Financial PlanHealth Insurance

5 Benefits of Critical Illness Health Insurance Plan

Every couple of minutes, four people below the age of 50 die due to heart attack. More than 1,300 people are diagnosed with cancer every day. The figures are not exaggerated but rather realistic and quite alarming. In our fast paced lives where everyone is relentlessly chasing money and success, we often end-up ignoring our health and then paying the price later. Factors like obesity, stress, smoking, alcohol abuse, erratic food habits, lack of exercise, sedentary lifestyle, etc. are detrimental to our health and part of the modern lifestyle. Sadly, this means more and more youngsters are susceptible to critical illnesses and this is a documented fact. According to statistics obtained from insurance companies, 40% of heart patients in India fall within the age range of 25-35 years. The deteriorating environment due to rapid urbanization, deforestation, various types of pollution and climate change has further contributed to the rising health issues in our country.

Major critical ailments like heart diseases, lung diseases, cancer and many more chronic issues are rising exponentially. Treatments for such conditions will burn a hole in one’s pocket leading to financial losses. The cumulative costs of long-term medical treatment bills can be a burden for most working class families in India. For example, chemotherapy costs and post-surgery rehabilitation expenses. The following table will further make things clear.

Critical Conditions Deaths Per Year Average Treatment Costs
Cardiovascular diseases 24,00,000 3.5 lakhs
Lung diseases 1,160,092 20 lakhs
Cancer 5,56,400 10 lakhs
Liver diseases 2,16,865 18 lakhs
Kidney Diseases 2,00,000 4 lakhs

Given the high costs, it’s always better to be covered by individual life insurance policies. However, your regular health policy will only cover hospitalisation costs and hence it’s important to obtain supplementary coverage. Plus, covering other costs like loan EMI, household expenses, children school fees while undergoing treatment can make things even more difficult. This is where your critical illness cover will step-in and provide the much needed financial cushion. There are many health insurance plans available in the market with critical illness policy being one of them.

Critical Illness Policy

It’s a policy that’ll pay you a fixed amount in case you are diagnosed with any of the critical illnesses mentioned in your policy document. The lump sum amount will be paid immediately up on the diagnosis of the condition and can be used to cover many costs including household expenses. The policy will be voided once the payment is disbursed.

The following health conditions will be covered by your critical illness policy:

  • Heart attack
  • Stoke
  • Kidney failure
  • Major organ transplantation
  • Cancer
  • Paralysis
  • Benign brain tumour
  • Primary pulmonary arterial hypertension
  • Alzheimer’s disease
  • Multiple sclerosis
  • End stage liver disease
  • Aorta graft surgery

Let’s compare the features of a regular health insurance policy and a critical illness policy.

Regular Health Insurance Policy 

  • The diseases covered by this health plan will be clearly mentioned in the policy document.
  • Only medical expenses incurred in India will be covered by this plan.
  • Pay-out will be made based on the medical expenses incurred.
  • This policy will continue to offer coverage until renewal.

Critical Illness Policy 

  • This policy will cover illnesses mentioned in the policy document.
  • A lump sum amount will be paid once the diagnosis is made.
  • The amount will be paid regardless of whether the treatment is received in India or not.
  • The medical expenses incurred will not have a bearing on the lump sum benefit.
  • The policy will be terminated once the payment is made.

Benefits of your critical illness health insurance plan 

  • Income substitute: Hospitalisation can lead to diminished or no income causing a major dent on your family finances. This also holds true for recuperation period and hence financial backup becomes necessary to cover medical and household expenses. Your critical illness policy is meant to provide monetary relief under such circumstances.
  • Tax benefits: Under Section 80D of the Income Tax Act, critical illness pay-out is classified as tax-free.
  • Peace of mind: Medical emergencies can be testing and you don’t want additional worries bugging you in such situations. Nothing should deter patients from receiving the best medical care and critical illness insurance is designed to do just that.
  • Treatment received in the foreign country is also covered: This is one of the major advantages of this policy. Your lump sum amount will be paid even if the diagnosis and treatment of the critical illness takes place in a foreign country. This facility is not offered by regular health insurance plans. If you’re planning on going to another country for treatment, then this policy is perfect for you.

This variant of health insurance plan is quite simple to understand and not complicated at all. It operates on a single straightforward principle – upon diagnosis of the diseases mentioned in the policy document, a one-time lump sum amount will be paid by the insurer. The money obtained can either replace your income or supplement it.

Make sure to insure yourself with sufficient funds as medical expenses simply cannot be anticipated. It’s essential to secure oneself against such uncertainties and decide on the cover according to factors like age, income and lifestyle.

Vikas Agarwal
the authorVikas Agarwal
Vikas Agarwal is an IIT-Varanasi graduate in Chemical Engineering. He is the Founder and CEO of - an investment advisory website. He is a Business Development Professional but a Value Investor at heart. He writes articles on Finaacle, which focus on simplifying the art of investing and the causes of human misjudgment when it comes to investing. He also shares his experiences as an investor and lessons from some of the greatest investors of all time.

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