Know This before Buying Critical Illness Insurance
Introduction
A lot has changed over the last few decades in India. We live a modern western lifestyle and are continually getting more western in the way we live. We, like the westerners, are at an increased risk of falling prey to lifestyle diseases.
Lifestyle diseases are getting increasingly prevalent in India. Various organisations say that one out of four Indians is at risk of dying from non-communicable diseases like cardiovascular disease or cancer before the age of 70.
Starting a healthy lifestyle, sticking to a healthy diet, and following exercises can keep many such unwanted diseases at bay. But, due to hereditary reasons or because of age, the chances of developing life-threatening lifestyle diseases increases. The treatment cost of such illnesses can be a financial drain for a family.
It is useful if you already have a health insurance policy or a mediclaim to your name. But maybe this is the time to create a second financial buffer by way of critical illness insurance.
Why buy critical illness insurance now
It is often said that one should buy a critical illness insurance policy at the age of 40. However, purchasing a policy early on helps as health risks, and even the premium is less. Also, people are getting lifestyle diseases very early nowadays.
With the change in lifestyle and work-life, people are getting a heart attack at an early age of 35. If you buy critical illness insurance in India early on, not only you save on premium, but you also rule out facing such a life-threatening situation unprepared.
The working of critical illness health insurance policy in India
Critical illness policy is different from a mediclaim policy. Critical illness policy is a health insurance plan that pays a lump sum amount to you when you acquire a serious disease like cancer or a stroke. The lump-sum can pay off the cost of care and treatment, the recuperation cost, and even any debt taken. Your insurer pays the sum insured, regardless of what your hospital expenses come.
Critical illness health insurance policies are thus defined-benefit plans. The payout for such plans is defined and fixed. If you hold more than one critical illness covers, every cover pays. Mediclaim, on the other hand, is an indemnity-based plan that reimburses the expenses that are incurred during treatment.
The right age to buy critical illness plans
The disease-specific plans offered by health insurance policies cover diseases like cancer and diabetes. The critical illness plans can be bought even after you have been diagnosed with any of the listed critical illnesses. They come at an extra cost.
A few health insurance companies in India have started extending their critical illness health insurance covers for people of over 60 years of age. Normally, senior citizens are denied health insurance covers because of their old age, high-risk conditions, and because they are prone to serious illnesses such as diabetes.
Mostly, people get rejected to buy such a policy because they try to buy a critical illness policy after getting diagnosed. Buying a health insurance policy is more challenging at an old age, and policyholders have to pay much more as premium after getting diagnosed with a disease.
Disease-specific plans can be a way out for such people. Insurance companies offer disease-specific plans for diseases like diabetes and cancer. While such plans can be opted after getting diagnosed with a critical illness, they come at an extra cost.
Look out for these before buying critical illness insurance in India
Waiting period: Disease-specific policies do not come with a waiting period. But yes, while a cancer-specific policy covers you from day one, cover for other diseases like dengue comes after a waiting period of say 15 days. Standard health insurance policies extend waiting periods of 2 to 4 years depending upon the type of illness.
Premium rates: Critical illness insurance covers are available for almost all ages and come at a high premium. Experts suggest that one should first go for a basic health insurance plan, the premium for which is low when availed at an early age. A primary health plan covers almost everything after 3-4 years of waiting period.
Treatment limits: Some treatments come with upper limits. Cap amounts are put on the treatment of certain critical illnesses, within that limit only can a policyholder claim for a particular treatment even when the sum insured is more. Know regarding such clauses from the insurance provider before buying a policy.
Co-Payment and sub-limits: Co-payment is a percent of expenses that you have to pay from your pocket, in case of a claim. The insurer pays the rest of the share in case a claim arises. Sub-limit is a limit set by the insurer on some of the expenses in the policy. The insurer pays for those expenses, but only up to a certain limit, depending on the type of the policy.