The criticality of critical illness insurance
It is interesting to note that prior to the start of the financial year 2020-21, barely 10% of those with the means were interested in buying health insurance to cover new age diseases. But a documented study back then showed that since the advent of the fear instilled by the pandemic, 71% considered health insurance a necessity.
Notably, and almost overnight, 57% of those surveyed claim to understand the importance of comprehensive health insurance plans. I would, however, not be too surprised if those high numbers have fallen off a fair bit, as it is human nature to get complacent once there is some semblance of a return to near normalcy.
In this context, it would be prudent for every sensible person to take time out to understand and consider purchasing a very crucial insurance product, namely critical illness insurance. Most people tend to overlook it believing that since they have Mediclaim they are adequately covered.
But the fact is, firstly there has to be hospitalisation for mediclaim to kick in, and further, there are often caps and sub-limits that will easily be exceeded in the event of a critical illness.
Furthermore, escalation in premium payable in case of mediclaim is a given, especially post a year like the last couple of years where huge pay-outs have been made. In contrast to this, there are critical illness insurance policies that offer the optional benefit of covering several (approximately 30 plus usually) critical illnesses such as cancer, heart attack and kidney failure for a maximum of 30 years without any change in premium.
What also makes some of these product offerings distinctive is that it gives full claim payout on the first diagnosis of any of these covered critical illnesses, even without hospital bills. This payout amount is particularly crucial as it can also safeguard one’s family against the loss of income arising out of an illness that could put one out of action for a prolonged period of time.
Critical illness policies usually come bundled with an equivalent Term Plan and that usually adds an enhanced financial ring around the family of the one with a critical illness in the event of non-survival.
That the payment of Premium paid under such a policy can be demarcated and qualifies for deductions under both, Section 80C as well as Section 80D of the Income Tax Act, offers an additional benefit.
Finally, one must remember that if ever diagnosed with a critical illness, it can affect one physically, emotionally, and financially. By investing in a critical illness cover, one can at least take the inevitable financial pain and insecurity out of the equation. We have made this part of our MUST DO Financial Decisions List and having thought it through, a large number of people we know have discussed it with us and made the right choice.
Again, like most insurance products, it is about acting in time to secure your family’s financial future.
Ashok Kumar
Head of LKW-India
He can be reached at ceolotus@hotmail.com