Critical illness insurance in 2025: Everything you need to know before you buy

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What is critical illness insurance

Critical illness insurance is a kind of health insurance where a lump sum amount is provided upon diagnosis with some of the mentioned diseases. They include heart attack, cancer, stroke, kidney failure, major organ transplant, etc. Common health insurance pays for hospitalisation expenses, whereas critical illness insurance pays cash to cover the expenses of treatment, recovery, and lifestyle changes so that the policyholders are not concerned about money during recovery.

Cover in 2025: What's new

More critical illness policies have come on the market in 2025 to cover more forms of illnesses and provide greater flexibility. Some insurers now cover more illnesses such as early cancers, multiple sclerosis, and serious respiratory illnesses. Other insurers offer cover for genetic illnesses and rare disorders, owing to advances in medicine. New-generation critical illness policies can also provide coverage for more than one disease that falls within the policy duration with full cover. The policy document has to be read carefully by the policyholder so he is made aware of covered diseases and exclusions.

Critical illness insurance's prime benefit

The primary benefit of critical illness insurance is the lump sum, which can be used for treatment, rehabilitation, loan repayment, or daily living expenses. It saves your savings from being depleted by medical bills. Financial independence is a plus point as well — unlike conventional health insurance where the sum assured is paid directly against hospital costs, this facility can be availed according to your will. Furthermore, critical illness policies offer add-ons such as income replacement, second opinion medical protection, and wellness programs, offering more benefits.

How to choose the right plan

Choose the right critical illness policy by taking seriously your need, age, health, and way of life. Verify the amount assured — whether it is enough to cover the treatment and related costs. Verify the diseases covered and exclusions. Choose policies that include extra riders and flexibility of premium payment. Compare policies from different insurers for competitive premium rates and comprehensive cover. You may wish to discuss your decision with an insurance advisor who can help you align your decision with your goals.

Reminders

Although protection from critical illness insurance is beneficial, it is not a substitute for health insurance. It should be considered as one component of a total financial protection strategy. Premiums are age-related, depend on one's health status, and relate to sum assured, hence early uptake is beneficial. Regular checking of your policy is necessary, especially if one's health status or one's financial needs change. Knowing the claim procedure and documentation requirements in advance will save time and allow easy settlement of claims.

FAQs

1. How is critical illness insurance different from normal health insurance?

Normal health insurance covers medical expense and cost of care, whereas critical illness insurance provides a lump sum at diagnosis of certain diseases.

2. Can one buy critical illness insurance with a normal health policy?

Yes, purchasing both provides complete protection — medical expense insurance as well as financial assistance in case of critical illness.

3. Are critical illness plans tax-advantaged?

Yes, premium paid for critical illness insurance is tax-deductible according to Section 80D of the Income Tax Act if specific conditions are satisfied.