Certain diseases like Cancer, Paralysis are so fatal that no cure have been found for them till date and therefore they remain for a lifetime. Such diseases not only lead to steep medical expenses but also lead to loss of potential income as the person affected may not be able to work in the same manner as he/she used to work before being diagnosed with a critical illness.

It is for such diseases that insurance companies provide Critical Illness Insurance which is over and above the Health Insurance Cover as well as the Life Insurance Cover.

A critical illness insurance plan is different from a health insurance plan as Critical Illness Insurance plan covers only specific harmful illnesses like Cancer, Paralysis, Kidney Failure, Blindness, Coronary Artery Bypass etc.

And as critical illness insurance only covers certain illnesses, the premium to be paid for critical illness insurance is also lower than the premium to be paid for health insurance policies which are generic in nature and cover hospital expenses for a wide range of diseases. The reason for lower premium for standalone critical illness insurance is that these are very rare diseases and the probability of a person having this disease is also lower.

How Critical Illness Insurance Works

Critical Illness Cover works differently from a Health Insurance Cover. Under a health insurance cover, your hospitalisation and other related expenses are covered on an actual basis whereas under a critical illness cover, the policy amount is paid back to you lump-sum within 30 days of the diagnosis of the disease. You may use this amount for treatment of the illness or for any other purpose. No proof of actual expenses is required to be submitted in case of critical insurance cover.

The Critical illness cover isa defined benefit plan as the payout is pre-defined and fixed. A person may subscribe to one or more critical insurance cover and each of these insurance policies will pay the amount separately. In case of multiple critical insurance covers, the amount specified in all the insurance policies would be paid completely irrespective of the actual expenses incurred.

It is important to note here that most policies have a waiting period of 90 days at the start of the policy. Thus, a person can make a claim only after 90 days of starting the policy.

Moreover, to make a claim a person should also survive at least 30 days from the date of detection of the disease.

How to enroll for Critical Insurance Cover

A person may enroll for Critical Insurance Cover as a separate plan or it can be added as a rider to the life insurance plan. When added as a rider to a base plan, there can be 2 situations:-

  1. The base life insurance policy ends when the critical insurance rider is used;
  2. The base life insurance policy continues when the critical insurance rider is used.

Apart from adding Critical Illness Insurance as a rider to the Life Insurance Plan, this rider can in some cases also be added to Health Insurance Plan.

Irrespective of whether a person enrolls for critical insurance cover as a separate plan, income tax deduction would be allowed in both the cases for the premium paid for the insurance plan(s).