This Article is From Dec 11, 2013

How to choose the best critical illness cover

How to choose the best critical illness cover

"There are worse things in life than death. Have you ever spent an evening with an insurance salesman?" - Woody Allen

Life insurance is the answer to the one of scariest question - 'What if I die tomorrow?' If your life is covered, you do not have to worry about any mis-happening (financially, of course!)

However, have you ever wondered what will happen if you don't die!

Let us rephrase - what will happen to you and your family if you are alive but not able to make any living due to some illness. On top of that, you have to bear heavy medical expenses on treatments.

Here comes the critical illness cover.

Critical illness cover, also referred to as critical illness insurance, is an insurance policy where you'll get a tax-free 'lump sum' - a one-off payment - if you're diagnosed with one of the serious illnesses covered by your insurance policy. It's designed to pay off your mortgage, debts, or pay for alterations to your home such as wheelchair access, should you need it.

You critical illness insurance will pay out if you get one of the specific medical conditions or injuries listed on the policy. Not all conditions are covered. The policy will also specify how serious the condition must be. Examples of critical illnesses are:

  • Heart attack
  • Stroke
  • Certain types and stages of cancer
  • Conditions such as multiple sclerosis

Most policies will also pay out, if you are permanently disabled because of injury or illness. It only pays out once and then the policy ends.

Points to consider before buying critical illness cover

  • List of all critical illness insurance coverages included in your policy: Different companies offer risk coverage towards different critical illnesses.
  • List of critical illnesses not included in your policy: It is vital to know the things included in your policy. Similarly, it is essential to take a note of things not covered under the policy.
  • Understand the procedure of filing claim: A claim process is important for any insurance policy. So is the case with critical illness insurance policy. Thus, do learn well in advance about the formalities and documents you would require to file a claim.
  • Benefits you would get at the time of renewal: Before buying any particular critical illness insurance, make it a point to find out about the renewal benefits you would get from your insurer for the year you haven't filed any claim.
  • Some other factors that one should look for before buying critical illness insurance are hospital network, claim settlement history, etc. To know about critical illness insurance pros and cons, it is vital for you to understand the coverages, exclusions and other factors of such a policy.

Who should buy?
The money you get from a critical illness policy can be used to pay off a mortgage, to pay medical bills, home modifications or for anything else.

Critical illness cover could be a good choice for you, if:

  • you don't have savings to help you if you are seriously ill
  • you don't have a good employee benefits package to cover a period of time off work due to sickness

How to choose sum assured?

Before deciding on sum assured, keep in mind factors like treatments costs, recurring costs and future financial liabilities in case of income loss.

Also, take into account existing covers such as Mediclaim or personal accident and disability insurance policy.

Stand-alone policy or rider?

You either can buy a critical illness plan as a standalone policy, or you can combine critical illness riders with your life or health insurance plans. The policy terms and conditions under both the options are more or less the same. The choice between a standalone policy and a rider depends on your requirement.

Usually, a standalone policy offers more suppleness in choosing the sum insured and larger covers as compared to riders. The limit on sum insured under a rider is usually the same as the base policy. Therefore, if you have a health plan or term insurance of Rs 5 lakh and buy a critical illness rider with it, it is unlikely that the insurer will offer you a sum insured of more than Rs 5 lakh for the add-on cover.

There will be a difference in pricing as well. A standalone critical illness policy will cost more as it comes with the option of choosing a higher sum insured.

What does a critical health insurance plan not cover?

Every insurance policy has some clauses and limitations attached to it. Similarly, a critical illness insurance policy has its own restrictions. For example, a critical illness plan may not cover all chronic diseases/illnesses; such as -

a) Any critical illness arising out of any genetic illness or disorder
b) Any critical illness due to alcohol, smoking, other tobacco intake or drug abuse
c) Critical illness acquired because of Human Immune-deficiency Virus (HIV) infection
d) Critical illness arising due to intentional self-injury, suicide or attempted suicide

Besides these, all insurance providers may also not cover pre-existing diseases, which you were already diagnosed with before buying the critical illness insurance. is a leading personal finance portal.

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