Do you need a critical illness cover?

A friend of mine taking a medical insurance policy was advised by her insurance agent to also take a critical illness cover.

She initially thought it was just sales talk and her agent was after some more business. However, the agent threw some interesting light on this cover.

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What is it?

Critical illness is a benefit plan and not a reimbursement plan.

Medical insurance will reimburse all the expenses incurred. Let's say you have a medical cover for Rs 1,00,000. You fall sick and your hospital and medical expenses touch Rs 80,000. You will be reimbursed this amount.

But under a critical illness cover, you will not be reimbursed any expenses, you will be given the entire amount. Let's say you are insured for Rs 1,00,000. If and when you get diagnosed with the illness, you will be given the entire amount (Rs 1,00,000), irrespective of whether or not you spend all of it.

What's a critical illness?

That depends on the insurer. You will have to check their list of critical illnesses.

Generally, this is the broad list and each individual insurer may or may not include all.

- Heart attack
- Bypass surgery
- Stroke
- Cancer
- Kidney failure
- Major organ transplant
- Multiple Sclerosis
- Aorta graft surgery
- Primary pulmonary arterial hypertension
- Paralysis

However, you had better read the fine print and check for exclusions.

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What's excluded?

If the illness was diagnosed within 90 days from the start of the policy, you are not eligible for any claim. This time frame is referred to as the waiting period.

Once the illness is diagnosed and you die within 30 days of the diagnosis, you will not be eligible for any claim. This is referred to as the survival period.

If the illness existed when taking the cover, that illness would be excluded. That means, if it is a first heart attack you will be covered (not the subsequent ones). Or, if you already have a kidney problem, then you will not be covered for it.

If the illness is a result of consumption of alcohol or drugs, then the insurance company may choose not to pay the benefit.

Also, if the treatment is arising from or traceable to pregnancy or childbirth, it may not quality.

Have a detailed chat with your insurer to find out exactly what is and what is not covered.

Who determines whether the illness is critical?

A pain in the chest followed by hospitalisation need not be the result of a heart attack. So don't expect compensation for it.

On the other hand, a minor heart attack may not be termed as critical, so no compensation for this too.

Or lets say you suffer from heart failure or angina.

Heart failure occurs when the heart cannot pump enough blood fast enough to meet the needs of the body. While angina is pain or discomfort due to lack of oxygen to the heart muscle.

You will not get the benefit for the above as technically, neither of these are heart attacks.

A heart attack is the death of heart muscle due to the loss of blood supply. The latter is usually caused by a complete blockage of a coronary artery (the arteries that supplies blood to the heart muscle).

Take the case of cancer. If the cancer cells can be permanently removed and have not spread, it might be excluded since the cancer has been arrested and is no longer critical. 

The illness will have to be diagnosed by a registered medical practitioner and supported by ample evidence (X-rays, laboratory reports, tests). The insurance company will also get it reconfirmed by a Registered Medical Practitioner.

If you test HIV+ (even though you did not test for this virus at the start of the policy), then too the cover will not apply.

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What happens once you claim?

The entire policy gets terminated. Let's say you get a heart attack and your cover was for Rs 1,00,000. You avail of this benefit.

Now, the entire cover is terminated. If you wish, you can apply for a fresh critical illness cover. This time around, you will not get any heart related illness covered.

What is the cover?

Normally, there are just four slabs:

1. Rs 5,00,000
2. Rs 10 lakh (Rs 1 million)
3. Rs 20 lakh (Rs 2 million)
4. Rs 25 lakh (Rs 2.5 million)

You can opt for any slab you choose. You pay a premium once a year. This premium will depend upon your age and cover.

• Mediclaim: What to look for

The critical illness cover is not a substitute for a medical insurance cover. This can be an add-on cover but it should not be the only cover. If you have to take just one cover, then opt for mediclaim.

However, if you have a family history of certain illnesses and you want to be adequately covered, add this to your main mediclaim policy. Don't substitute the mediclaim policy for this.