Critical illness insurance plans are useful when the insured gets diagnosed with a critical illness covered under the policy. However, to fully understand the difference or scope of critical illness, it is important to understand how it differs from a health insurance plan. To begin with, while health insurance or medical insurance can help cover the cost of consultation, hospitalization fees, treatment charges, etc, the coverage does not necessarily help cover the treatment of critical illnesses. A comprehensive critical illness cover can help individuals care for their medical needs and treatment requirements.
Why Is Critical Illness Insurance Important?
Getting diagnosed with a critical illness can cause significant financial loss, denting savings and straining income. The financial strain becomes more concerning if it leaves the insured with a complete or partial disability, causing a loss of income.
In this case, a critical illness can help individuals cover the treatment charges and loss of income. In addition, individuals pay relatively less for critical illness cover than general health insurance policies.
For instance, if individuals avail of a health plan that offers a sum of Rs. 10 lakh as a payout, they might pay a premium of around Rs. 12,000. On the other hand, the premium for critical illness coverage would be around Rs. 3,000.
How to Choose the Best Critical Illness Policy?
One must compare different plans and their accompanying features to ensure that one gets the best critical illness plan.
Today, the insurance market offers a variety of insurance plans to individuals. While selecting choices offers individuals choices, the variety often confuses them. By trying to understand the coverage of the policy and its features, individuals can pick a comprehensive critical illness cover that will ensure they are prepared for unforeseen medical situations. To ensure that individuals can weigh some crucial factors –
Should we go for an add-on or choose a stand-alone policy?
Individuals must first understand whether they want to pick an add-on or a standalone policy. Typically, one can avail of a critical illness plan in two ways – as a standalone insurance policy and a separate plan. Notably, a separate plan will have nothing to do with a pre-existing health plan. The other way to avail yourself of critical illness coverage is to get health or life insurance with a critical illness rider benefit.
Usually, a standalone insurance plan is deemed more flexible than any add-on. This is because standalone plans extend a more comprehensive cover. On the other hand, in the case of add-ons, the insured sum limit is relatively less than the base plan. Moreover, insurers may only offer a larger rider benefit coverage than a small base cover. For that same reason, a standalone critical illness cover comes with a higher premium than the charge for an addon.
Know the cover benefits.
Having an in-depth idea about the cover benefits and the riders can help make an informed choice. Knowing the features and their limitations beforehand will help us choose a suitable plan and enable us to account for the gaps more effectively.
Why the age of the applicant is crucial
The premium of a critical illness cover depends on the applicant’s age, which increases with the increase in age. This is because older individuals are deemed to be more prone to suffer from a critical illness or a disease induced by aging. This is why insurers charge them a relatively higher premium to spread out the risk involved with older applicants. Hence, buying an insurance policy early in life is recommended to enjoy a comprehensive cover at a lower premium.
Declare existing plans and health conditions – but why?
When applying for an insurance policy, it is important to be transparent with the crucial personal, financial, and insurance details. To begin with, individuals must declare their existing health conditions and critical illness beforehand to avoid rejection of the claim during verification. In addition, they should declare their existing health plans or life insurance and avoid contradiction or overlap of benefits that could lead to confusion or rejection at the time of claim verification.
Check Special plans and their availability for you.
Some insurance providers also offer special policies designed for senior citizens or women. Such plans are designed with their unique needs and financial protection requirements in mind. For instance, some plans may extend exclusive coverage for women that includes critical illnesses like cervical cancer, breast cancer, or ovarian cancer. On the other hand, plans for senior citizens may have an inbuilt pension or savings feature to help them plan their retirement better.
Find out the renewability age.
The renewability of insurance policy tends to vary among insurers. Some may fix the limit at 50 while others beyond 60 or offer a lifetime renewability option. Typically, once the policyholder crosses the limit, they are not allowed to renew their existing insurance plan. Ideally, senior citizens should consider getting a critical illness that comes with wide coverage for various diseases and look for features that are in their interest. This is because health or critical illness coverage for senior citizens comes with a significantly low coverage and a high premium.
Find Inclusions and Exclusions
This aspect is a key consideration to ensure the policy one avail meets their requirements and offers comprehensive protection. Choosing a plan that offers comprehensive coverage, including multiple diseases, assistance for treatment, and financial aid during hospitalization could prove more beneficial. Similarly, it is important to know about the limitations of a policy, i.e., the exclusions, to understand the actual scope of the plan and what they can expect from it during an emergency.
Having an idea about the exclusions beforehand helps avoid unwarranted confusion or hiccups during emergencies. Individuals must also check the full coverage and exclusion of add-ons if they plan to get riders.
Know the waiting period.
Typically, policyholders have to wait for a certain time before they can raise a claim against their critical illness plan. In other words, insurers do not tend to entertain claims raised during this waiting period, making the policyholder accountable for their own needs for this period.
In this regard, it is always beneficial to avail a policy that comes with a short waiting period to ensure they are protected against unwarranted situations that can arise anytime and are protected against it. Similarly, find out the claim settlement ratio to gauge how likely a policyholder is to accept or reject a claim.
Illnesses and the disorders covered
To make sure you avail of a plan with comprehensive coverage, make it a point to check the list of critical illnesses and diseases covered under it. It is always recommended to opt for a policy that covers lifestyle-induced diseases, especially those that run in the family. Usually, critical illness policies may cover up to eight illnesses, but some may account for more.
Individuals should account for their protection needs and financial standing before getting critical illness coverage. They should also weigh the features of the policy, the reputation of the insurer, and the scope of the coverage to make an informed choice that assures robust coverage and protection at the time of need.
