What Is Critical Illness Policy? – Kotak Life Insurance

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What is Critical Illness Policy

Term Insurance Quote
  • 10th Dec 2018
  • 5,792

What is Critical Illness Policy

Before understanding critical illness plans, it will be beneficial to know the meaning of a critical illness. It is a severe health condition, which has an incapacitating consequence on your health and lifestyle. Generally, you need to spend huge amounts to treat such illnesses. You may also be unable to work due to the severe health condition.

As modern living becomes stressful coupled with unhealthy eating habits; there is a rise in the number of people being affected from such critical illnesses. You may also face financial difficulties due to loss of income and high treatment costs.

To protect yourself and your family from financial difficulties during an emotionally stressful situation, it is important to avail of a critical illness policy. This kind of an insurance plan offers a lump sum payout if you are diagnosed with any of the covered health conditions. The money may be used for your treatment or to meet the daily expenses of your household.

Difference between critical illness and health plans

Often, you may confuse between health and critical illness insurance. However, the former is a comprehensive plan covering hospitalization expenses for any medical condition. On the other hand, the critical cover is available in case you are diagnosed with severe sicknesses, such as permanent paralysis and tumor, among others. Another difference is that to avail of benefits under a health plan, you need to be hospitalized for treatment. You may either claim your expenses by providing the bills or seek treatment at a network medical facility. Under a critical illness plan, hospitalization is not mandatory. The plan will pay a lump sum amount when you are diagnosed with the medical condition and the money may be used as desired.

Critical illness plan inclusions

Most of the types of critical illness plans cover the following medical conditions:

  • Certain specified severity cancer
  • First cardiac arrest
  • Coronary artery bypass grafting (CABG)
  • Heart valve repair or open heart replacement
  • Stroke causing permanent damage
  • Kidney failure requiring periodic dialysis
  • Bone marrow or major organ transplant
  • Last stage liver or lung condition
  • Permanent limbs paralysis

Several other conditions may be covered by various insurance companies. It is important you read the policy document carefully to avoid any unpleasant surprise in the future.

Critical illness plan exclusions

Some of the conditions that are not covered under a critical illness plan are listed below:

  • Any serious illness diagnosed during the first 90 days from the purchase date
  • Demise within 30 days of being diagnosed with the condition or post surgery
  • A medical condition arising due to smoking, drug use, or alcohol
  • Any sickness resulting from external or internal congenital disorder
  • Dental or cosmetic surgery
  • Complications resulting from pregnancy or childbirth
  • Any treatment received outside the country

Benefits of a critical illness policy

Have you considered the consequences on your family in case you are unable to earn an income due to a serious medical condition? Moreover, how will you meet the treatment costs? A critical illness plan is beneficial to deal with this situation. In addition to receiving a lump sum payout under the policy, here are other benefits of such insurance plans:

  • You receive regular health checkups
  • The plan covers recuperation and care costs
  • The premium paid on the plan is eligible for tax benefits under section 80D of the Income Tax Act

Factors to consider while buying a critical illness plan

  • Critical illness cover sum assured amount must be four to five times of your yearly income
  • Choose the lowest waiting period to ensure coverage commences at the earliest
  • Ensure that the policy covers a higher number of severe medical conditions
  • Opt for a plan that offers the highest age for renewal
  • Without compromising on the benefits, find a plan with the lowest premium costs

It is important to know what is critical illness before you choose the most appropriate policy for your needs. Today, critical illness coverage is vital as the number of people affected by such conditions is increasing. Moreover, due to stress many people belonging to the younger age group are being affected by critical illnesses. Therefore, such a policy is crucial to protect you and your family against financial difficulties in case of a critical illness.

- A Consumer Education Initiative series by Kotak Life

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