Critical Illness Insurance: What You Should Know

A critical illness cover can be a standalone policy or an add-on to a regular health insurance plan. It offers financial protection when you are diagnosed with a listed critical or life-threatening ailment, such as cancer, heart attack, stroke, paralysis, liver failure, kidney failure, multiple sclerosis and more.

Once the diagnosis is confirmed and it meets the policy’s definition and severity criteria, the insurer provides a lump sum payout after completing the claim verification process. This lump sum is unrestricted, meaning you can use it for treatment costs or any other financial needs, such as loan repayments, household expenses or your family’s ongoing commitments.

Here are some important features of critical illness cover in health insurance you should know about before investing in one:

• Coverage for critical illnesses

A critical illness cover provides financial protection for listed severe illnesses such as cancer, kidney failure, heart attacks, strokes, brain surgery and more. Only the illnesses specified in the policy are covered.

• Payout of a lump sum

A critical illness plan pays a lump sum amount once the diagnosis is confirmed and the condition meets the policy’s defined severity criteria. This payout can support both medical and non-medical financial needs.

• Flexibility in usage of payout

The payout is non-restrictive. You can use it for treatment, loan repayments, household expenses or any other requirement since the plan does not limit how the amount must be used.

• Waiting period

Critical illness plans come with a waiting period; commonly around 90 days from policy activation, though this varies by insurer. Claims can be filed only after this period ends.

• Survival period

Some critical illness plans include a survival period (such as 14 or 28 days) after diagnosis. You must survive this duration to be eligible for the payout, depending on the policy terms.

• Number of claims allowed

Many traditional CI plans allow only one claim, after which the policy terminates. Some newer plans offer multi-claim options for different illnesses or illness groups.

• Coverage for pre-existing diseases (PEDs)

Most CI plans exclude pre-existing critical illnesses, but some may offer coverage after a specific waiting period based on the insurer’s terms.

• Claims process

If your diagnostic reports and other required documents are in order, insurers process the claim after verification and release the lump sum payout as per their standard turnaround timelines.

You can enjoy the following benefits when you invest in a critical illness cover in health insurance:

• Financial benefits:

A critical illness cover provides a lump sum payout that offers financial support at the time of a serious diagnosis.

• Peace of mind :

The lump sum amount helps you manage essential expenses and financial commitments even if your ability to earn reduces during treatment and recovery.

• Affordable premiums:

Critical illness premiums are often affordable at younger ages, though they may increase with age and health risks.

• Access to costly treatments:

Coverage for major illnesses ensures you can seek timely treatment and expert medical care without delaying decisions due to cost concerns.

• Tax benefits:

Premiums paid for critical illness policies are eligible for deductions under Section 80D, up to ₹25,000 for individuals below 60 and ₹50,000 for senior citizens. This limit is shared with other health insurance premiums.

Even though you have a medical insurance family, it is a good idea to invest in a critical illness cover as well for the following reasons:

• Standard health insurance does not provide a lump sum payout for critical illnesses unless a CI rider is added. A CI plan gives a fixed lump sum that can support you during a major diagnosis.

• Traditional health insurance typically reimburses hospitalisation and treatment costs only. A critical illness cover helps you manage non-medical financial commitments as well, such as children’s education, loan repayments and household expenses during recovery.

Keep these points in mind before choosing health insurance with critical illness cover:

• Read the inclusions and exclusions thoroughly.

• Select a plan offering coverage for maximum critical illnesses.

• Always calculate your sum insured carefully, so that it covers your treatment costs and other financial commitments.

• Invest in a plan with a low waiting period and survival period.

• Compare various plans, their terms, coverage and claim settlement ratio to choose the one that best suits you.

The claim submission procedures for claiming coverage under a critical illness cover are:

• Collect all relevant documents needed.

• Fill out the claim form of your insurer and submit your claims along with your medical reports.

• The insurer checks your submission details thoroughly.

• Based on the authenticity of your details, your claims can be approved or rejected.

• If approved, the insurer releases a lump sum payout for your critical ailment treatment.

• If rejected, the insurer sends back the documents to you with the reasons for rejection.

To avoid rejection of claims, ensure you submit all these documents properly at the time of filing your claims:

• Claim form filled with valid details

• Diagnostic reports

• Doctor’s prescription

• Hospitalisation documents, if approved by the doctor

• Any other specific document as requested by your insurer