Critical Illness Insurance: What Is It and Who Needs It?

November 28, 2020 11:28 newlambertagency

If you have never experienced any critical illness, you’re one of the lucky ones. Their treatments are quite expensive and pose a burden on every common man’s finances.

But you need to be prepared for everything that life throws at you. In the event of a big health emergency such as cancer, heart attack, etc. Critical Illness Insurance could provide you with a much-needed financial shield.

People usually assume that they’re fully protected under their health insurance plan, but the exorbitant costs of treating life-threatening illnesses are usually more than any plan will cover.

That is why critical illness insurance exists to help meet the high costs associated with critical illnesses and provide the necessary financial security.

Read on to know everything about them, a Critical Illness Insurance 101 if you will.

What are Critical Illness Health plans?

Critical illness health plans are fixed benefit health insurance plans which cover a specified list of critical illnesses. Some common illnesses covered include cancer, stroke, heart attack, major organ transplants, liver failure, lung failure, multiple sclerosis, etc.

Critical illness insurance can pay for costs not covered by traditional insurance. So if the policyholder is diagnosed with any of the covered critical illnesses during the term of the plan, the sum insured is paid in lump sum irrespective of the actual medical costs incurred.

Not just that, the money can also be used for non-medical costs related to the illness, including transportation, child care, etc.

The coverage limits may vary and the policy pricing is impacted by several factors, including the cost and extent of coverage, age, health, and the sex of the insured, and the family medical history.

What is not covered?

There are exceptions to critical illness insurance coverage. These exclusions are as follows:

  • Illnesses or treatments occurring within 60 to 90 days of buying the policy
  • Pre-existing illnesses during the waiting period
  • Congenital defects, ailments, or diseases
  • Diseases occurring due to alcohol or drug abuse
  • HIV/AIDS infections
  • Illnesses due to war or war-like situations
  • Maternity related illnesses
  • Death due to critical illness during the survival period

Why are such plans necessary?

Illnesses like cancer, heart-related ailments, etc. are on the rise. With various external factors like pollution, health ignorance, and genetics, many individuals are getting afflicted with common critical illnesses and are requiring intensive treatments.

Even the treatments required for critical illnesses are very expensive. Individuals need a specially designed plan which pays for such expensive treatments where normal health insurance might prove to be insufficient.

This is where Critical illness insurance can prove to be extremely beneficial for people who are at a high risk of falling prey to severe illnesses.

Also, the premiums which are paid for a critical illness plan are allowed as a tax deduction under Section 80D. Thus, you can avail tax benefits too from a critical illness policy.

Bottom Line

Since medical bills are a common cause of bankruptcy in the United States, it’s crucial to be prepared and protect yourself against the unpredictable fate, especially if you have a family history of any of the illnesses mentioned above.