How Critical Illness insurance is different from Medi-claim insurance and why you need to have one

While recently in this space we discussed how to zero-down on the right medi-claim policy, now, a look at the sub-category in health insurance: critical illness covers.

The difference between regular medi-claim policies and critical illness insurance is that the former is an indemnity plan where the benefit is capped to the extent of expenses on hospitalisation subject to a maximum of sum insured (SI) while the latter is a benefit policy where the SI is paid as a lump sum at the very instance of diagnosis of the illness. You can use the money from the critical illness insurance policy to pay non-medical expenses or even to re-pay outstanding loans. There is no restriction of how you can use the insurance amount. If you are not able to continue in your job, the amount from the critical illness policy can also help support your family and household requirements. A critical illness policy however, covers only the listed ailments that usually include heart ailments and cancer among other illnesses. It will not cover minor ailments and regular hospitalisation, say for a cataract surgery or dehydration from a sun stroke or food poisoning. Thus, it should complement a medi-claim policy and not be considered as an option in the place of a medi-claim insurance.

Before you decide to buy one…

When buying an insurance for critical illness, you need to first decide whether you want to go with a life insurance company or a health/general insurer. The decision is critical because there is a difference in the policy that will be issued. Critical illness policies offered by general/health insurers come with life-long renewability option as per guidelines of IRDAI. Life insurance companies, on the other hand, can’t offer life-long renewability in their policies; the cover ends after a specific term/period. That said, note that life-long renewability is valid only till the policyholder is in good health; once he/she gets diagnosed for a major illness and makes a claim, be it a policy with a life insurer or a general/health insurance company, he can’t renew it again.

At the time of signing up for a critical insurance cover itself, thus, make sure, you take sufficient SI. You may know that many critical ailments including cancer and those related to heart recur and you may want to plan your finances to pay for future treatment as well.

One option in critical insurance for youngsters who don’t want to shell high premium is: Religare Health’s indemnity plan for critical illness – ‘Critical Mediclaim’.

Religare Health is the only insurer at present to offer an indemnity plan for critical insurance. The claim paid will be as per the expenses of hospitalisation subject to maximum of SI. This policy like a medi-claim insurance cover can be renewed life-long even after you make a claim on the policy any year.

When buying insurance for critical illnesses, go for a comprehensive cover. Today, in the market, life insurers offer the most comprehensive products in critical illness. ICICI Prudential’s Hear and Cancer Protect, HDFC Life’s Cancer Care, and Future Generali’s Heart & Health are best of the lot. You can also consider Religare Health’s Critical Mediclaim if you are looking for lifelong renewability. For women, the best critical illness cover is HDFC ERGO’s my: health Women Suraksha.

Best plans in the market

Review of three best critical illness covers in the market based on the SA options given, survival clause, number of illnesses they cover and other features:

1. Future Generali Life’s Heart and Health plan: The plan provides two options — one, a heart cover with a total of 18 critical illnesses related to the heart and, two, a critical illness cover for heart-related, cancer-related and other CI conditions, covering a total of 59 illnesses (including minor and moderate conditions under each) — the highest number of critical illnesses covered by any plan in the market. The policy provides sum assured of ₹5 lakh-50 lakh. The listed illnesses include loss of speech, deafness, blindness and Alzheimer’s disease (without any age limitation), which are not covered under some CI plans in the market. The policy provides sum assured of ₹5 lakh-50 lakh. Maximum age at entry is 65 years and the cover is provided till 75 years. The policy pays 25 per cent of the SA on diagnosis of a minor ailment; 50 per cent in case of a moderate condition, and 100 per cent if it’s a major condition. The minimum policy tenure is 10 years. The policy covers the individual only if he/she has survived 21 days after diagnosis of the illness. This condition doesn’t apply for cancer, but it is applicable for heart ailments. The policy doesn’t cover pre-existing diseases. The policy also assures waiver of premium for five years if you are diagnosed with any of the stated conditions under the policy.

2. ICICI Prudential Life’s Heart and Cancer Protect: This plan covers heart ailments (18 minor and major conditions) and cancer (including carcinoma-in-situ and early stage cancer). The maximum sum assured offered is ₹75 lakh. The policy covers individuals of 18-65 years and allows renewal till 75 years. The maximum policy term allowed is 40 years (minimum – 5 years). If the ailment is diagnosed in the early stage, the policy will pay 25 per cent of sum assured and waive all future premiums, though the risk cover will continue. The balance sum assured will be paid whenever there is a next claim for a minor or major condition in a new or already existing ailment. In the case of cancer, there is no minimum survival period. In heart ailments, however, there is a condition that the policyholder has to survive for at least seven days after the diagnosis of the ailment for the claim to be accepted. The policy doesn’t cover pre-existing diseases.

3. HDFC ERGO’s my: health Women Suraksha: It is the only comprehensive women health policy in the market (covers osteoporosis too). It offers six different plans. You can opt for cover for cardiac ailments alone, or only for cancer, or take a comprehensive critical illness cover that will pay for 41 chronic illnesses, including kidney failure requiring regular dialysis, end-stage liver failure, Parkinson’s and Alzheimer’s, along with cancer and heart ailments. It also offers a plan that covers expenses on treatment for bodily injury arising from assault and burns. Under the Cancer Plan, expenses on treatment of cancer in the breast, cervix, uterus, fallopian tube, ovary, and vagina, among others, are covered. Under the Cardiac Plan, open chest CABG, heart valve repair, first heart attack of specified severity, and coma of specified severity are among a long list of health conditions that are covered. This is the only policy that lets all women in the family (mother/mother-in-law, daughter/daughter-in-law and sister/sister-in-law who are dependants) to be covered under one plan. The policyholder has to survive seven days after diagnosis of the ailment to make a claim on the policy. If a claim is made for any minor ailment, a 50 per cent discount in the premium is given for the next five years. Women aged 18-65 years are eligible for this policy, and it can be renewed lifelong. The policy is offered to women with multiple sum insured options, ranging from ₹1 lakh up to ₹1 crore.