Critical illness policy - Wake up to the beauty of this health policy.


Critical illness policy is an insurance cover against any specified critical diseases. The insurance company pays a lump sum cash amount when the specified disease is diagnosed irrespective of the amount spent on the illness. It is a pure benefit policy. This policy has been around for some time now but the common man is still unaware of it's importance.  We at would like to give you some basic information about this policy and also why it is different from a mediclaim but equally important.



Diseases covered under critical illness

The diseases covered mostly depend from company to company and one needs to check the exact details before the policy. Some of the general diseases covered are: Cancer, Major Organ Transplant, lung, pancreas or bone marrow, Third Degree Burns, Heart Valve Replacement, Coma, Total Blindness, End Stage Renal Disease, Kidney failure and more as mentioned in the policy document.

Equally important to mediclaim but often ignored

Critical illness policy is often the most ignored policy. Not many people consider taking critical illness policy if they have a mediclaim. One should first understand the importance of a critical illness policy and also how it is different from mediclaim. Mediclaim is a reimbursement plan where you receive the money spent on the costs of treatment where as critical illness policy pays the entire claim amount to the policy holder irrespective of the expense once the covered disease is diagnosed.

Mediclaim being the most popular health insurance policy people do not prefer or often ignore buying a critical illness policy without realizing that  mediclaim can be used only when an individual stays in the hospital whereas critical illness policy pays a sum insured even if the diagnosed (any diseases covered by critical illness policy)  person is treated from home. Since future is unpredictable it is important to take care of any unforeseen event, so the diagnosed person doesn’t face any urgent financial crisis or a sudden monetary burden because of health issues.

For example when a person is diagnosed with kidney failure and requires dialysis say twice a week, he may not need to stay in the hospital, at this point critical illness policy plays its role. The mediclaim may not pay the charges as it requires the patient to stay in the hospital for atleast 24 hours. In the critical illness policy a lumpsum amount is given to the policy holder and he can make his payments towards the hospital as and when required. Mediclaim cuts down ones hospitalization cost where as critical illness policy helps in compensating ones financial loss during a serious illness.

You can take Sum assured for critical illness from any general insurance company for a maximum of Rs. 10 lacs. One can however also take multiple cover of Rs 10 lacs from different general insurance companies. If taken at a young age the premiums are very low and mostly no medical checkup is required. If the policy holder dies without any claim the premiums paid are given back. Tax benefits are also available under section 80C and 80D. The insurance company however provides the claim only once for a particular critical illness, the company gives no claim bonus of around 5% for every claim free renewal (accumulated upto 50%). Thus each specific company may offer different advantages for signing up for critical illness cover.

Diseases excluded from critical illness policy:

The policy leaflet shall provide some general exclusion which depends from company to company. If these exclusions are existing the company is eligible not to pay the claim. Thus one should know about these to avoid any unpleasant surprises. Some of the gene exclusions are given below:

The diseases, illness, injury should not be pre-existing, 90 days waiting period (i.e. if the illness signs or symptoms are contracted within 3 months from the day policy is taken the claim shall not be given), Any illness directly or indirectly because of any prolonged child birth or any pregnancy problem, Any illness due to alcohol, smoking, other tobacco intake or drug abuse, cosmetic surgery, HIV infection or AIDS, suicide or attempted suicide and more as mentioned in the policy document.


However these are just basic differences between a critical illness policy & mediclaim, thus it is advisable for all to realize the benefits provided by both these health insurance policies and consider them equally important when taking health cover. Since mediclaim is the most popular health insurance policy and bought by the masses it is now high time to understand the purpose of a critical illness policy and purchase one for avoiding financial stress in the unfortunate event of a serious medical condition.

By Namrata Shah.

The writer is working with as a Financial planner.


0 #2 Jayesh 2011-12-04 19:17
very true.. it should be considered even if one has mediclaim.
0 #1 gaurav 2011-12-04 19:15
had only heard abt this policy.. finally understood it well..
Will definately consider buyn one.

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