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Benefits of Buying Critical Illness
Critical Illness

Benefits of Buying a Critical Illness Policy

Buying a Critical Illness Plan is the best option to get over the shortcomings during a financial crunch.

It acts like a helping hand when you require the most. Such policies are beneficial for those individuals who have higher responsibilities or the once who are the primary bread earners of the family. Such individuals can’t afford to fall ill as this might hamper their finance’s or those who abstain from taking any risk pertaining to their health conditions.

However, there are few who are not aware of the ramifications of not buying a Critical Illness Plan. Allow us to share a few advantages of purchasing a Critical Illness Policy.

Treatment Cost is way expensive

If you are cognizant of the current medical cost, then it would be easy to say that, “Cost of Health Care Treatment will upsurge year on year, but are you prepared to handle the situations in case of an emergency?”

As per statistics, Health Care Inflation is between 15-20%. Your current Health Insurance Plan may not be sufficient to bear the expenses in the event of a major critical disease. An Acute Illness can lead to loss of income, disability, change in lifestyle or even loss of ability to work. Sometimes even a simple treatment procedure might wipe out your savings. In certain situations, buying a Critical Illness policy will facilitate you to get away from these shortcomings.

Let us look at the estimated cost for certain major illness/diseases for the next 15 yers.

Estimated Cost for Certain Illness/Diseases:

Health Ailments

Approximate cost in 2010

5yrs -2015

10yrs- 2020

20yrs- 2030

15% inflation

10% inflation

10% inflation

Kidney Transplant

Rs. 1,57,000

3,15,000

4,07,218

10,56,000

Open Heart Surgery

Rs. 2.75,000

5,53,000

7,713,000

18,50,062

Liver Transplant

Rs.  10,00,000

20,11,357

25,93,742

67,27,500

Chemotherapy

Rs. 31,000

62,350

80,406

2,08,000

Dialysis

Rs. 24,000

48,273

62,000

1,61,460

*Please Note: Above prices are indicative and may vary depending on the hospital you choose.

If we look at the above prices, it includes the cost for treatment of an Illness or Procedure. However, it does exclude the cost for hospitalization, medical bills, and post recovery expenses.

Broadly speaking, if you are insured under a health insurance policy, it will only take care of your hospitalization expenses. On the other hand, there are certain other expenses (Like – Post-treatment cost, Household expenses, Maid expenses, School fees, etc.) which you might have to pay from your pocket.

In such circumstances a Critical Illness insurance may sound like a better option. It offers a lump sum amount upon diagnosis, irrespective of the actual billing. The claim amount is paid irrespective whether the insured opts to undergo a treatment or not.

Balancing Act:

The main purpose of buying a Critical Illness Plan to pay for the expenses treatment post diagnosis. Normally, a critical illness policy is much cheaper than an Indemnity/ Health Insurance Policy.

Let us explain you with an example.

A Comprehensive Health Insurance Policy for a 25yrs old Individual with a Sum Insured of Rs. 5 Lakhs will cost around Rs. 5,500/-(One Year Cost). Whereas, a Critical Illness Plan with the same cover will cost around Rs. 1,500/- (One Year Cost). A Critical Illness Plan acts as a supplement to your current health insurance policy.

As said earlier, while an indemnity / health insurance plan will cover your hospitalization expenses, a critical illness policy will pay a lump sum benefit on diagnosis of a major diseases/ illness.

It is advisable to buy a combination of both a Comprehensive Health Insurance Cover and a Critical Illness Plan to support your future health care needs.

Recovery time post the treatment:

Once you have undergone the treatment, the time required to recover is around 3-4 months. This is quite more than your allotted paid leaves. During the recovery, there are lot of other expenses which you might have to handle –

  • Maid Expenses
  • Expensive Medical Treatment or Recuperation Aids
  • Loan Repayment against property, car, personal loan, etc.
  • Utility Bills
  • Rent
  • Household Expenses
  • Child’s Education Expenses

So, when the outflow increases your manifold, your income will virtually come to a stop. The situation might be worse if you are laid-off from your work due to the illness. In any case, if you are a self-employed, during the recovery time there is a possibility of losing your business as you won’t be in the position to put in your best efforts.

Having a Critical Illness might lessen your burden by keeping the cash outflow until the time your recover from your illness.

Along with the above benefits there is certain additional benefit you might get while choosing a Critical Illness Plan:

  • Tax Benefit: Premium Paid is eligible for tax benefit under section 80C (Life Insurance) & section 80D (Health Insurance) of Income Tax Act of 1961.
  • Free Health Check-up: A Critical Illness Policy offers free health checkups to assess your overall health and diagnose any illness at an early stage.
  • Renewal Age: In a Life Insurance Plan most of the policies offer long-term coverage up to 75 years of age, whereas, in a Health Insurance plan the maximum age for entry is 65yrs but the renewal age is Life Long.
  • Flexible Payout option for the various critical illnesses covered under the policy.
  • Certain Policies come with options where the cover continues even after claiming benefits on selected critical illness.

Certain points to remember before purchasing a Critical Illness Cover:

  • Read the list of the Critical Illness coverages included in the Policy Document
  • Carefully read the risk coverage offered along with the terms & conditions of different insurance companies before choosing the right product.
  • Analyze your lifestyle and make a note of the critical illness you might be susceptible to.

If you want to reduce your financial burden buying a Critical Illness Policy is a wise decision.

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