Is Critical Illness Insurance needed? What does it cover? I already have Health Insurance, do I still need it? Is it just another gimmick to make me spend more? Am I eligible?
These are all valid questions about Critical Illness Insurance. Let us try to answer them all.
Critical Illness Insurance comes into play in case of some major health issues like cancer, heart problems, kidney/liver diseases, stroke, paralysis, organ transplant etc termed as Critical Illnesses which have unfortunately become commonplace in our lives. And the feeling that someone else always gets these, leaves us vulnerable to not just a financial setback but also without a chance to get effective medical care due to a lack of savings or insufficient or non-existent insurance covers.
Critical Illness Insurance has 2 parts :
Part A - Covers hospital bills, saves expense on hospitalisation due to critical illnesses - called Critical Illness Indemnity Insurance
Part B - Gives a lump sum payout, replaces income lost & helps with living expenses as the patient may not be able to work in most cases - called Critical Illness Fixed Benefit Insurance
Health Insurance also covers hospitalisation bills but maybe insufficient to cover major hospital bills which arise with critical illnesses. Most importantly, health Insurance will cover hospital bills for any illness only once per year, not repeated hospitalisations for the same illness which may be required in the case of a critical illness. Moreover health insurance doesn’t give any lumpsum payout. Hence, even if you have health insurance you need Critical Illness Insurance.
Anyone above the age of 18 is eligible to get Critical illness Insurance Part A, that covers hospitalisation expenses. For Part B that gives out a lumpsum payout, the cover is decided as an income multiple & is subject to stringent health tests.
Critical Illness Insurance makes health insurance more comprehensive and covers all bases. It’s biggest plus is that it protects you from erosion of wealth. By the time you’ve fought a critical illness, if your savings also take a big hit it’s just one problem replaced by another. But if savings remain largely intact because insurance covers most expenses, then one major worry is averted.
The covers start at INR 10 lac & premiums are relatively inexpensive starting at INR 1500/- p.a.
Another lesson for us on using OPM (Other People’s Money) i.e. insurance money effectively.
The sense of being prepared for as much as we can when it comes to our health is something that might just be dawning on all of us thanks to Covid.
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