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Why a critical illness cover is a must-have in addition to your health insurance policy

A critical illness plan pays a lump-sum amount to the family, should one get diagnosed with any serious illness that is listed in the policy document

December 28, 2021 / 10:20 AM IST

Crowdfunding websites that help collect money for medical treatment make you realise that even people with a healthy and active lifestyle are exposed to the risk of serious diseases.

The next thing you notice on these platforms is that such risk has a major, long-term impact on the family’s finances. On the one hand, the family needs to pay for the treatment of the family member and, on the other, the family might have a sudden, substantial reduction of regular income. This could  be because of job loss or having to take a less strenuous role for lesser pay. Then there are newer expenses to meet the changing medical needs, changes in lifestyle, apart from spending more time on the care of such a family member etc.

Some of these expenses are also big-ticket, long-term costs such as physiotherapy fees for several months, rehabilitation charges, full-time nursing care and structural changes around the house. As a result, a critical illness diagnosis will not only drain the family mentally and physically, but would also do so financially.

Also read: Why a critical illness cover for serious diseases is a must-have to avoid huge expenses

While the death of an earning family member results in a large and immediate financial loss of earnings, a critical illness results in financial chaos for a stretched period of time.


Of course, a good health insurance plan can help meet the expenses of hospitalisation and treatment. But all other hidden costs such as outpatient expenses, deductions in the health insurance claim, loss of earnings, and more have to be borne by the family from savings that were kept away for retirement or children education.

A critical illness insurance plan, if taken in addition to health insurance, could address the problem.  It pays a lump-sum amount to the family, should one get diagnosed with any serious illness that is listed in the policy document. This plan will help the family with the hidden costs in serious diseases, for example, in situations where a standard health insurance policy falls short – say, health-related expenses that are not under the purview of the hospitalization cover, or providing an income replacement since you can’t go to work as usual, anymore.

Does the number of illnesses really matter? 

When we were researching for our detailed critical illness eBook, we realised that every critical illness insurance policy comes with a list of illnesses and medical conditions that it will cover, and this list varies from insurer to insurer. While some insurers directly mention the name of the disease, some mention micro-level details of the disease, when the plan will pay, or not. For instance, some insurers mention ‘cancer’ while some specify the type and stage of cancer – say, ‘Skin cancer-Stage 3’.

Pay attention. A long list of diseases doesn’t essentially mean a comprehensive one. For example, take the situation above. A plan that covers ‘Cancer’ as a single line-item is obviously offering a more comprehensive, all-inclusive cover than another that lists five types of cancers or two cancer-stages. But, the latter might make up a longer list.

Second, some plans also bolster the list of illnesses with some very rare conditions that are very less likely to be claimed for and present a much longer list. These might have 150 critical illnesses covered, but you’ll see that the actual chance of most of them occurring will be very minor.

As long as a policy covers the most common serious diseases such as cancer, heart disease, kidney disease, paralysis, stroke, lung disease, etc., you should not worry too much about the length of conditions the policy covers, unless, of course, the price difference is minimal.

How can you buy a critical illness cover?

You can buy the critical illness cover in one of two ways:

-Rider along with your term or health insurance plan

While buying health or term insurance, insurers allow you to choose riders or add-ons and a critical illness rider is a common rider you’ll see. You can buy a critical illness rider by paying an additional premium along with your base plan premium.

Although these are not the most effective, most comprehensive covers, they do prove to be effective because of the convenience and affordable pricing, as compared to specialised, standalone critical illness plans.

-Standalone critical illness insurance plans 

You can also buy a critical illness plan as a separate, standalone cover, independent of your term or health insurance. Since such policies are designed specifically for covering critical illnesses, they provide way more comprehensive cover, in comparison to Riders. The only hitch is the price. Most of the plans we researched came out to be extremely expensive in the longer term, especially after you cross 50.

How do you decide which one is right for you?

This decision must be based on what is more important to you.

If convenience and price are a priority: Choose a critical illness rider along with your term or health insurance policy if you want to buy the critical illness cover with little effort and at a premium that remains fixed for several years.

If sufficient cover is a priority: Go for a standalone critical illness cover if you want a more dependable cover. It might be expensive (can get considerably costlier with age) and require additional documents and medical reports, but you’ll get a more comprehensive cover that will protect your family from the financial risk of serious diseases, more effectively.
Mahavir Chopra is the founder,, a consumer awareness platform for insurance
first published: Dec 28, 2021 10:20 am
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