Critical Illness Cover: Because it’s not just about medical expenses

Critical Illness Cover is not just about paying for medical expenses. The bad news is that India is projected to have the highest incidence of heart, diabetes and hypertension related diseases by 2020. At the same time the incidence of cancer is also projected to grow by about 20% in India by 2020. The good news is that the mortality rates on account of these diseases are on their way down. What that means is that with advances in the field of medicine, a higher percentage of affected people will be able to fight these diseases and survive.

Part of the resources required to put up this fight can come from hospitalisation expenses covered under a health insurance plan. But the very nature of some of these critical illnesses results in medical expenses that are way too high and can deplete your savings significantly. Some may even require significant lifestyle changes, continued post hospitalisation treatment for years and / or impact a person’s earning ability and potential. Various studies indicate that one in four women and one in fiv

e men are affected by a serious illness, such as cancer or heart ailments, before their retirement age. Such reduced or no earnings can cause additional financial burden and anxiety.

What is Critical Illness Cover?
Critical Illness or what was originally known as dreaded disease cover is an insurance that pays a benefit on the diagnosis of certain specified critical illnesses. The diseases covered under such plans vary from one company to another but most plans cover ailments such as heart attacks, cancer, bypass surgeries, kidney failure, organ transplants, multiple sclerosis etc. These plans are different from your usual health insurance policies:
• Health insurance plans will cover your hospitalisation and medical expenses due to any illness or accident. On the other hand, critical illness plans cover only the diseases specified as part of the contract.
• Both Health insurance as well as Critical illness plans are bought for a specified Sum Assured (the maximum benefit payable by the insurance company) and are typically sold for the duration of one year and need to be renewed every year.
• In case of Health insurance, you will be covered for any medical treatment or hospitalisation expenses as long as they are within your Sum Assured limit and the policy can continue for the remaining part of the year with a reduced cover (Sum Assured minus expenses claimed). On the other hand, your critical illness will pay you the entire Sum Assured once any of the specified diseases are diagnosed and the policy is terminated. You are then free to utilise this amount as per your financial needs which could be a lot more than those just related to hospitalisation.

Why it makes sense to buy Critical Illness in addition to a health insurance policy?
The expenses associated with serious and life threatening ailments are not just restricted to hospitalisation. There could be financial needs associated with lifestyle changes required, continued treatment post hospitalisation as well as the reduction in or loss of regular income. Health insurance policies primarily cover medical and hospitalisation expenses only and do not usually cover post hospitalisation expenses beyond a certain number of days. Since the benefit under a Critical Illness policy is paid out as a lumpsum amount, it gives you the flexibility to manage these additional requirements without having your savings significantly depleted.
The best combination, in fact would be to buy a health insurance policy and top it up with a critical illness plan. This helps you meet your hospitalisation expenses for both critical illnesses or even other diseases/accidents through the health policy and can provide you with a meaningful financial protection you may require in case of a critical illness.

What is important, however, is to make sure you take an adequate amount of cover keeping in mind the rising costs of healthcare. The amount of cover should not only be meaningful enough to provide reasonable financial help when it is needed most but should also be affordable. You may want to read our earlier blog on key factors you should keep in mind while purchasing health insurance.

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