Basically there are two types of critical illness policies. One is reimbursement policy and the other is benefit policy. Reimbursement policy will pay for actual medical expense like a health policy, whereas the benefit policy will pay for entire sum assured as a lumpsum benefit in case of diagnosis of any specified illness. The lumpsum benefit policy is the most commonly available and generally understood as a CI policy in general.
Illness coverage
Most critical illness policies cover the basic seven to eight critical illnesses, which would be nearly 75% of most common critical illnesses that one is likely to suffer. The list of critical illnesses covered differs from company to company. Hence, study the list of illness covered by each company and take an informed decision. The highest number of critical illnesses covered in a single policy is by Apollo Munich Vital and the number of illnesses covered is 37.
The discussion will not be complete without discussing specific illness policy like cancer care policies. Though the CI policy covers array of critical illnesses only of a specified stage or severity, a cancer care policy would cover even early stage cancer, which would not be covered under CI policy. Hence it would be worth considering option of standalone aliment policy also.
How to decide sum insured
The sum insured depends on the likely amount of expenditure to be incurred in case of any critical illness, loss of income and premium cost of the policy. It is advisable to take the maximum possible sum insured available within your budget, as any major critical illness would not only lead to cost of treatment, but could also impair the earning ability of a person substantially.
Besides, in case of a major critical illness, expenses could be as high as Rs 40 to 50 lakh, which would not be covered under one's health insurance policy. Considering the requirement of a higher sum insured, many companies have started offering large sum assured ranging from Rs 50 lakh to Rs 1 crore.
What is the premium range?
Premium for the CI policy is extremely low as compared to a normal health insurance policy. With respect to your regular health insurance policy, premium for CI policy also increases with the increase in your age, generally after every five years, but the percentage increase in the premium is substantially higher than that of a normal health insurance policy. Also note, that the premium for CI policy at a higher age, of around 60 plus years, far exceed the premium of a normal medical insurance, as at that age the possibility of contracting a critical illness is much higher, so premiums are also high. The liability of an insurance company would not be restricted to the actual cost of treatment, but the entire sum insured needs to be paid in case of a claim.
Should you buy online or offline
Whether it is bought online or offline, the CI policy has the same coverage and comes at the same premium. Buying online is convenient and can be easy, but you need to do thorough research. While buying offline you can assistance from your insurance agent, who could guide you through the buying process and be your contact point.
When is claim payable
Claims under the CI policy are payable on survival and after 30 days of diagnosis of a critical illness. So what it means is that no claim will be payable if a person is diagnosed with a critical illness, but does not survive for 30 days thereafter.
The writer is chief gardener, Money Plant Consultancy
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