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What is Critical Illness Plan?

  • Karan Batra
  • Aug 12 2019
  • 4 minutes
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Critical illnesses are diseases and conditions that include but are not limited to cancer, stroke, organ transplants, and kidney diseases, among other health conditions. Critical illnesses are expensive and disruptive.

Begin diagnosed for critical illness means completely wiping away the lifetime savings. So, then your worries regarding the financial security and dependents start haunting you. The only way to get out of this dilemma is a“Buy Critical Insurance Plan.”

Do not let unseen happenings to shatter dreams of you and your family, instead start planning for such incidents. Critical Illness Insurance Plans provides coverage against specific threatening diseases. Treating these illnesses, you may require multiple visits to the hospital over a period of time. Thus, in addition to the hospitalization cost, there will be other costs like doctor visits, medical expenses, etc.

A Critical Illness plan pays a lump sum amount that can be used to cover these high expenses. The lump-sum payout will be an addition to mediclaim or health insurance policy that you may already have.

What is the need for critical illness cover?

Life insurance policy will come into the picture only when you die, and the health insurance policy will only pay off the cost of your hospitalization.
Unlike these, Critical illness plans are ‘Fixed Benefit’ plans. For instance, Imagine that you are diagnosed with Cancer, and then your insurance company will pay for your treatment, irrespective of the cost of treatment.
Due to the diagnosis of critical illness, you might not die, but you’ll be bedridden because of the illness.
The most common critical diseases are Cancer, a stroke, or a heart attack. The survival percentage is comparatively less. So having a critical illness plan will be very supportive to you and your family.

What does critical illness cover?

There are several different illnesses covered under this scheme, which may vary from policy to policy. Stroke, cancer, bypass of a coronary artery, paralysis, and failure of a significant organ are common to various available covers. You can use critical illness an addition to your existing Mediclaim to have extra financial security when deadly disease strikes.

Key benefits of the plan:

  • A lump-sum payment is made.
  • Additional cover for you and your family
  • Pre and post hospitalization expenses are covered under this plan.
  • Lifetime renewability
  • Tax benefits availed on the premiums paid under Section 80D of the Indian Income Tax Act.

How are payments made?

Critical illness provides a lump sum to individuals in case if they are affected by one of the specified diseases. Common diseases include cancer, heart surgery, coma, and brain tumor. The number of illnesses covered by these plans may vary between 8 to 12 illnesses. The claim is paid when the disease is diagnosed. Claims are paid if the policyholder survives for a specified waiting period or a survival period which is around 90 days.
Payout is in two forms:
1. Additional Payouts: a part of the sum assured will be paid
2. Accelerated Payouts: benefit paid over and above the base sum assured.
For example, the sum assured is Rs1 crore. The critical illness has a sum assured of Rs10 lakh. If the person dies six months after contracting cancer, then under the accelerated payout she will be paid Rs10 lakh for cancer. After crossing the survival period, on death, the nominee will receive Rs 90 lakh.
In case of additional payout, she will be paid Rs10 lakh on completion of the survival period. On death, her nominee will receive Rs1 crore.

Thus, a critical illness health insurance policy helps you to mitigate emergencies which if unattended, would be fatal.

“When the unthinkable happens, the lighthouse is hope. Once we choose hope, everything is possible.”
– Christopher Reeve

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