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In fact, critical illnesses have started to affect people in their most productive years. India’s rising healthcare inflation rate is another great matter of concern. At any stage of life, you cannot afford to let treatment of a particular disease drain a major part of your savings. This is why it is best to stay adequately protected by buying the right insurance product.

How critical illness cover works

While it is important to cover yourself under a comprehensive health insurance policy to offset your healthcare expenses with regard to hospitalisation, it is equally important to be covered under a critical illness plan. A critical illness plan works quite differently from a normal health insurance plan while providing you with income replacement benefit.

Under a critical illness plan, the insurer pays the policyholder the entire sum insured as lump sum regardless of the hospitalisation bill upon diagnosis of a critical illness such as heart related ailment, cancer, stroke, major organ transplant or any other illness covered under the plan. The lump sum amount received by the policyholder can be used for paying off hospital bills, home loan instalments, premium for insurance, day-to-day expenses and other expenses that may incur due to loss of income while you are unable to go to work during the treatment and recovery phase.

For instance, a person buys a critical illness plan with a sum insured of Rs 10 lakh in 2018. After two years of buying the policy, he is diagnosed with lung cancer and gets hospitalised for removal of the tumour through surgery that cost him Rs 3 lakh. Now, when he will file for a claim through his critical illness cover, his insurer will pay him Rs 10 lakh as lump sum. A part of the amount received by him can be used for payment of hospital bills while the remaining amount can be used for paying daily expenses, EMIs if any, children’s education or any other expenses that he needs to take care of. As he will not be able to attend his work for a few months due to recovery from the ailment, the remaining amount can be used as loss of income.

The number of critical illnesses covered differs from insurer to insurer, and most insurers cover between eight to 20 major critical illnesses that include heart valve replacement, kidney failure, paralysis and major organ transplant.

Know before you buy

A critical illness plan is a must for those who have a family history of critical illnesses. Also, those who are the sole breadwinners of their family must invest in such a plan with adequate sum insured. The coverage amount for critical illness plans can be from Rs 1 lakh to Rs 50 lakh.

The waiting period under a critical illness plan is mostly 90 days from the policy issuance day. In order to file a claim, the policyholder needs to survive for at least 30 days after diagnosis of the critical illness. Though these days, there are even a few plans available in the market that offer coverage from day one of diagnosis of the ailment.