Critical Illness Insurance: Key Exclusions Explained

Posted on: Dec 12, 2024 | 3 mins | Written by: HDFC ERGO Team

Critical Illness Insurance: Key Exclusions Explained

Health issues often come without warning, and being diagnosed with a life-threatening condition like cancer, stroke, or kidney disease can be overwhelming. These illnesses usually require long-term care and come with high medical costs. That’s where critical illness insurance can make a big difference. It covers a wide range of serious conditions and helps policyholders manage treatment, recovery and even day-to-day expenses.

While a critical illness insurance policy offers extensive coverage, it is not unlimited. There are certain conditions and situations that the plans do not cover. Knowing the critical illness insurance exclusions is just as important as understanding what is included, so you are not caught off guard when it matters most. Let’s take a closer look at the exclusions of these plans.

What is Critical Illness Insurance?

Critical illness insurance is a type of insurance policy that covers critical or life-threatening illnesses, such as stroke, cancer, kidney failure, paralysis, etc. As critical ailments require extensive care and treatment, they can affect your finances. A critical illness plan will ensure your savings are protected in these trying times, and you focus on getting back on your feet. On diagnosis of a covered illness, you will receive a lump sum payout from the insurer, which will help you manage both medical and non-medical expenses. The insurer will not ask for any bills, but only proof of diagnosis of the illness to provide compensation.

You can buy critical illness insurance as an add-on to your existing healthcare plan or a standalone policy.

Why are Critical Illness Claims Denied?

While critical illness insurance provides important financial support to policyholders, sometimes claims can be denied. Here are some common reasons why:

• Not sharing full information:

Failure to provide important health details or providing incorrect information when buying the policy can lead to claim denial.

• Pre-existing illness:

If the illness existed before purchasing the policy, the insurer may reject the claim.

• Policy exclusions:

Some illnesses are not covered by the policy. If the policyholder is diagnosed with a condition on their critical illness cover exclusions list, the insurer will reject the claim.

• Lapsed policy:

If premiums are not paid on time or policy terms are not followed, the coverage can lapse, which may lead to claim rejection.

• Not meeting policy rules:

Some plans pay out only if the illness reaches a certain stage or severity. If the condition doesn’t meet these requirements, the insurer may deny the claim.

Tips to Navigate Exclusions and Claim Denials

If you are covered by critical illness insurance, it is important to know how to navigate policy exclusions and claim denials. Here are some helpful tips:

• Take time to understand your policy:

Before you buy a health plan, check what is covered and what is not. Also, look out for waiting periods and illnesses that may not be included.

• Ask questions if you are not sure:

If anything in the policy confuses you, ask your agent or the insurance company. It is better to understand things clearly before you buy a plan.

• Be honest about your health:

When applying, tell the truth about your medical history. Hiding anything from the insurer can lead to problems when you need to make a claim.

• Check your policy every year:

When it’s time to renew, take a quick look to make sure everything is still okay. Sometimes, terms or coverage can change.

• Appeal if the claim is denied:

If you think a claim was unfairly rejected, you can appeal. Sometimes, submitting extra documents or getting help from a professional can turn things around.

Features of Critical Illness Insurance

Some key features of critical illness insurance are:

• Lump sum payment:

If you get diagnosed with a covered critical illness, the insurer will pay a lump sum amount, irrespective of the actual expenses incurred. This amount is not restricted to medical expenses; you can utilise it for miscellaneous expenses, such as compensating lost income, meeting day-to-day expenses, paying off debts and/or other financial obligations. However, to avail of the compensation, you must survive a certain period after being diagnosed with the ailment. This timeframe is referred to as the survival period, which typically ranges from 14 to 30 days, depending on the insurer.

• Coverage for critical illnesses:

Although the number of illnesses covered may vary from insurer to insurer, some life-threatening illnesses covered include cancer, stroke, heart attack, kidney failure, paralysis, brain tumour, multiple sclerosis, etc.

• Tax benefitsv:

In addition to financial protection, you can avail of a tax deduction under Section 80D of the Income Tax Act on the premium paid towards the policy, thereby reducing your tax liability.

• Shorter waiting periods:

Critical illness plans have a shorter waiting period as compared to standard healthcare policies.

• Easy claims process:

For claiming compensation, you don’t have to provide any bills or documents. Only proof of diagnosis of the ailment is enough.

What are the Exclusions in Critical Illness Plans?

Some common exclusions in critical illness plans include:

• Any critical ailment diagnosed within the waiting period is not covered.

• Illnesses or medical conditions you have been diagnosed with before purchasing the policy are not covered.

• If the insured dies within the survival period, he/she is not eligible for compensation. Critical illness plans come with a survival period of 14-30 days, which means the insured has to survive this period after being diagnosed with a critical illness.

• The insurer will not compensate for the claims filed during the waiting period. Most health plans have a 90-day waiting period for critical illnesses.

• Self-inflicted injuries or attempting suicide

• Illnesses or injuries developed due to war, terrorism, or civil unrest

• Injuries/illnesses sustained in hazardous activities or jobs

• Injuries/accidents due to participation in adventure sports

• Injuries/accidents while participating in defence operations, whether it’s the Army, Navy, or Air Force

• Illnesses developed due to smoking, alcohol consumption, or substance abuse

• Sexually transmitted diseases

• Infertility treatments

• Cosmetic surgeries and dental treatments

• Treatments done abroad

Who Should Buy a Critical Illness Insurance Plan?

Here is who should consider this coverage:

• If a critical illness, like cancer or kidney ailments, runs in the family, you have a high likelihood of getting it. Hence, individuals with a family history of critical illnesses should consider purchasing a critical illness insurance policy.

• Those above the age of 40 are at an increased risk of developing critical illnesses.

• Those working in high-pressure work environments as they are at high risk

• Those who are the sole earning members of the family must consider investing in a critical illness insurance plan. The claim amount can be used for compensating loss of income, daily expenses, or paying the fees for children’s education.

Critical Illness Insurance Vs Health Insurance Plan

Even though both plans provide financial protection against medical expenses, there are some differences between the two, such as:

1. Coverage:

Critical illness insurance covers only critical/life-threatening diseases covered by the policy. Health insurance, on the other hand, covers diseases, accidents, as well as critical illnesses.

2. Payout:

Upon diagnosis of a covered critical illness, a critical illness plan will provide a lump sum amount, irrespective of the actual costs incurred. However, in the case of health insurance, you can claim the medical expenses in actuals.

3. Survival period:

Only if you survive a certain period can you avail of the compensation under a critical illness insurance plan. In a health insurance plan, there’s no survival period but a waiting period.

Conclusion

Understanding the exclusions in critical illness plans is just as crucial as knowing what is covered. It helps you avoid claim denials and makes things smoother during stressful times. That’s why it is important to read the policy details carefully and ask questions to the insurer if anything is unclear.

If you are looking for the best health insurance plan in India, start by shortlisting a few good options and choose one that matches your needs. Whether you are buying health insurance for senior citizens or for yourself, take the time to research properly. You can also use a health insurance calculator to compare premiums and benefits. The goal is to choose a plan that truly supports you when it matters most.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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