Critical illness policy is a cover which provides a fixed sum after you are diagnosed with a critical illness covered under your insurance policy. You can opt to purchase a critical illness policy as a stand-alone policy or as a rider to your regular health insurance policy.

Critical illness (CI) serves as a valuable addition to the basic health cover in case you are diagnosed with a critical illness. While you may use your individual or family health insurance to cover hospitalization bills, you can gain a lump sum amount from the critical illness cover to fund other essential expenses related to your critical illness apart from best life insurance policy.

Why Buy a Critical Illness Plan in Your 20’s?

In this modern world of stress and sedentary lifestyle, critical illness can happen to anybody at any time. Additionally, when one is young and physically healthy, insurance premiums are cheaper since they are classified as low risk for critical illnesses like cancer and heart disease.

As one grows older, the health risks and as such, insurance premiums increase. If you wait till you are older to buy a critical illness policy, it may prove more expensive. This is particularly because there is a higher possibility of developing conditions like diabetes, high cholesterol and high blood pressure, which can lead to exclusions, denial of policies or higher premiums.

Kinds of Insurance Plans that cover Critical Illnesses

There are several kinds of insurance plans to opt for with regard to getting covered against Critical Illnesses. Many people have a life insurance plan and add the critical illness plan as a rider to the base policy. Some have a Stand Alone critical illness Plan. Some others may depend on a Hospitalization plan.

• Stand-alone CI plan: It offers a lump sum payout if the policyholder suffers a critical illness, covered under the plan. Claiming the Stand-Alone plan does not typically impact other insurance policies you own. This plan alleviates financial burdens as it permits you to use payout as you desire.
• CI as Rider on Term Life Plan: The rider permits the sum assured on base plan, which was payable only on death to be now payable on both death and CI. After you claim on CI, your base plan may be terminated. Because of this, the rider plan is cheaper than a Stand-alone plan. This term plan even helps you to choose from multiple payouts, as suited for your need.
• Hospitalization plan It takes care of both out-patient treatment and hospitalization. But it cannot cover extra expenses like regular bills, daily expenses, payments for maids, cost of mobility aids etc. Critical Illness plan offers a sum of money which can be used to cater to all other needs while one is recuperating from an illness and is not able to work.

Must Read - Disability Insurance

Things to Know about Critical Illness Plans:

You need to know the following details about critical illness plans:

• Health conditions covered: Typically, ‘critical illness’ includes cover for illness, sickness, disease or corrective measures linked to cancer, heart surgery, kidney failure, heart attack, organ transplantation, arterial hypertension, multiple sclerosis, stroke, coma and total blindness. In sum, insurers provide cover against health conditions which need long term monitoring and medication and may occur and re-occur indefinitely.
• Differences from regular medical insurance plans: Apart from the kind of cover, a critical illness plan usually does not stipulate that the patient must be hospitalized to be eligible for cover. As opposed to a regular Medi-claim plan, the CI plan only needs that the policyholder be diagnosed with a critical illness to be eligible for cover under a CI plan. Hence coverage under CI medical insurance plan is restrictive, with regard to pre-defined health conditions and not extensive. Additionally, a CI plan is typically offered for a period of time, longer than a year as opposed to a regular medi-claim policy that is renewed annually.

Choosing a Critical Illness Policy:

Besides a general comparison of insurers on the basis of market share, claim settlement ratio and reputation, experts recommend that policy documents must be studied carefully for all details and additional benefits like a whole life insurance top-up, child benefits, spouse cover etc. It is always recommended that all details for conditions applicable to CI must be perused rigorously:

• Waiting period: A CI policy may have a waiting period measuring several years which implies that even after purchasing a policy, any claim made by the policyholder is not deemed admissible by the insurer for that period. A potential customer for medical insurance should thoroughly compare waiting periods offered by different policies, particularly if one desires protection against the critical illness must come into effect soon.
• Exclusion and Inclusion: Also, there are many inclusions and exclusions linked to CI plans. All information is available in policy documents and must be demanded from the insurance agent. It is good to have a complete understanding of various conditions applicable to CI coverage. The customer can not only gain the capacity to make the most of the insurance plan by being aware of its constraints and limitations but also avoid falling prey to tough financial conditions, resulting from a CI circumstance.
• Premium and Term: When you subscribe only to a suitable and well-examined plan, you are protected in case of a significant health problem. Without doubt, one must also consider the term and premium linked to the policy with regard to the family history of health, special needs and one’s budget.
• Claim process: The claim process is crucial for all kinds of insurance policies and is applicable also for CI policy. You must learn well in advance what documents you would be required to submit and what formalities are needed to file a claim, such that you can be prepared for any eventuality.
• Benefits: Apart from knowing the basic benefits of a CI policy, one must also know the extra features of the policy as offered by your particular company. It does not even hurt to enquire about benefits being offered at the time of renewal for claim-free years.
• Age of coverage: Prior to purchasing a CI policy, get to know the maximum age for which the policy will cover you.
• Other factors: Check other details about the insurer like the history of claim settlement, different caveats impacting the policy etc.

In conclusion, it is often advised that you buy a critical illness plan in a young age. Buying early (in your 20’s) helps as health risks are less and so are the premiums. On the other hand, changes in modern lifestyles and diseases contribute to health issues like a heart attack as early as in your 30’s imply that you should invest in critical illness policies, or even other life insurance policies for ruling out financial emergencies while enjoying a low premium.