I recall something that happened about 20 years ago. A friend got news that her mother was diagnosed with cancer. The family was naturally devastated. However, both parents were retired and their savings had gone towards buying a family home and giving their three children the best education possible. The children were determined to give their Mom the best possible care they could.
What they didn’t bargain for was the high cost of treatment and hospitalization. They pitched in their savings. Then each of them started to borrow as much as they could. Sadly, cancer won and their mother passed away. The children were left with huge debts that they struggled to pay off.
A sad story – but one that often played out in middle-class homes in India, where medical insurance was not taken seriously enough and was often not affordable. Insurance coverage was available only to those fortunate to work for a multinational firm or a major Indian corporate group, where the company could work with the insurance companies to provide medical insurance cover to its employees.
With the opening up of the insurance sector some years back, the health insurance sector now has a full bouquet of offering from vanilla health plans to critical illness insurance.
Why Get Critical Illness Insurance?
Whilst most of us are familiar with medical insurance, which reimburses or directly pays hospitalisation bills, critical illness insurance is of fairly recent origin, at least in India.
Essentially, such policies, first introduced in the United States in the mid nineties, are designed to cover three illnesses, viz. Cancer, Heart Attack and a Stroke, though some policies may also cover some other conditions like Heart transplant, Coronary bypass surgery, Angioplasty, Kidney (Renal) failure, Major organ transplant and Paralysis.
Basically, all these are conditions that can and do disrupt the life of an individual; whilst the patient suffers trauma and pain, there are direct and indirect financial consequences if you are diagnosed with a critical illness.
These include the huge medical expenses incurred, all of which may or may not be reimbursed by the medical health insurance policy and there may also be a loss of income if an earning member is critically ill.
This specialized insurance provides a lump-sum payment should a policy holder suffer from certain specific critical conditions. The amount paid out differs from insurer to insurer and depends on the plan chosen.
Some policies actually provide for multiple payments. For example, if you are diagnosed with cancer, the insurer will pay out the sum insured. A couple of years later, if you have a heart attack, the insurer will again make another payment.
During the course of my research, I discovered that there are a number of insurers offering such policies in the Indian market and whilst the basic coverage is somewhat similar, details vary with each having its own unique features in terms of sum insured, number of critical illnesses covered or survival period.
To illustrate the features of a typical plan available, I will consider the Criticare+ Policy, which was launched only a couple of months ago by Edelweiss Tokio Life Insurance. As one of the latest offerings I believe that the insurer enjoying the benefit of a late mover advantage whilst designing the policy and learning from what others have done, been able to offer a comprehensive policy.
Some of the unique features of this policy are
# 1 – The maximum coverage extends to Rs. One Crore, which is very adequate.
# 2 – Entry is possible till the age of 65 years, which is quite high. And the coverage can be extended till the age of 70 years.
#3 – It is a standalone policy and not linked to any other policy, as in the case of a critical illness rider where an existing policy is extended to cover critical illnesses.
#4 – The policy covers a broad range of critical illnesses; seventeen in all, divided into four groups.
#5 – A multi-claim option, on payment of additional premium, is also available. This option enables you to claim thrice under the policy subject to a miximum of one illness per group. In case of a multi claim policy is bought and all future premiums are waived after the first claim is paid out.
#6 – The survival period, i.e. the period that an insured must survive after the critical illness is diagnosed, is 28 days.
Most financial planners are today recommending a combination of health insurance and critical illness cover for a balance in terms of coverage and pricing.
In order to avoid the situation that my friend’s family faced, it is advisable that in addition to life, personal accident and medical insurance, critical illness insurance MUST form part of a family’s insurance portfolio.
Do consult your Financial Planning Advisor or Insurance advisor to get your family covered.