What is Critical Illness Plan?
Critical illness plan is a fixed benefit health plan that cover a specific list of critical illnesses. Some common illnesses covered include cancer, stroke, heart attack, major organ transplant, liver failure, lung failure, multiple sclerosis, and more regardless of actual medical expenses incurred. It provides a lump sum coverage amount that covers medical as well as personal expenses for critical illnesses according to the sum mentioned under the insurance policy.
Why you should have a critical illness plan?
Critical illnesses have major effects on patients’ health and life. They usually have high medical costs leaving families financially weaker. At the same time, some critical illnesses can adversely affect a patient’s ability to earn a livelihood.
- Critical illness policy covers major critical illnesses, providing you with a lump sum payment once diagnosed with the illness.
- While health insurance covers your hospitalization expenses, a critical illness plan covers other expenses and also serves as income replacement during this period.
So any individual should have a critical illness plan on top of their health insurance for complete safety. Also, critical illness policies have low premiums as they cover only certain critical illnesses.
What factors are to be considered?
- Sum Insured – Expenses incurred for critical illnesses are generally quite high and based on the critical illnesses or the plan chosen the sum insured should be as high as possible.
- Number of illnesses covered- Higher the better
- Waiting period – Generally it is initial 30 days from the start policy date
- Survival period – Survival period is the amount of time an insured must survive after being diagnosed with a critical illness to qualify for a claim under the critical illness program. Generally, it is 30-90 days.
- Renewability / Policy term – Higher the better
Additionally, critical illness premiums are considered for tax benefits under section 80D.
Best Critical Illness Plans
Compiled considering an individual policy of 10 Lakhs for a 40-year-old male from tier 1 city and period 1 year. All policies mentioned below have lifetime renewability.
| Factors/Insurance plans | HDFC ERGO Critical illness | Manipal Cigna Lifestyle Protection | Care Critical | Future Criticare |
|---|---|---|---|---|
| Sum Insured options | 1-50 lakhs, max 20L for people above 55 years of age | Upto 3 crores | 10 lakhs to 2 crores | 1-50 Lakhs (up to 45 years of age); reduces gradually afterwards |
| Illnesses covered | 15 | 30 | 32 | 12 |
| Eligibility | Entry age 18-65 years | Entry age 18-65 years | Entry age 5-50 years | Entry age 6-65 years |
| Waiting period | 30 days | 90 days | 90 days | 90 days |
| Survival period | 30 days | 30 days | 30 days | 28 days |
| Premium | Rs 6785, 565/month | Rs 6219, 518/month | Rs 7537, 628/month | Rs 7800, 650/month |
Conclusion
Given the cost involved in treating a Critical Illness and the potential loss of income, it is prudent for any individual to have a critical illness policy. If an individual has a family history of certain medical conditions like diabetes, cancer and other such ailments then he/she should buy a critical illness cover.
Also, have a look at Best Small Cap Mutual Funds & AMC Profiles. If you need any assistance on Critical Illness Plans, Feel free to contact Wealth Baba – Financial Planner & Investment Advisor in India. We will try to help you out in the best possible way.
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