A comprehensive health insurance policy is crucial because medical expenses can run into lakhs and not having insurance can cause a dent in one’s finances.
However, while health insurance is crucial for covering medical expenses during treatment, more is needed in the face of a critical illness. It often doesn't account for potential loss of income during recovery, long-term care costs, non-medical expenses like transportation and childcare, and the financial strain it can place on loved ones.
How Critical Illness Riders Work
“Critical illness insurance provides a financial safety net by offering a lump-sum payout upon diagnosing specified severe health conditions. However, understanding the nuances of such policies is crucial to ensure adequate coverage. These policies typically cover illnesses like cancer, heart attack, stroke, kidney failure, and major organ transplants, “ says Aditya Mall - Appointed Actuary - Future Generali India Life Insurance.
Critical illness riders, available with term insurance, offer a lump sum payout upon diagnosis of specified critical illnesses. This rider has a separate premium and calculation method from your main-term insurance.
This financial support can cover medical expenses, loss of income, and other related costs. It provides an additional layer of protection beyond basic health insurance.
For example, a critical illness rider provides a lump sum payout upon diagnosis of a specified critical illness, like cancer. This financial benefit can cover medical expenses like chemotherapy, radiation therapy, and surgery. It can also help offset lost income during treatment and recovery. The exact payout amount depends on the policy's terms and the specific type of cancer.
Waiting Period And Survival Period
A critical illness rider can be added to your term insurance plan as a supplemental benefit. This rider has a separate premium and calculation method from your main-term insurance.
If the insured person is diagnosed with a covered critical illness during the policy term, they can file a claim. However, the claim can only be processed after a specific survival period. This is a waiting period after diagnosis, and the insured must survive this period to qualify for benefits. “Policies include waiting period (meaning the time from policy start until coverage begins and survival periods (meaning the time the insured must survive post-diagnosis to claim benefits),” says Mall. For example, a typical waiting period might be 90 days, and a survival period could be 30 days.
Once the survival period is over, the claim can be processed.
The Claim Process
If the insured person is diagnosed with a covered critical illness during the policy term, they can file a claim. However, the claim can only be processed after a specific survival period. This is a waiting period after diagnosis, and the insured must survive this period to qualify for benefits.
Once the survival period is over, the claim can be processed. If approved, the policyholder receives a lump sum payout, which can be used as needed to cover medical expenses, loss of income, or other related costs.
The claims process involves notifying the insurer while submitting the claim form and providing necessary medical documentation. Timely submission and accurate information disclosure are vital to expedite claims.
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How Premiums Are Decided
“Premiums are affected by factors such as age, health, lifestyle choices. For eg. senior citizens or people with health risks may face higher premiums. Similarly, lifestyle factors, such as smoking, and engaging in high-risk activities, can lead to increased premiums up to 20 per cent due to the risk of developing a critical illness,” says Mall.
