Generally, most of the policies offer a lump sum payout options under a critical illness cover. Whenever an insured is diagnosed with a listed critical illness (post the survival period is completed from the date of diagnosis or the initial waiting period is completed from the date of inception of the policy) a lump-sum amount is paid to the insured.

E.g.: Let assume Mr. Sharma is diagnosed with cancer. Current policy details:-

Sum assured - 20 lakhs

Plan name: Religare assure critical illness plan

Once the initial 90 days waiting period is over, the insurance company shall pay a lump sum benefit of 20lakhs to the insured. Once the claim is paid the insured needs to decide how he would like to utilize the amount.

However, there are certain policies where the insured gets 2 options for receiving the claim amount. Let us understand with an example:

The critical illness policy offered by Cigna ttk - critical care has 2 payout options:

• Lump sum payout - Here, when the insured is diagnosed with any listed critical illness he shall get the lump sum payout equivalent to the sum insured. However, benefit payment will take place post the survival period of 30 days from the date of diagnosis of critical illness or procedure.
• Staggered payout - On theoccurrence of a critical illness 25% of the sum insured will be paid as a lump sum and balance 75% and an additional 10% of the sum insured will be paid in 60 equated monthly installments.

Only, when staggered payout has opted at the time of buying the plan, the insured person will have the option to choose 100% lump-sum benefit at the time of claim payment. Example: Mr. Sharma has a critical care cover for Rs 20 lacs and has opted for a staggered payout. At the time of claim, 25% i.e. Rs 5 lacs will be paid as lump-sum and balance 75% & 10% additional, i.e. 17 lakhs will be paid in 60 equated monthly installments (rs. 28,333 each month).

It depends on the option the insured will choose. If you would like to know which plan will best suit your needs, Please click here.