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Critical illness covers from non-life insurers are better

These products cover treatment costs and help supplement loss of income

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The high cost involved in the treatment of lifestyle-related ailments such as heart attack, stroke and cancer is prompting more people to go in for , with companies saying the rise in demand is as much as 10 per cent.

A critical illness cover gives a lump sum payment to the policyholder on detection of an illness. The money can be used on expenses incurred for treatment or for compensating the loss of income.

has seen a 10-15 per cent increase in the number of critical illness policies sourced over the last year, says , chief, underwriting and claims.
 

WHAT TO LOOK FOR
An ideal critical illness cover should include: 
  • Comprehensive critical illness cover, including the most commonly diagnosed critical illnesses 
  • 100% benefit payable on diagnosis of a critical illness 
  • Continuous coverage – in spite of benefit being payable on diagnosis of a critical illness, coverage continues for balance critical illnesses 
  • Whole life coverage 
  • No loading on premium on claims

Both life and general insurers offer critical illness covers. You can take this cover either as a rider or as a standalone with your health or life insurance policy.

, chief executive officer (CEO), , says since a critical illness policy offers a pre-determined lump sum upon diagnosis of a disease and its subsequent treatment, it hedges against the probable loss of income, usually huge in the case of a critical illness.

According to of , it is better to opt for such a cover offered by a general insurer, since it covers hospitalisation charges and pays a lump sum on detection of the illness. A critical illness rider by a life insurer, on the other hand, will only offer the lump sum and the treatment costs will have to be borne by the policyholder.
 

HEALTH PLAN
Insurer Name of the 
product
No of
diseases
covered
Sum
assured*
(Rs lakh)
Premium
(Rs)
Aviva Life** Health Secure 12 10 2,303
ICICI Lombard** Critical Care 9 6 2,506
TATA AIG General Criticare 11 5 3,237
HDFC Life Critical Care Plan 30 5 3,812
Bharti AXA Life Triple Health 
Insurance Plan
13 5 5,945
*Premium is for a 30 year old male; **ICICI Lombard & Aviva Life plans are sold online only.
Source: policybazaar.com 

Broadly, most critical illness covers include lump sum coverage against the most commonly diagnosed critical illnesses such as cancer, end-stage renal failure, multiple sclerosis, major organ transplant, heart valve replacement, coronary artery bypass graft, stroke, paralysis, myocardial infarction, major burns, total blindness, end stage liver failure, etc.

The demand for such covers is seen more in individual policies than in group policies says Amarnath Ananthanarayanan, managing director and CEO of Bharti AXA General Insurance. "It has still not caught on for group policies because the employer has to pay the premium and the rates for group policies are high. Therefore, there is no incentive for the employer to give more cover to employees,'' he says.

Group insurance generally offers coverage against hospitalisation and surgical procedures arising due to an accident/sickness/critical illness. However, a lump sum amount is not payable on diagnosis of a critical illness in group insurance covers. So, even if you are covered by your company's group insurance, it would be advisable to go for a separate comprehensive individual policy, says K K Mishra, CEO, Tata AIG General Insurance.

"Opting for a standalone critical illness cover could work out to be expensive. It is recommended to buy one health insurance plan that covers everything,'' he says.

Akshay Mehrotra, chief marketing officer at policybazaar.com says, “It's a myth that buying an add-on critical illness cover is expensive. You may be charged Rs 3,000 to 4,000 extra on a Rs 1 crore sum assured. The sum for critical illness is paid on detection of the disease, whereas the hospitalisation part is paid during the treatment.”

In the case of ICICI Lombard, for a policy holder aged between 36 and 45 years, on a policy with a sum assured of Rs 5 lakh, the premium without critical illness works out to Rs 11,469 and with critical illness, to Rs 16,182.

While buying a critical cover, you must look at the illnesses included in the policy and buy one that covers the maximum number of frequently occurring illness that run in your family. You should also thoroughly check the waiting periods listed for each illness in the contract before signing to ensure you are not caught unaware at a future date.

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