Critical illness cover, also referred to as critical illness insurance, is an insurance policy where you'll get a tax-free 'lump sum' - a one-off payment - if you're diagnosed with one of the serious illnesses covered by your insurance policy. It's designed to pay off your mortgage, debts, or pay for alterations to your home such as wheelchair access, should you need it.
You critical illness insurance will pay out if you get one of the specific medical conditions or injuries listed on the policy. Not all conditions are covered. The policy will also specify how serious the condition must be. Examples of critical illnesses are:
Most policies will also pay out, if you are permanently disabled because of injury or illness. It only pays out once and then the policy ends. Points to consider before buying critical illness cover
The money you get from a critical illness policy can be used to pay off a mortgage, to pay medical bills, home modifications or for anything else.
Critical illness cover could be a good choice for you, if:
Before deciding on sum assured, keep in mind factors like treatments costs, recurring costs and future financial liabilities in case of income loss.
Also, take into account existing covers such as Mediclaim or personal accident and disability insurance policy.
You either can buy a critical illness plan as a standalone policy, or you can combine critical illness riders with your life or health insurance plans. The policy terms and conditions under both the options are more or less the same. The choice between a standalone policy and a rider depends on your requirement.
Usually, a standalone policy offers more suppleness in choosing the sum insured and larger covers as compared to riders. The limit on sum insured under a rider is usually the same as the base policy. Therefore, if you have a health plan or term insurance of Rs. 5 lakh and buy a critical illness rider with it, it is unlikely that the insurer will offer you a sum insured of more than Rs. 5 lakh for the add-on cover. There will be a difference in pricing as well. A standalone critical illness policy will cost more as it comes with the option of choosing a higher sum insured.
Every insurance policy has some clauses and limitations attached to it. Similarly, a critical illness insurance policy has its own restrictions. For example, a critical illness plan may not cover all chronic diseases/illnesses; such as -a) Any critical illness arising out of any genetic illness or disorder
Besides these, all insurance providers may also not cover pre-existing diseases, which you were already diagnosed with before buying the critical illness insurance.