5 factors to consider before buying critical illness cover

Vivek Sharma
Financial Planner and Trainer

Diagnosis of critical illnesses is a life changing event which has far reaching consequences for both an individual and the persons dependent on him as critical illness can disrupt dreams and wipe out savings. The most effective solution to overcome challenges arising from critical illness is to buy critical illness health insurance policy. The objective of these policies is to provide lump sum money on diagnosis of the specified critical illness. While it is important to buy critical illness policy, it is equally important to check the features of such policies.

Here are five critical factors that you need to look into before buying critical illness cover:

Diseases Covered: Check out for diseases covered under the policy. Insurance companies do not cover all critical diseases under the cover. For example Max Bupa critical illness cover has 20 diseases covered while HDFC Ergo critical illness policy covers only 8 diseases. While there may be difference in the premium because of this, what is important is what you are looking for in a critical illness policy.

Exclusions: While it is important to understand what is covered under critical illness policy, it is equally important to know are the exclusions under the policy. Also read the exclusions very carefully i.e. how are they worded. For example, HDFC Ergo policy document says,’  We must be informed of any event or occurrence that may give rise to a claim under this policy within 14 days of diagnosis of first occurrence of the Critical Illness’.  Such details are available under policy document only and you must read this.

Claim Process: Claim process is very important as critical illness generally involves a payment of huge amount. Some of the health insurance plans have cashless facility while some others do not offer this. Max Bupa critical illness explicitly mentions that ,’ No cashless facility will be available for the benefits of this product. All claims will be adjudicated after the occurrence of the event and further submission of documents by the Insured Person. Benefits will be paid out in line with the coverage in the plan and will be irrespective of the actual costs incurred by the Insured Person’.

Renewal Benefits: Since renewal is done for such policies every year, check out for renewal benefits. For example Bharati AXA policy rewards no claims as follows,’ Renewal discount of 5 percent for every claim-free year, up to a maximum of 25 percent’. Higher renewal benefits are important as there may be a claim in the initial years of policy and hence no claim bonus reduces cost of coverage.

Coverage Age: Check out till what age is the policy covering critical illness. For example Star Criticare Plus covers the illness upto the age of 70 years of age. Some other insurance companies cover critical illness only upto 65 years of age.

While there are the many other factors that a person buying critical illness needs to look at like hospital network, claim settlement history etc., there is very limited scope for trade off in case of critical illness cover in terms of cost!!! Buy the most suitable policy for you and ignore the cost even if it costs a little more.