critical-illness-benefit-under-life-insurance

All You Need To Know About Critical Illness Benefit under Life Insurance

Critical illness benefit in life insurance, including coverage terms, payout structure, and important considerations.

Written by : Knowledge Centre Team

2025-12-28

895 Views

6 minutes read

Exit Pop Up

Live Life More Confidently

Get best insurance from our experts

Name is required Name should be Valid
Mobile Number is required Mobile Number should be Valid
DOB is required DOB should be Valid
Annual Income is required
Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

A rapid increase in the cost of healthcare has emerged as a major concern in India. In 2019, healthcare inflation rose at double the rate of retail inflation, which means the cost of medical care is rising faster than that of other goods and services.

Key Takeaways


  • Critical Illness Benefit provides a lump sum payout on diagnosis of serious illnesses, like cancer or heart attack.
  • It is usually available as a rider with life insurance plans and acts as a supplement to health insurance.
  • The benefit helps cover costs that health insurance might not—like income loss, long-term recovery, and expensive treatments.
  • Coverage usually includes major illnesses such as stroke, organ transplant, kidney failure, and more.
  • Some policies pay the benefit in addition to the sum assured, while others deduct it from the base cover.

Rising cost coupled with increasing incidence of lifestyle diseases has made having a financial buffer important. Most people purchase a health insurance plan with the aim to manage health emergencies. But health insurance may prove to be inadequate in a large number of cases. Life insurance plans with critical illness benefits can be the answer to inadequate health cover.

Click here to know - critical illness cover

Get Life Cover Instantly

Please enter correct name Please enter the Full name
Please enter valid mobile number Please enter Mobile Number
Please enter valid email Please enter Email
Consent is required

Enter OTP

An OTP has been sent to your mobile number

Didn’t receive OTP?

Application Status

Name

Date of Birth

Plan Name

Status

Unclaimed Amount of the Policyholder as on

Name of the policy holder

Policy Holder Name

Policy No.

Policy Number

Address of the Policyholder as per records

Address

Unclaimed Amount

Unclaimed Amount
Error

Sorry ! No records Found

.  Please use this ID for all future communications regarding this concern.

Request Registered

Thank You for submitting the response, will get back with you.

What is the Critical Illness Benefit Under Life Insurance?

The Critical Illness Benefit under life insurance is an added layer of protection that offers financial support in the event of a serious health diagnosis. Typically offered as a rider or optional add-on to a base life insurance policy, it provides a lump sum payout if the insured is diagnosed with a specified critical illness during the policy term. These illnesses are predefined by the insurer and usually include conditions like cancer, heart attack, stroke, kidney failure, and other life-threatening diseases. The benefit is paid out upon diagnosis (subject to a survival period, usually 30 days), helping the policyholder manage treatment costs, replace lost income, or cover other financial needs during recovery.

This payout is not linked to hospitalisation or treatment bills, giving the insured complete flexibility in how the funds are used. It acts as a financial cushion, especially when income stops or expenses surge due to the illness. Since critical illnesses can strike unexpectedly, this rider ensures you're financially equipped to focus on recovery instead of worrying about costs. Opting for this benefit can be a proactive way to safeguard long-term financial stability in the face of serious health challenges.

Why is Critical Illness Cover Needed?

When one hears about anything related to a disease or hospitalisation, health insurance is the first thing that comes to mind. Health emergencies have the power to significantly impact a person's financial position. If you do not have adequate insurance coverage, treatment of critical diseases can deplete your savings.

Health insurance plans have a few gaps which can be filled by critical illness cover. The treatment of critical diseases like cancer or heart and liver ailments is extremely expensive. A single dose of medicine in the case of certain types of cancer can cost several thousand rupees and a successful treatment requires multiple doses. The bill for treatment of cancer can run into several lakhs of rupees. Most health insurance policies generally cover only the cost of hospitalisation.

The total cost of a critical illness can be significantly more than the expenses incurred for treatment. Critical illnesses often leave the affected individual debilitated. It can lead to a loss of income and can even affect the employability of the individual.

How Does a Critical Illness Cover help?

There are various types of life insurance policies. Life insurance can be used to financially secure your family in your absence as well as a savings instrument. But the primary goal of a life insurance policy is to provide a financial buffer to your family in your absence. Life insurance policies like a term plan pay a lump-sum amount in the event of the insured’s death. With a critical illness benefit, the life insurance policy pays a lump-sum amount to take care of the various costs associated with the illness. The amount paid is equal to the sum assured as part of the critical illness benefit rider and is generally separate from the death benefit or maturity benefit guaranteed by the policy. Some insurers deduct the amount paid as critical illness benefit from the sum assured and accordingly revise the death benefit. Some insurance companies pay the critical illness benefit over and above the sum assured.

Which Diseases are Included Under the Critical Illness Covered?

The critical illness benefit typically covers a broad range of serious health conditions, and while the core list is similar across most insurance providers, there may be slight variations in the exact illnesses included. Commonly covered conditions include heart attack, cancer, stroke, paralysis, major organ transplant, and kidney failure, among others. These are life-threatening illnesses that often require expensive treatment and long-term care, which the benefit is designed to help manage. It's always advisable to check the specific list of covered illnesses in your policy document, as definitions and inclusions may differ slightly from one insurer to another.

When is Critical Illness Benefit Paid?

The disbursal of funds under the critical illness benefit is not dependent on the treatment of the disease. Insurance companies pay the critical illness benefit taken with life insurance policies as soon as the insured is diagnosed with an illness covered under the critical illness benefit rider.

Conclusion

When purchasing a life insurance policy, many individuals tend to overlook the importance of adding a critical illness benefit. However, this add-on can play a vital role in providing financial security during a medical crisis. It serves as a valuable supplement to your existing health insurance by offering a lump sum payout upon diagnosis of a serious illness, money that can be used for treatment, lifestyle adjustments, or managing household expenses during recovery. 

The iSelect Smart360 Term Plan by Canara HSBC Life Insurance offers a terminal illness benefit as a standard feature and also allows for flexible customisation to suit your specific protection needs. With a wide range of coverage options, including critical illness benefits, this plan is designed to provide both peace of mind and financial stability in difficult times. Investing in such a comprehensive and adaptable plan ensures that you're protecting your family's future and also safeguarding your own well-being against unforeseen health challenges.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

Recent Blogs

5 Reasons Your Life Insurance Application May Be Rejected
27 Feb '26
2610 Views
7 minute read
Learn the top 5 reasons why a life insurance application may be declined, including medical history, incorrect details, financial risks, and underwriting concerns.
Read More
Life Insurance
Key Features and Benefits of Life Insurance in India
27 Feb '26
1417 Views
13 minute read
Understand the key features and benefits of life insurance in India, including financial protection, tax advantages, savings options, and long-term security.
Read More
Life Insurance
How Life Insurance Protects Families Facing Rare Health Conditions?
27 Feb '26
24 Views
8 minute read
Learn how life insurance helps families facing rare health conditions maintain financial stability through income protection and long-term planning support.
Read More
Life Insurance
Life Insurance Payout Process: How It Works in India?
26 Feb '26
896 Views
5 minute read
Understand how life insurance payouts work in India, including claim settlement process, payout options, timelines, and nominee payment methods.
Read More
Life Insurance
Buying Life Insurance for Someone With a Critical Illness
22 Feb '26
894 Views
7 minute read
Covers eligibility, underwriting considerations, and factors involved when purchasing life insurance for someone with a critical illness.
Read More
Life Insurance
How do I Surrender my Life Insurance Policy?
18 Feb '26
886 Views
6 minute read
Learn how to surrender your life insurance policy, reasons not to, required documents, and whether you can surrender your term plan with Canara HSBC Life Insurance.
Read More
Life Insurance
Where Do Life Insurance Companies Invest Your Premiums?
17 Feb '26
2415 Views
10 minute read
Curious where life insurance companies invest your money? Get insights into how your premiums are managed for long-term growth and security.
Read More
Life Insurance
5 Ways to Cash Out a Life Insurance Policy in 2026
17 Feb '26
4906 Views
15 minute read
Learn five common ways to cash out a life insurance policy, including surrender, loans and withdrawals, and understand the impact on coverage and payouts.
Read More
Life Insurance
Prepaid Insurance: Meaning, Examples & How Does it Work?
17 Feb '26
1553 Views
6 minute read
Learn about prepaid insurance, its benefits, and why it’s crucial for securing your financial future by ensuring continuous coverage without interruptions.
Read More
Life Insurance

Life Insurance - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.

Family Shield: Enhanced Protection

iSelect Smart360 Term Plan
  • 3 Plan options
  • Life cover till 99 years
  • Steady income benefit
  • Block your premium at inception

Start Young, Pay Less, Stay Secured

Young Term Plan
  • Life cover till 99 years
  • Coverage for spouse
  • Block your premium rate
  • Covers 40 critical illness

Fixed Returns, Zero Risks & Worries

iSelect Guaranteed Future Plus
  • 4 Plan options
  • Life cover + Guaranteed benefits
  • Accidental death benefit
  • Premium protection cover