars of financial well being brought in light, a new realization for us. A friend of mine called up asking “Ami,don't health insurance plans cover the critical illnesses? Aren't they both the same?”. This question raised my eyebrow and i thought it was wise for the benefit of many to clarify the same. Today, I would to share the conversation that took place between us on this topic.

Some of the questions raised by my friend were as follows:

Q1-Don't health insurance plans cover the critical illnesses? Aren't they both the same?

Saarthi – No, Critical Illness policy is not same as Health Insurance policy. But, some health insurance policies offer critical illness coverage as an additional rider for a marginally higher premium. Health insurance covers only the hospitalization expenses for any illness including for the critical illness.

Q2- So, what is a Critical Illness Policy?

Saarthi- A Critical Illness policy is a policy covering life threatening diseases and making a lump sum payment to the insured on the diagnosis of the same. The list of illness include -

• Cancer of Specified Severity, First heart attack of specified severity
• Open chest CABG
• Open heart replacement or repair of heart valves
• Coma of specified severity
• Kidney failure requiring regular dialysis
• Stroke resulting in permanent symptoms
• Major organ/bone marrow transplant
• Permanent paralysis of limbs
• Motor neuron disease with permanent symptoms
• Multiple sclerosis persisting symptoms
• Aplastic anemia
• Bacterial meningitis
• Loss of speech
• End stage liver disease
• Deafness
• End-stage lung disease
• Fulminant viral hepatitis
• Major burns
• Muscular dystrophy (listed compiled from www.policybazaar.com)

Since, these are medical terms, you can ask your TPA or family doctor for their commonly used terms.

Q3 – Is it necessary to present bills in critical illness policy to the insuring company for claim like in health insurance?

Saarthi- Unlike in health insurance, it is not necessary to prove hospitalization or expenses to claim the benefit. In Critical Illness policy, benefit is received once the insured is diagnosed with the life threatning disease if it meets the general conditions attached to it.

Q4- What are the conditions attached to it?

Saarthi – Like every other policy, this cover has got a 90 day waiting /gestation time before the cover actually begins. Also, if the insured dies within 30 days of inception from any listed critical illness/ surgery , he would not receive the benefit. Beyond this there are other conditions, which deny the cover under critical illness policy. They are common across all insurers. You can read about them in detail in the brochure.

Q5 – I am healthy and except viral fever,I have never even been hospitalised. Do you think I should have a Critical Cover at my age?

Saarthi- Yes, it is helpful. These ailments which are covered under critical illness are majorly silent killers. They don't show symptoms till aggravated. So, you can never claim that you are free from any illness. Also, not all ailments are hereditary. Most of these diseases are outcome of our sedentary and stressful lifestyle. Also, the increasing work pressure makes it necessary to keep our guard on for safety.

Q6 – How do I select my Critical Illness Cover?

Saarthi – You should get Critical Illness cover for atleast 4-5 times your annual income. Also, whenever you are considering any policy, please look into the inclusions and exclusions under the policy. Also, study the sub -limits under the policy and the waiting period under the policy .Since, these policies are 15- 20 year contracts(depending on your current age), it is better to know the age upto which you can renew it.

Q7 – Who issues a Critical Illness Cover? Is there any tax benefit for it?

Saarthi – All the major general insurance companies provide Critical Illness Cover. Also, the premium paid under these policies can be claimed under Sec 80D of IT Act,1961 along with health insurance.

I hope the above discussion is useful for all of you to make your decision simple and quick. Send in your queries relating to critical illness at saarthifp@gmail.com