Today, I have written in detail about “CRITICAL ILLNESS” policy in the form of FAQ (Frequently asked Question).
Before I proceed forward, I would like to state that in insurance, two categories of policy are there
1. Indemnity based policy: Under such policy, insurer reimburse you the amount which has actually been incurred by you. For example: mediclaim, car insurance.
2. Fixed Benefit policy: Under such policy, insurer pays you the lumpsum benefit irrespective of the expenditure incurred by you. For example: Critical illness Policy. If you have opted for a Rs. 10 lacs critical illness policy which covers cancer and post taking this policy if you are detected with cancer then insurance company will pay you lumpsum payment of Rs. 10 lac. Now its entirely upto you how you want to utilize this amount.
So now let’s start with the FAQ on critical illness policy.
Q.1-What is critical illness policy ?
Ans – It’s a fixed benefit policy which pays you a lumpsum just on the basis of diagnosis of critical illness or life threatening ailments mentioned in your policy document. Some of the examples of critical illness are coma, heart attack, cancer, kidney failure, paralysis etc.
Q.2 – I already have a mediclaim policy. Then do I need to take a critical illness policy as well ?
Ans-Mediclaim policy is an indemnity policy which will not pay you more than the actual hospitalization cost or actual sum insured whichever is lower. For Example: You got paralysis, now the treatment of this disease will be covered under “mediclaim policy” but because of paralysis there might be loss of income, more expenditure on specialized treatment, permanent or partial disability etc. To overcome this, a lumpsum payment from your critical illness policy (which has covered paralysis) would act as a much needed support. Thus a critical illness policy is not a substitute but it actually supplement your existing mediclaim policy.
Q.3 – Should I take a standalone critical illness policy or take it as a rider ?
Ans-My personal view is that you should always take standalone critical illness policy bcz of the following reasons:
A. A stand alone critical illness policy covers more critical ailments as compare to a critical illness policy taken as a rider.
B. Your sum insured for a rider critical illness policy cannot be more than the sum insured of actual base policy. Let’s assume you have a base policy of life insurance of Rs. 3 lacs then in this case your sum insured for your rider policy cannot be more than Rs. 3 lac whereas in case of standalone policy there is no such limitation.
C. At any given point of time, you cannot discontinue your rider policy. But in case of you have individual life insurance policy and standalone critical illness policy, then if you want you can discontinue your critical illness policy.
Q.4- Are there any conditions/special clause in critical illness policy ?
Ans: Yes, normally the following conditions/special clause are there :
A. Once you are detected with a critical ailment then you have to remain alive for 30 days to get the lumpsum.This is also called “survival period” clause.
B. There is an initial waiting period of 30 to 60 days post taking the policy. During this period no claim illness will be covered. However this clause is not applicable for renewal policy.
C. There will be waiting period of 3 to 4 years for pre existing disease. Most likely companies might refuse to issue you the policy itself incase you are already suffering from a critical illness disease.
Q.5 – Is the premium of critical illess policy eligible for any tax benefit ?
Ans: Yes it is eligible under section D upto a limit of Rs. 20,000 who are senior citizen and Rs. 15,000 for those who are not a senior citizen. Section D also gives tax benefit for the premium of mediclaim. So the benefit of Rs. 15,000 and Rs. 20,000 includes the premium of mediclaim as well.
Q.6 – What is the most important point to be kept in mind while buying this policy ?
Ans: Buy a policy which covers maximum critical illness. Also if there is any family history of a illness then one should take the policy which covers that illness atleast.
Q.7 – Who should take this policy ?
Ans: The bread earner of the family should definitely take this policy and if budget permits, it should be taken for one’s spouse and parents as well.
Q.8 – Is medical check up compulsory for taking this policy ?
Ans – If one’s age is below the age of 45, then no medical check up is required. However if someone’s age is 45+, then the company might ask you to go for a medical check up.
Q.9 – Once I claim from this policy, can I renew the same policy again ?
Ans: No, once you claim under this policy, then the policy ceases to exist and you cannot renew the same.