Critical illness insurance pays out a lump sum if you get a serious illness, such as cancer, or kidney failure or stroke. The lump sum pay-out is tax free and can be used any way you like it. For example, advanced medical treatment, to pay your home loan EMI or rent, daily expenses, adjustments to your home etc.

How much does it cost?

Critical illness insurance premium costs vary greatly and premiums depend on various factors like
  • Age
  • Whether you are a smoker or a non- smoker
  • Health (your current health, your weight, your family medical history)
There are both riders and stand alone plans in the market. Riders can be attached to your existing term plan. The amount of cover you need will also depend on various factors, for instance:
  • Net salary Debts
  • Mortgage/rent payments
  • Dependants
How much cover do I need?

You can work out what level of cover is right for you by calculating the below:
Your debts: your mortgage and any other debts. These could include credit card debts or personal loans.
  • Expenses you want your insurance to cover: your essential monthly outgoings (x12), such as rent, utility bills, or your children’s maintenance costs.
  • A possible lump sum that you might think you’d need for medical costs or property changes
Once you have these figures, take away the cover you already have from the total amount you need – the result is the amount of cover you should take out.

How Critical illness insurance is different from Mediclaim?

Mediclaim pays for your hospitalisation. What happens when you don’t work after a critical illness? You may need to take a break from your job in order to get completely recovered from a critical illness. Now this means your monthly income will reduce or stop but your EMIs and daily expenses will still continue! This means either you’ll hamper your savings and God forbid if you haven’t saved enough, you and your family members will have to be dependent on others for expenses. This is where a critical illness plan will act as a saviour. Also, you will usually need to continue to pay the premiums for your insurance plan even if you can’t work because of a critical illness. In this case, you can opt for a plan with ‘waiver of premium’ rider, which will waive off your future premiums after you have been critically ill.

Plans available in the market:

There are quite a few plans available in the market. There are plans offered by well known life insurance companies like HDFC Life, Aegon, Edelweiss Tokio Life, ICICI Prudential Life etc. Also there are general insurance companies like Bharti Axa,ICICI Lombard, Bajaj Allianz and HDFC Ergo. Most general insurance company plans are good for health plans but their critical illness plans are comparatively expensive than those offered by life insurance companies. HDFC Life and Aegon provide critical illness plan that only covers cancer whereas ICICI Prudential and Edelweiss Tokio Life cover multiple critical illnesses like kidney failure, heart disease, cancer etc. ICICI prudential provides a critical rider which can be attached to their term plan, Now if you already have an existing term plan then you are forced to opt for this one because ICICI prudential life insurance doesn’t provide a stand alone critical illness plan. Also the cost involved in buying a stand alone plan is more or less similar to that of attaching a rider. If you opt for a critical illness rider you are forced to buy a term plan, second you may have to compromise on your sum assured for a term plan, if the sum assured is 1 crore and the sum assured for a critical illness rider is 80 lakhs. So basically, after you suffer from a critical illness your sum assured for a term plan will be 1 cr – 80 lakhs, which is 20 lakhs only. Edelweiss Tokio Life – CritiCare+ is a stand alone critical illness plan that provides a cover of Rs 1 crore at low premium rates and also gives a multi claim option where the policy holder can claim thrice in case he suffers from a second critical illness. Now, this seems comprehensive protection against critical illnesses. This plan can help one bounceback from various critical illnesses like cancer, CKD, Heart Attack etc.

Since, buying a critical illness plan is a crucial decision, I would suggest that you do a thorough research, look for a plan that suits your needs & provides maximum benefits at reasonable rates.

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