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Features
Ref. No. KLI/22-23/E-BB/492
A critical illness in term insurance offers a lump-sum payout upon diagnosis of covered conditions, providing financial security during challenging times.
A critical illness in term insurance policy is a specialized insurance plan crafted to offer financial security to the policyholder in the event of a diagnosis of a severe illness or medical condition outlined within the policy. Such illnesses commonly encompass major conditions known to impact one’s health and well-being significantly. Examples include cancer, heart attack, stroke, organ transplant, kidney failure, and other life-threatening diseases.
The primary purpose of a critical illness in term insurance is to provide a lump-sum payment to the policyholder upon the diagnosis of a covered illness. This lump sum can be utilized to cover various expenses associated with the illness, including medical treatments, hospital bills, rehabilitation costs, household expenses, and other financial obligations. By offering this financial cushion, critical illness policies aim to alleviate the monetary strain often experienced during times of severe illness.
As modern living becomes stressful, coupled with unhealthy eating habits, there is a rise in the number of people being affected by 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 yourself of a critical illness in term insurance.
Term insurance with critical illness riders offers comprehensive financial protection against both death and serious health crises. This combination of coverage provides policyholders and their families with peace of mind, knowing that they are safeguarded against the financial burdens that can arise from unexpected life events.
Let’s delve into how term insurance with critical riders works:
Term insurance is a type of life insurance policy that provides coverage for a specified period, known as the term. If the insured individual passes away during the term of the policy, a death benefit is paid out to the beneficiaries. However, if the insured survives the term, no benefits are paid out, and the coverage typically expires.
A critical illness rider is an add-on feature that can be attached to a term insurance policy for an additional premium. This rider provides coverage for specified critical illnesses, such as cancer, heart attack, stroke, organ failure, and major surgeries. If the insured is diagnosed with a covered critical illness during the term of the policy, a lump-sum payout is made, irrespective of whether the insured survives the illness or not.
When you purchase term insurance with a critical illness in term insurance rider, you pay a single premium for both components of the policy. The term insurance provides coverage for death benefits, while the critical illness rider offers protection against the financial impact of severe health conditions.
Term insurance with critical illness in term insurance riders operates on a dual benefit structure, offering coverage for both mortality risk and critical illness risk under a single policy. Policyholders have the flexibility to choose the sum assured for both components based on their individual needs and financial goals. In the event of the insured’s demise during the policy term, the death benefit is paid out to the nominee(s) as per the terms of the term insurance policy. On the other hand, if the insured is diagnosed with a covered critical illness in term insurance during the policy term and survives the specified survival period (usually 30 days), the critical illness rider benefit is triggered, and a lump sum amount is paid out to the insured to address the financial repercussions of the illness.
If you have ever contemplated the potential repercussions on your family if you were unable to earn an income due to a serious medical condition, you likely recognize the paramount importance of critical illness in term insurance. This specialized form of insurance offers a range of invaluable benefits, each serving to safeguard both you and your loved ones during times of adversity. Here’s a closer look at the significant benefits provided by critical illness in term insurance:
A critical illness policy offers a lump-sum payment upon the diagnosis of a covered critical illness in term insurance. This financial assistance can be instrumental in covering medical expenses, treatment costs, and various other financial obligations such as mortgage payments, household bills, or childcare expenses.
The lump-sum payment received from a critical illness policy grants policyholders unparalleled flexibility in its usage. They have the autonomy to utilize the funds for medical treatment, rehabilitation, lifestyle adjustments, or any other expenses arising due to the illness, ensuring tailored support based on individual needs.
While health insurance typically covers medical expenses, it may not suffice to cover all costs associated with a critical illness. A critical illness in term insurance serves as a supplement to health insurance by offering additional funds to cover out-of-pocket expenses, experimental treatments, or other non-medical costs.
In many instances, a critical illness in term insurance can render individuals unable to work for an extended period. The lump-sum payment from a critical illness policy serves as a vital source of income replacement during this time, enabling the policyholder and their family to maintain their standard of living.
Unlike certain other types of insurance, critical illness policies generally impose no restrictions on how the funds can be utilized. Policyholders retain full control over allocating the money to meet their specific needs and priorities, ensuring personalized support tailored to their circumstances.
In addition to offering financial protection, critical illness policies provide tax benefits to policyholders. The premiums paid towards the policy are eligible for tax deductions under Section 80D of the Income Tax Act, 1961, thereby incentivizing individuals to invest in their health and well-being.
Despite furnishing comprehensive coverage and substantial financial protection, critical illness policies are renowned for their affordability. With competitive premiums and flexible payment options, these policies ensure that individuals from diverse backgrounds can access the benefits of comprehensive health coverage without burdening their finances.
When navigating the realm of insurance options, individuals often encounter a variety of plans, including pure health insurance and critical illness in term insurance. While these plans may seem similar at first glance, they serve distinct purposes and offer different types of coverage. Let us take a quick look at how they differ from each other:
Feature
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Critical Illness Insurance
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Health Insurance
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What it Covers
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Specific critical illnesses like cancer, heart attack, stroke, etc.
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Wide range of medical expenses, including doctor visits, hospitalization, surgery, prescriptions, etc.
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Benefit payout
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Lump sum payment upon diagnosis of a covered critical illness
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Covers a portion (usually a percentage) of approved medical bills
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Purpose
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Provides financial support to cover out-of-pocket medical costs, lost income, or debt repayment due to a critical illness
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Helps manage ongoing medical expenses and protects against unexpected high medical bills
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Premiums
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Generally higher premiums due to the specific coverage and potential for large payouts
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Premiums vary depending on plan type, deductible, and coverage level
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Claims process
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Typically easier claims process with clear criteria for covered illnesses
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Claims process can be more complex and may involve denials based on policy exclusions
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Focus
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Financial protection in case of a critical illness
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Managing ongoing healthcare costs
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Understanding the differences between critical illness in term insurance coverage and disability & accidental cover is crucial for individuals seeking to protect themselves and their families from unforeseen health-related challenges. While critical illness in term insurance cover focuses on providing financial support upon diagnosis of specific severe illnesses, disability & accidental cover offers protection against disabilities resulting from accidents or illnesses, ensuring continued financial stability during difficult times.
Feature
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Critical Illness Cover
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Disability & Accidental Cover
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Purpose
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Provides financial protection upon diagnosis of specific critical illnesses
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Offers financial support in case of disability or accidental injury causing inability to work
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Coverage
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Covers a predetermined list of critical illnesses such as cancer, heart attack, stroke, etc.
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Covers disabilities caused by accidents or illnesses, including partial or total disability
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Nature of Conditions
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Typically focuses on severe illnesses that can have a significant impact on one’s life and ability to work
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Covers a broader range of conditions, including temporary or permanent disabilities resulting from accidents or illnesses
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Premiums
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Generally higher premiums due to the specific coverage for critical illnesses
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Premiums may vary based on the level of coverage and the individual’s risk profile, but often lower than critical illness cover
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Duration of Coverage
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Typically provides coverage until the policyholder reaches a certain age or until the policy is terminated
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Can be short-term or long-term depending on the policy terms, offering coverage for a specified period or until retirement age
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Claim Process
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Requires submission of medical reports confirming the diagnosis of a covered critical illness
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Requires documentation proving the disability or accidental injury and its impact on the insured’s ability to work
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Critical illness in term insurance is designed to offer comprehensive financial protection against a range of severe medical conditions, providing policyholders with peace of mind during challenging times. While the exact list of covered illnesses may vary depending on the specific plan and insurance company, most critical illness in term insurance plans encompass a wide array of critical illnesses. Here’s a closer look at critical illness coverage:
Major Cancers: Different stages of cancer are often covered, with some plans specifying the severity.
Heart Diseases: This can include heart attack, coronary artery bypass surgery, and valve replacement surgery.
Stroke: Some policies also cover stroke resulting in permanent neurological damage.
Organ Failure: This can include kidney failure requiring dialysis, liver failure, and lung failure.
Major Organ Transplants: Coverage may extend to bone marrow transplants as well.
Neurological Conditions: Some plans cover conditions like Alzheimer’s disease, Parkinson’s disease, and motor neuron disease.
Musculoskeletal Conditions: Critical illness plans may cover certain severe musculoskeletal conditions like permanent paralysis of limbs.
While critical illness insurance plans typically offer coverage for a range of serious medical conditions, it’s essential to recognize that various insurance companies may include additional conditions in their coverage. To ensure you have a clear understanding of your policy’s terms and avoid any unpleasant surprises in the future, it’s crucial to read the policy document carefully. Here’s why:
Critical illness insurance plans are designed to provide comprehensive financial protection against a wide range of serious medical conditions. However, it’s essential to be aware that certain illnesses may not be covered under a critical illness insurance plan. Here’s a closer look at some conditions that may be excluded from coverage:
Critical illness coverage is a vital form of insurance that offers financial protection in the event of a severe illness diagnosis. While it’s not obligatory for everyone, there are specific groups of individuals who could significantly benefit from having this coverage. Here are some key groups who should consider availing critical illness coverage:
For individuals who serve as the sole breadwinners of their families, critical illness coverage is crucial. If the primary earner falls ill and becomes unable to work, the financial strain on the family can be substantial. Critical illness cover provides a lump-sum payout upon the diagnosis of a covered illness, helping to cover medical expenses, household bills, and other financial obligations during the period of illness and recovery.
Those with a family history of critical illnesses such as cancer, heart disease, or stroke are at a higher risk of developing similar conditions. In such cases, availing critical illness coverage can provide peace of mind, knowing there’s financial protection in place to help cope with potential medical expenses and loss of income arising from a serious illness diagnosis.
Certain professions entail higher levels of stress, increasing the risk of developing serious health conditions. Jobs involving long hours, high pressure, or exposure to hazardous environments can take a toll on both physical and mental health. For individuals in such occupations, critical illness cover offers a safety net in case of a serious illness diagnosis, providing financial support during treatment and recovery periods.
As individuals age, the likelihood of developing serious health conditions tends to rise. Critical illnesses such as cancer, heart disease, and stroke become more prevalent with age. Therefore, individuals aged 40 and above should seriously consider availing critical illness cover to protect against the financial consequences of such illnesses. Having this coverage ensures timely medical treatment and support without worrying about financial implications.
Understanding the eligibility criteria is crucial for individuals considering the purchase of critical illness insurance. These criteria serve as guidelines to determine who qualifies for coverage and help individuals assess whether they meet the necessary requirements. Below are some common eligibility criteria to consider:
Most insurance providers specify a minimum and maximum age for applicants to avail of critical illness insurance. The minimum age requirement typically ranges from 18 to 65 years old, while the maximum age varies depending on the insurer but is often around 75 years old. Age restrictions help insurers manage risk and ensure that policyholders are within an age range where they are more likely to benefit from the coverage.
Applicants may be required to undergo a medical underwriting process to assess their current health status. This process may involve completing a detailed health questionnaire, undergoing medical tests, or providing medical records. Insurers use this information to evaluate the applicant’s risk profile and determine their eligibility for coverage. Individuals with pre-existing medical conditions may still be eligible for critical illness insurance, but their premiums may be higher, or certain conditions may be excluded from coverage.
Insurance providers may consider certain lifestyle factors when assessing an individual’s eligibility for critical illness insurance. Factors such as smoking status, alcohol consumption, and participation in high-risk activities or occupations may impact eligibility and premium rates. Individuals with healthier lifestyles may be viewed as lower risk by insurers and may qualify for more favorable terms.
Insurers typically impose coverage limits on critical illness insurance policies, including maximum benefit amounts and minimum waiting periods before benefits are payable. Applicants should carefully review these limits to ensure that the coverage meets their needs and expectations.
Integrating critical illness coverage with term insurance enhances the financial safety net, providing comprehensive protection against both mortality and severe medical conditions. Here’s a detailed guide on how to avail critical illness coverage in term insurance:
Begin by selecting the base term insurance policy that suits your needs in terms of coverage amount and duration. The assured sum amount determines the payout your beneficiaries will receive in the event of your demise during the term plan.
Opt for the critical illness benefit rider offered by your insurance provider. This rider provides additional coverage specifically for critical illnesses, supplementing the base term insurance policy. Ensure that the critical illness rider covers the specific illnesses you’re concerned about or that are prevalent in your family history.
Pay the premium amount required for both the base term insurance policy and the critical illness rider. Timely payment of premiums is essential to keep the policy active and ensure coverage in the event of a claim.
Complete the proposal form provided by the insurance company, providing accurate and truthful information about yourself and your medical history. Any discrepancies or inaccuracies in the proposal form could lead to complications during the claim process.
Undergo medical tests as required by the insurance company. These tests help assess your current health status and determine your eligibility for critical illness coverage. The results of these tests may also impact the premium rates for your policy.
When filing a claim with your insurance provider, ensuring you have all the necessary documentation in order is crucial for a smooth and timely process. Whether you’re making a claim for life insurance, health insurance, or any other type of insurance policy, certain documents are typically required to support your claim and facilitate the claims process effectively.
In the event of a critical illness diagnosis or any other claimable event, you or your beneficiaries will need to complete and submit a claim form to the insurance company. This form serves as an official request for benefits and typically includes details about the illness diagnosis, treatment received, and any other relevant information pertaining to the claim.
A medical certificate issued by a registered medical practitioner confirming the critical illness diagnosis is usually a mandatory requirement as part of the claim documentation. This certificate provides official verification of the illness and is crucial for the insurance company to assess the validity of the claim.
Some insurance companies may request a certificate directly from the treating medical practitioner providing detailed information about the critical illness diagnosis and treatment. This certificate offers additional documentation and insight into the medical history and treatment plan, further supporting the claim.
Copies of relevant medical test reports confirming the critical illness diagnosis may also be required to support the claim. These test reports provide objective evidence of the illness and help validate the diagnosis, contributing to the thorough assessment of the claim by the insurance company.
To verify your identity and facilitate the claim processing, it’s essential to submit Know Your Customer (KYC) documents, such as identity proof and address proof. These documents help ensure that the claim is processed accurately and efficiently, reducing the risk of identity fraud or errors in processing.
Depending on the insurance company’s specific requirements and the nature of the claim, additional specific documents may be requested. It’s essential to carefully review the claim instructions provided by the insurance company and submit any additional documents or information as requested to expedite the claim settlement process.
Any other documentation or information requested by the insurance company to support the claim should be provided promptly. This may include invoices, receipts, or any other relevant documentation related to the claim event. Providing comprehensive and accurate documentation helps facilitate a faster and smoother claim settlement process, ensuring that you receive the benefits you’re entitled to under your insurance policy.
When purchasing a critical illness plan, it’s crucial to carefully consider various factors to ensure you obtain the most suitable coverage for your needs. Here’s an in-depth exploration of the key considerations:
Review the list of critical illnesses covered by the policy. Ensure it includes illnesses relevant to your health risks and family history. Look for term insurance policies with comprehensive coverage to protect against a wide range of conditions.
Carefully read and understand the terms and conditions of the policy, including coverage limits, waiting periods, exclusions, and renewal provisions. Pay attention to any restrictions related to pre-existing conditions or family medical history.
Determine the appropriate sum assured based on your financial obligations, such as medical expenses, living expenses, debt repayments, and income replacement needs. Ensure the coverage amount is sufficient to provide adequate financial support in the event of a critical illness diagnosis.
Compare premium rates from different insurers and select a plan that offers competitive pricing while providing comprehensive coverage. Consider your budget and ensure the premiums are affordable in the long term, as Critical Illness Plans are usually long-term commitments.
Understand the waiting period specified in the policy, during which no benefits are payable after purchasing the plan. Choose a plan with a waiting period that aligns with your needs and financial situation.
Evaluate the insurer’s claim settlement process, including documentation requirements, claim submission procedures, and turnaround time. Select an insurer known for prompt and hassle-free claim settlements to avoid complications during a critical illness diagnosis.
Research the reputation and financial stability of the insurance company offering the critical illness plan. Choose a reputable insurer with a strong track record of customer service and claim settlement to ensure reliability and peace of mind.
In today’s world, critical illness coverage has become increasingly vital as the prevalence of severe medical conditions continues to rise. With lifestyle factors, environmental changes, and genetic predispositions contributing to the growing incidence of critical illnesses, protecting oneself and one’s family against the financial hardships associated with such conditions is paramount.
1
Yes, most insurers allow policyholders to cancel their critical illness policy, but terms and conditions may apply. It’s recommended to review the policy document or contact the insurer for cancellation procedures and any associated fees.
2
Premiums for critical illness plans may increase over time due to factors such as age and changes in health status. Some policies offer level premiums, while others may be subject to periodic adjustments. It’s essential to understand the premium structure before purchasing the policy.
3
Yes, you can purchase a critical illness policy alongside your existing health insurance to supplement coverage and provide additional financial protection against critical illnesses.
4
Critical illnesses are severe health conditions or diseases that can significantly impact a person’s life and ability to work. Examples include cancer, heart attack, stroke, organ failure, and major surgeries.
5
The cost of critical illness insurance cover varies depending on factors such as age, health status, coverage amount, and insurer. While premiums may be higher compared to other types of insurance, the financial protection provided in the event of a critical illness diagnosis can outweigh the cost.
6
Critical illness insurance cover is essential because it provides financial protection and peace of mind during challenging times. It helps cover medical expenses, household bills, and other financial obligations if you are diagnosed with a covered critical illness and unable to work.
7
Yes, medical tests are often required to assess your current health status and determine eligibility for critical illness cover. These tests help insurers evaluate your risk profile and may influence premium rates and coverage terms.
8
No, critical illness insurance typically pays out a lump-sum amount upon diagnosis of a covered critical illness. This lump sum can be used to cover medical expenses, replace lost income, or fulfill other financial needs during the illness and recovery period.
9
The survival period of a critical illness rider refers to the length of time the insured must survive after the diagnosis of a covered critical illness to be eligible for the payout. This period varies depending on the policy terms but is usually around 30 days.
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.