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Why you should have a critical illness cover in your insurance policy?

Why you should have a critical illness cover in your policy?
2012 was a unique year for me, and scary too!

In the second half of the year, atleast 5 people I know were diagnosed with cancer. After the emotional impact of the revelation, came the financial blow. Take the case of my aunt, who was diagnosed with *** cancer, atleast Rs. 5 Lakhs was spent in diagnosis, surgery, hospital costs. Chemotherapy, radiation and the medication took up the other Rs. 2 -3 lakhs. While the immediate danger is averted, preventive check -ups, scans will be an on-going feature.

Those medical costs are rising and we must have a minimum mediclaim cover of Rs 5 Lakhs. This is something which we all are aware of. But what is clearly emerging as an important threat is a set of maladies which insurance companies term as critical illness.

Diagnosed with any one of them, can mean a significant outflow in terms of pre and post hospitalisation care which a regular mediclaim may not be able to cover adequately.

About the Coverage

Typically any critical illness cover offered by General Insurance companies provides protection against 12 major critical illnesses .The illnesses covered are: Heart Attack, Stroke, Cancer, End stage kidney failure, Major organ transplant, Coronary artery bypass surgery, Benign brain tumor, Heart Valve Surgery, Motor Neuron Disease, Multiple Sclerosis, Coma, Paraplegia. It is important to note that the coverage terms may differ between different insurance companies and it is important to go through the brochures and policy wordings.

Since the terminology is medical lingo, it may not be easily understood by us, it will also be beneficial to consult a medical practitioner to understand the coverage terms and the extent of coverage before investing in it. This will avoid any issues and untoward experience at a later stage.

The cover ranges from Rs 3 Lakhs to Rs. 10 Lakhs. If you are covered under this policy for Rs. 5 lakhs, and diagnosed for any of these illnesses, then you will receive a lumpsum amount of Rs. 5 lakhs which can be used towards your treatment.


Typically for insured who are less than 45 years of age, a medical test is not needed. However it is important to disclose any pre-existing condition that you may have.

Must remember

· The insured needs to survive for atleast 30 days after diagnosis to be eligible for the payout.

· The policy is eligible only for a one time payout during the lifetime of the policy after which it expires.

· Most insurance companies have a 30 to 90 day waiting period (depending on the insurance company) before you can claim under the cover

Typical Exclusions

Some of the common exclusions under this policy are as follows:

* War or any act of war, invasion, act of foreign enemy, war like operations

* Criminal or unlawful act, or intentional self-injury or attempted suicide while sane or insane

* Participation or involvement in naval, military or air force operation, racing, diving, aviation, scuba diving, parachuting, hang-gliding, rock or mountain climbing, Intoxicating drugs and alcohol

* Venereal disease," AIDS" (Acquired Immune Deficiency Syndrome) and/or infection with HIV

* Any treatment arising from pregnancy (including voluntary termination), miscarriage, maternity or birth (including caesarean section

For the complete list of exclusions please ensure you read the policy wordings adequately. All this literature is readily available on the company websites.

The claim procedures for claiming a benefit under this policy is much easier than that of mediclaim since this is a lumpsum payment and not based on actual costs.

How much does it cost

If you are 30 years of age, the policy for a coverage of Rs. 10 lakhs will cost you approximately Rs. 3000/-

That is about Rs. 250 per month, but ensuring this coverage is going to assure you and your family some respite from the financial stress that can come with these illnesses.

This is a good addition to your mediclaim cover since this is eligible for deductions under Section 80 D. You can avail upto Rs.15,000 as tax benefit under ‘Section 80D'. In case of senior citizens, you can avail upto Rs.20,000 as tax benefit under 'Section 80D'

About the author:Daisy Fernandes is a personal finance enthusiast who is also pursuing her Certification in Financial Planning

Read more about: medical insurance
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