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What is Critical Illness Insurance?

The insurance policy that covers the insured against fatal and life-threatening grave illnesses such as cancer, heart attack, renal failure amongst others is referred to as critical illness insurance. It provides protection coverage in the form of availing a lump sum at the time of the diagnosis of illness that is covered by the policy. The amount can be utilized for meeting the expenses of the treatment.


How Does Critical Illness Insurance Work?

Critical illness insurance generally has a list of illnesses that are included in the policy cited and the criteria for each illness is present that defines when you are eligible for a payout. The content of the policy defines which diseases are covered and which ones are not and if the claim is made for an illness that is not included in the policy then the claim by the insured will not be entertained and rather will be denied. Therefore, it is vital to review and evaluate payout circumstances of a critical illness policy prudently, and also how the policy describes the disease or condition and check if there is a waiting period at all.

Benefits of Critical Illness Policy

Critical illness policies act like an income replacement. It is seen that critical ailments not only affect the person physically but it also adversely impact on the finances status of the family. The medical and household expenses can be taken care of with the help of lump sum that the critical insurance pays out.

Which illnesses are covered?

Every insurer has different offerings and insured’s needs and different aspects to be taken care of and therefore it is important to prudently check each option before finalizing and buying. These policies generally cover illness like heart attacks, strokes and cancer among others and may also include some add-on illness that is usually optional.

Other conditions that could be categorized as critical illness includes:

  • Major organ transplant
  • Parkinson's disease
  • Deafness
  • Traumatic head injury
  • Bacterial meningitis

A point to note is that a critical illness are different things from terminal illness and a standard life insurance policy is supposed to cover any illness where you are anticipated to perish within 12 months of diagnosis.

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FAQs

Health insurance is a type of insurance coverage that protects an individual or a group of people against medical and surgical costs against payment of regular premiums.

Mounting healthcare and surgical costs are a major strain on household budgets. Like any other insurance, mediclaim or health insurance is the best possible protection you or your family may have against any medical (usually hospitalization or surgical) costs. Health insurance also makes medical help affordable for everyone.

Mediclaim or health insurance makes you eligible for tax benefits on premium paid under 80D of the Income Tax Act.

Given the current healthcare scenario, there is no right age to get medical insurance – the earlier, the better. Children can be added to either parent’s mediclaim policy. Many health insurance providers also have special plans for senior citizens and old age related health costs.

Most health insurance providers offer customized mediclaim or health plans. They are broadly of 4 types –

  • Individual health plan
  • Family health plan
  • Critical illness plan
  • Senior citizen health plan

Accident-related medical costs are generally covered by all health insurance plans or may be taken as an add-on rider.

Health insurance costs vary depending on the following factors –

  • Number of persons covered
  • Age of the person/persons assured
  • Health of the person/persons assured
  • Location (health risks in metros is deemed more than that of people residing in small cities and villages)
  • Additional riders (if any are opted for)

When a person signs up for a health insurance, the insurance company ascertains premium based on a number of criteria. Once determined, the company usually charges the same premium for that age group. The older a policy holder gets, the more the premium amount is. In the meantime, if there is a claim in any year, the premium may be hiked upon policy renewal. This is called load premium. The insurance company may sometimes offer a discount on premium, if no claim is registered for a number of years.

Mediclaim health insurance policies usually do not cover the following –

  • Congenital medical conditions and diseases
  • Pre-existing diseases diagnosed prior to policy issuance
  • Medical costs arising out of self-inflicted injuries and/or attempted suicide
  • Cosmetic surgeries and/or treatments including dental treatment
  • Drunken driving related accidents
  • Cost of spectacles or contact lenses
  • Treatment of HIV/AIDS

Planned hospitalization – Submit a written application with the TPA. Include doctor’s recommendation for hospitalization, medical records, and planned expenses. Once approval comes through go ahead with hospitalization. Notify TPA and make a claim through the hospital to avail cashless benefits.

Unplanned hospitalization/Accidents – Notify TPA within 24 hours of hospitalization. Submit a notification statement with name, policy number, and known medical details. The insurer is likely to clear your eligibility details within a day or two. Stake cashless claim through the hospital to avail cashless services or pay cash and stake claim with all bills and records at the completion of treatment.