Did you know that in 2021, the healthcare sector saw a total inflation of 8.4%? 2021 saw a surge in not just consultation fees and hospital charges, but also medical test fees and the prices of medicines. Of course while this means that one has to shell out a pretty penny just for basic treatments, it also indicates that treatments for critical and chronic diseases will cost an arm and a leg! 

As per Indian tradition, we all have that one little section of the cupboard that’s used to squirrel-away money. However, such emergency funds (and even those in the bank) may prove to be quite insufficient in the face of a hospital bill. Having a health insurance plan, of course, is essential when it comes to combating these expenses. However, have you ever given a thought to also buying a critical illness cover to mitigate the risk of expenses even further?

What is a critical illness cover?

A critical illness rider is an add-on that you can purchase while buying a health policy. This add-on basically extends your cover to include 36 critical illnesses that require long-term treatment and care. Some of these critical illnesses include cancer, cardiovascular diseases, degenerative disorders, strokes, kidney failure, and so on. While the details may vary, most critical illnesses riders offer protection against:

1. Hospitalisation charges incurred during the treatment of chronic diseases
2. The cost of medicines
3. The cost of diagnostic tests
4. Day to day expenses in the hospital (apart from treatment charges)
5. Loss of income (some experts suggest using the lump sum payout to compensate for the loss of income during the treatment)

3 Undeniable Reasons to get a critical illness cover!

If you’re wondering whether a critical illness rider can truly benefit you, keep reading! Here are some of the reasons you should get a critical illness cover:

1. Lump sum payout: You will receive the sum assured in a lump sum payout, which can then be used to pay for the treatments. As long as your premiums are not missed, and your treatments do not fall under the exclusions list, there should not be a problem with getting claim approvals.
2. Large network of hospitals: Most critical illness riders are offered by the leading insurance providers who have a large network of hospitals that accept their insurance. What does this mean for you? It means that you can arguably get your treatment at a leading hospital and ensure that the top physicians in their field are working on your case. Often, the hospital you end up at can mean the difference between a speedy recovery and a long drawn-out treatment. 
3. Peace of Mind: The thought of money and the inability to pay for treatments can be a harrowing one for the patient. At a time when you should only be focussing on your recovery, money should be the last thing on your mind. When you have a critical illness rider, you can ensure that you don’t need to spare a second thought to your financial situation. The insurance policy is designed to take care of the expenses, even when they are exorbitant. 

Critical care covers with term insurance! 

Most people associate critical illness riders with health insurance policies. However, did you know that you can get this rider with term insurance too? There are certain benefits of the same, such as:

1. No change in premium: Critical illness covers bought with term life insurance help customers in a major way – the premium stays the same. Even when you are diagnoses with a chronic disorder, you won’t have to end up paying a higher premium just to make sure that the policy continues to be valid.
2. Tax concessions: You can enjoy a large tax break as per Section 80D of the Income Tax Act, 1961. To be fair, you’ll still get a tax break if you buy the rider along with a health insurance policy. 
3. Coverage stays consistent: Let’s assume that you’ve got a term plan that is valid for 30 years. 10 years into the policy, you develop a chronic illness and make a claim. The term plan will continue to be valid inspite of that. You can ensure that your family is protected no matter what. 

Understanding fixed benefit vs indemnity based covers

While buying health insurance, you will be asked whether you want a fixed benefit plan or an indemnity based cover. Understanding the difference between the two is critical as it can alter your experience entirely. 

What is a fixed benefit? 

A fixed benefit is essentially insurance against a specified, pre-determined event. By its very nature, a critical illness rider is a fixed benefit plan as it is bought to insure you against any of the 36 diseases mentioned in the policy document, and has a fixed sum that will be given out during the payout. 

For instance, Rohini has purchased a critical illness rider that has a sum assured of INR 10 lakhs. She develops retinoblastoma and requires cancer treatment. On diagnoses, the insurance provider gives her the entire amount to use to cover her treatment. 

The only drawback of such policies is that there may be a discrepancy between the sum assured and the actual expense. Rohini’s treatment cost 9 lakhs, and so she did not have a problem with this insurance payout. However, Shushila, who underwent the same treatment and had the same policy, developed a complication that required further hospitalisation. As a result, her treatment cost INR 11 Lakhs and she had to dip into her savings to pay for the same. 

What is an indemnity cover?

An Indeminity cover pays for the cost of medical treatment, as long as it falls under the sum insured amount. Most Mediclaim plans are indeminity covers, and you can add a critical illness rider to the same. 

As an example, consider the case of Ameeta. She has a Mediclaim policy with a sum insured amount of INR 10 Lakhs. On being hospitalised for dengue, she gets a medical bill of INR 4.5 Lakhs. Once she will submit the required claim documents to her insurance provider, she will be reimbursed for the amount. 

A major drawback of indemnity covers is that they do not cover deductibles (these would be specific items such as gauze, PPE kits, oxygen masks, gloves, etc). In other words, the policyholder has to bear the expense of the same. 

Final Thoughts

In today’s age, when pollution levels are skyrocketing, stress is an accepted side-effect of being a working professional, and one’s lifestyle is getting more hectic by the day, having a critical illness rider is non-negotiabe. Getting this add-on is quite prudent as you’ll be able to handle expensive medical treatments, while also setting aside some of the funds to compensate for the loss of income.

Conclusion