Health Care

In Times of Crisis, How Does Critical Illness Insurance Provide Financial Protection?


The insurance industry, specifically health insurance in India, has dramatically changed in the past few years. Post-COVID-19 crisis, more people understand the importance of having an adequate medical insurance plan. However, given the rise in critical illness cases in India and the rising cost of healthcare, basic health coverage may not be sufficient. Hence, many people now opt for critical illness insurance coverage that serves two objectives: comprehensive coverage against life-threatening conditions and protecting your finances.

Diagnosed with a critical illness can put the entire family in a disturbing and uncomfortable situation. Moreover, the question of financial stability adds to the stress. Having a critical illness insurance policy at a time like this can give the much-needed financial backup.

 What is a Critical Illness Plan and What Does It Cover?

A critical illness plan is necessary today as it offers cover against specific life-threatening diseases. Treating these diseases can also take a toll on one’s financial health. Numerous expenses include hospitalisation expenses, doctor visits, treatment costs etc. Moreover, one may be unable to earn a living, jeopardising their and their family’s lives financially.

A critical illness insurance policy pays a lump sum amount that can be used to cover these high costs or act as financial aid.

The critical illnesses covered under the plan may vary from one insurer to another. However, some of the common critical illnesses covered are:

  • Cancer (depending on severity)
  • Kidney failure
  • Liver Failure
  • Lung Failure
  • Brain surgery
  • Benign brain tumour
  • Open chest CABG
  • Multiple sclerosis
  • Cardiomyopathy
  • Systemic lupus erythematosus

 What are the Benefits of Critical Illness Insurance?

Buying critical illness protection offers significant benefits to policyholders and their family members. Let us discuss a few of them.

  • Diagnosis of critical illness can cause immense physical, emotional and financial stress. The cover thus helps provide financial support at the time of crisis.
  • The lump sum payout option can be a great assistance as the critical illness treatment costs are typically very high and sometimes may be required in a lump sum amount. The lump sum benefit can also be used for repaying debt, which was difficult due to the diagnosis.
  • It covers several critical illnesses, including cancer, kidney failure, paralysis etc. Hence, you can be covered for many critical illnesses under a single plan.
  • If the policyholder diagnosed with a critical illness is the family’s sole breadwinner, chances are he may have lost his job due to health conditions. A critical illness insurance policy can substitute for the potential loss of ability to work and earn during this difficult time.
  • A critical illness insurance plan provides additional financial support, which is over and above your regular health insurance policy. This allows you to bear the medical and other related expenses after the diagnosis in a better way.
  • A significant myth surrounding critical illness coverage is that it comes at a higher price. However, critical illness plans from a reputed insurance provider like Tata AIG can be availed at affordable premiums. The plan covers a wide range of critical illnesses and offers multiple other benefits, making it prudent to buy.
  • Additionally, you can also avail tax benefits on the purchase of a critical illness insurance policy. You can claim a tax deduction of ₹25,000 for a premium paid for this policy under section 80D of the Income Tax Act 1961.

 Role of Critical Illness Plan in Times of Crisis

In times of crisis, critical illness covers act as a friend you can depend upon. Let us look at ways this plan can help provide financial protection during difficult times.

  • Critical illness typically requires high treatment costs, which critical illness coverage can provide you with.
  • You receive a lump sum in the event of diagnosis of any covered critical illness, which can be utilised in an emergency.
  • It helps you safeguard your assets, as during a time of crisis, if there is a financial crunch, many people resort to selling their assets and prized possessions.
  • Other than spending the lump sum on treatment or recuperation, your family can utilise this amount for paying off any debts due to disease or taking care of financial needs to cope with the loss of income.
  • It can help keep intact the family members’ financial goals, dreams, and aspirations.

 Final Word

Ideally, a critical illness policy should be purchased in addition to a health insurance plan covering hospitalisation and other expenses. Critical illness protection ensures that additional medical expenses, loss of income and other such factors are also taken care of.