Critical illness policies: Strengthening your health insurance coverage

The policies, offered by both general and life insurers, typically, cover specified critical illnesses, ranging from two to even 60. In the last three to four years, several life insurers have rolled out policies that cover two to three critical ailments such as cancer, heart attack and renal failure. They also sell critical illness riders as options along with their life insurance plans.

I have a regular health insurance policy. Do I need critical illness plans?

You can consider critical illness plans, if you can afford them, as they can complement your regular health policies. You can file a claim under such policies even if your regular, indemnity-based policy has already settled the bills.

So, if you have a basic cover of Rs 5 lakh, you can add a Rs 15-20-lakh critical cover to take care of expenses that your regular policy will either cover partly or not pay at all. It will help you meet your recuperation expenses after surgery, chemotherapy or radiation – be it expensive medication, regular calcium or vitamin supplements, purchase of walking aids, physiotherapy sessions and so on. Also, you can dip into the lump-sum to meet costs of follow-up sessions and regular check-ups for an extended period of time. Regular policies stop paying for post-hospitalisation expenses 90 days after discharge.

Once the claim is paid out, you can decide how to use the funds to reduce the burden of your expenses. “It can compensate for loss of income in case you are unable to resume employment due to the ailment. The amount will also come in handy for any lifestyle modification expenses that you have might have to make,” adds Abhishek Bondia, Co-founder, Securenow.in.

How does the claim settlement process different from that of a regular policy?

The claim settlement process is straightforward – you do not have to worry about the deductions your insurer will make. For example, your regular policy could settle claims only partially due to restrictions such as room rent sub-limits, co-pay and other exclusions. Under a critical illness policy, such complications will not arise, as a pre-determined sum will be paid out once you furnish photocopies of medical reports that prove the diagnosis and recommended treatment.

On the flipside, however, the insurer will hand out the promised sum insured only if the policyholder survives for at least 30 days post-diagnosis. For some critical illness covers, you also need to understand clauses stating that only 25-50 per cent of the sum insured will be paid in the case of initial-stage cancer, for instance. Also, typically, such policies will be terminated once the full sum insured is paid out.

How should I choose a critical illness plan?

Ensure that the coverage is broad as possible. Policies that cover a wider range of ailments are better bets than the ones that cover one or two critical ailments. After all, even though cancer and heart-related ailments are more common, it is not possible to predict the dreaded disease that you may contract in future.

The number of illnesses covered, however, will have an impact on premiums. For example, National Insurance’s critical illness plan covers 11 diseases. A 35-year-old will have to pay an annual premium of Rs 8,275, besides GST, for a Rs 25-lakh cover. On the other hand, if she chooses to buy a plan that covers 37 critical ailments, she will have to shell out Rs 10,939 every year.

Do note, however, that the current health scare should not push you to go overboard with health insurance coverage. Take your affordability, city of residence and family history, among other factors, into account before buying additional protection.