Think long term while buying health insurance for critical ailments

Lifestyles of people are changing, today more than ever. The demanding professional and personal lives of individuals have created an unhealthy pace of life, and as a result, people are becoming victims of chronic and critical health conditions, even at an early age. In such a scenario if an individual who is the sole breadwinner is diagnosed with a critical illness then the family may be left with meagre means to support themselves. This may not only cause a loss of income for the entire family but they may also be severely burdened with medical expenses. Hence, there are Critical Illness (CI) policies, designed for such situations. 

It is imperative that one should not confuse a CI policy with an indemnity health insurance plan. While a health insurance plan will insure an individual against medical and hospitalisation expenses, a CI policy will provide a lump sum amount in case an individual is diagnosed with one of the illnesses mentioned in the list determined by the insurer. A CI policy would help an individual cover the cost of the treatment and further help in repaying debts taken for the treatment. This will ensure that the illness does not hamper the family's lifestyle or burden them financially.

Importance of CI policy

A CI policy would cover fatal diseases such as cancer, heart attack, multiple sclerosis, stroke, major organ transplantation, coronary artery bypass surgery, paralysis, kidney failure and others. A diagnosis which confirms the critical illnesses is enough to get benefits of a CI plan. All insurance companies would cover a diverse set of critical illnesses which may differ from insurer to insurer. It will be prudent to check the list of diseases covered under the policy, and the exclusions as well, to get a better understanding of the policy beforehand. 

Typically, the waiting period would approximately be three months under a CI policy. A CI policy should be opted for a sum insured that has a linkage to your annual income, a reasonable premium and waiting period along with the maximum number of diseases covered under one policy. Premiums might be higher for an elderly individual purchasing a CI policy, as older individuals are more likely to have such illnesses rather than someone at a young age. The CI policy should be taken from a long-term perspective as compared to a health insurance plan which gets renewed every year. The policy is also helpful to claim tax benefits under section 80(D). 

However, it is equally important to check exclusions such as self-inflicted injury, alcohol and drug abuse and sexually transmitted diseases which would not be covered in a CI policy. Also, it is important to know that a CI policy may have a survival period, wherein an insured must survive the listed number of days from the date of being diagnosed by a critical illness. The insurance company is not liable to pay for the claim, in case the insured does not survive this period. Hence, it is vital to read the fine print of the policy to avoid any misconceptions.

Myths and facts about CI policies

There are some myths about CI policies which need to be countered with facts.

Myth: A CI policy would cover any illness

Fact: One should always read the fine print of the CI policy before making any assumptions as to which illnesses would be covered under the policy. It is important to note that the policyholder will only be covered for those illnesses which are mentioned in the policy document by the insurer.

Myth: Once diagnosed with a critical illness mentioned in the policy, the claim amount will be paid

Fact: Every critical disease covered under the CI policy defines the disease covered and stages/progression at which the coverage is paid. This is mentioned in the policy document and hence, it's important to be aware of such details while purchasing the policy.

Myth: One needs to submit original bills of hospitalisation to avail a claim

Fact: CI policies are usually benefit covers and hence, hospitalisation of the insured is usually not required and only the diagnosis of the critical illness is important to avail the benefit. Therefore, the insured is required to submit the medical reports confirming the diagnosis of the illness. But in case the CI policy offers coverage on an indemnity basis, in such cases, the insured may be required to submit the original bills/documents for hospitalisation for the purpose of claim settlement. It is advisable to buy a stand-alone policy as it will give an extensive cover in terms of illnesses.

The writer is member of executive management, HDFC Ergo, General Insurance