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How Critical Illness Health Insurance can Help Your Future

One of the major expenses that an individual has to face during the lifetime is related to healthcare costs in India. The recent outbreak of the Covid-19 pandemic is an example, where the hospital bills of affected people are hitting exorbitant levels. A medical emergency can occur anytime and a health insurance policy is of great help during such a situation. Moreover, if you or your family members suffer from any life-threatening disease, a critical illness health insurance policy can cover the medical expenses efficiently.You get a lumpsum amount for the treatment process. Read on to know more about it.

In case of a life-threatening disease like cancer or cardiovascular ailments, you should be able to concentrate on the treatment process instead of worrying about the funding. As standard health insurance policies usually do not cover these diseases, you should consider purchasing a critical illness cover.

About critical illness insurance

Critical illness insurance is an additional cover that offers you financial protection if you are diagnosed with a chronic or life-threatening disease. It is associated with the disbursement of a lumpsum amount to the insured. It would take care of the medical and rehabilitation costs associated with treating the specific critical illness. You can buy critical illness health insurance as a standalone policy or add it as a rider to your existing health policy.

The number and type of ailments that a critical illness insurance policy covers, would vary among different insurance companies. Most insurance companies usually cover 8-36 illnesses, which include the following:​

  • cancer (specified severity)
  • stroke
  • permanent limb paralysis
  • heart attack (first time)
  • multiple sclerosis
  • coronary artery diseases requiring surgery
  • end-stage liver disease
  • kidney failure
  • loss of speech
  • encephalitis
  • blindness
  • Parkinson's disease
  • Alzheimer's disease
  • motor neuron disease/amyotrophic lateral sclerosis (ALS)
  • major burns
  • muscular dystrophy
  • end-stage lung failure

aplastic anae​

Some critical illness insurance policies also provide coverage for a major organ transplant, aorta graft surgery, bone marrow transplant, heart valve replacement, etc. You have to read the policy document care fully to know about the illnesses that your policy covers.

You can go for an additional cover by purchasing a critical illness policy, but it is necessary for certain categories of people as mentioned below:

  • Individuals having a family history of critical illnesses

Several critical illnesses are hereditary and if you have a family history of any serious ailment, you are at a higher risk of developing them. Having critical illness insurance will be of much help and provide you support to get the best treatment possible.

  • An individual who is the principal earning member of a family

As the only breadwinner of your family, you will notwant your loved ones to have financial difficulties if you get diagnosed with a critical illness. Critical illness insurance helps you take care of your treatment costs, and reduces the financial burden on you and your family.

  • Those who are above 40 years

People over 40 years are more likely to develop a critical illness. If you want to get secured when you reach this age, you should plan to purchase a critical illness insurance policy much earlier like in your 30s.

How is the insurance amount disbursed for the critical illness policy?

Critical illness health insurance policy differs from standard health insurance. The insurance company would give the entire sum insured as a lump sum amount to you in case you are diagnosed with any critical illness covered under the policy.

Moreover, the insurer will pay you the entire amount in one go, irrespective of the medical expenses. This differs from a standard health insurance policy, where you must file a claim depending on your hospital bills.

Several types of insurance products are available in the market, and you may confuse critical illness insurance with a product like personal accident insurance. To make an informed choice, research about the products available in the market, compare different policies, and read through the terms of the policy that you decide to buy.

 ​Benefits of buying critical illness insurance early in life

Most of the critical illnesses occur later in life but the situation has changed currently due to a lifestyle change. The usual suggestion is that you should purchase a critical illness insurance policy around your late 30s or early 40s.

However, according to recent insurance estimates, 40% of the patients suffering from heart diseases in India are 25-35 years old. Considering this, it is a good idea to buy critical illness insurance earlier when you are in your 20s, to stay protected. Buying critical illness policy early, offers several benefits, including:

  • Lower premium

The age of the policyholder plays an important role in determining the insurance premium. Since younger policyholders are usually in better health and are less likely to get a chronic illness, insurance companies charge a lower premium due to the lower risk involved.

Older people have to pay a higher premium because they have an increased chance of chronic diseases and the insurer would be liable to pay.

  • Coverage for medical bills

Getting treatment for critical illnesses is an expensive affair and can become a burden for those without a safety net. Since critical illness insurance gives you the entire lump sum amount in a single transaction, you do not have to wait due to a lack of funds. You can avail of the treatment in case of emergency.

  • Income replacement

Suffering from a critical ailment could force you to take frequent leaves from work to keep up with hospital appointments, affecting your income. Critical illness health insurance provides financial protection during such times by offering coverage for the loss of income.

  • Coverage for other expenses

You can use the lump sum amount given by your insurer not just to clear medical bills, but also to take care of your children's school/college fees, instalments, household expenses, etc. This can be very useful as covering these expenses may otherwise become difficult due to the effect of your illness on your household income.

  • Tax benefits

Critical illness insurance is subject to tax benefits under the Income Tax Act, 1961. Section 80D of the Income Tax Act, 1961, allows tax exemption up to Rs. 15,000 for beneficiaries. The same section grants senior citizens tax benefits up to Rs. 20,000.

The best way to avoid critical illnesses is to lead a healthy lifestyle. Try to maintain a balanced diet, exercise regularly, and manage your stress level.

Due to hereditary reasons and old age, the chances of contracting chronicillnesses often increase. Having critical illness health insurance can help you stay prepared if you are diagnosed with any of the ailments that are covered. Moreover, having critical illness insurance also helps you to remain stress-free because you can focus on the medical treatment instead of worrying about funds for your medical expenses.