Critical Illness Health Insurance

About India health insurance

Critical illness insurance was originally sold with the intention of providing financial protection to individuals following the diagnosis or treatment of an illness deemed critical. Critical illness should ideally be purchased by individuals along with a life insurance or term assurance policy or even with a standard health insurance cover.

The claims received could be used to:

• pay for the costs of the care and treatment;
• pay for recuperation aids;
• replace any lost income due to a decreasing ability to earn; or even
• fund for a change in lifestyle

This insurance can provide financial protection to the policyholder or their dependents on the repayment of a home loan due to the policyholder contracting a critical illness condition or on the death of the policyholder. In this type of product design, some insurers may choose to structure the product to repay a portion of the outstanding home loan (Credit Shield) debt on the contracting of a critical illness, whilst the full outstanding mortgage debt would be repaid on the death of the policyholder. Alternatively, the full sum assured may be paid on diagnosis of the critical illness, but then no further payment is made on death, effectively making the critical illness payment an 'accelerated death payment'. Some employers may also take out critical illness insurance for their employees. This contract would be in the form of a group contract and has become an essential strategy used by employers around the world to both protect their employees financially as well as attract more employees to consider working for the company.

So what are some of the Features of Critical Illness Insurance Plans?

There are quite a few important features of Critical Illness insurance plans that one must note: Critical Illnesses (CI) Defined – The most important feature is that under the CI Plan Coverage, there are defined number of illnesses only covered. All insurance companies provide a list of the illnesses/ailments that are covered so that the applicant will be aware of what’s covered. Kindly note that any ailment/illness other than those named/listed by the insurance company will not be covered. Some important ones that all insurance companies cover include First Heart attack, Cancer, Kidney Failure, Stroke etc.

Survival Period – Every CI policy comes with a survival period benefit, this means that post detection of the critical illness, the insured will need to survive this period in order to ensure the claim becomes payable. This is normally 30 days. Hence for example, if one has suffered a Stroke, he/she will need to survive 30 days and then the claim is payable. This is important to note, so incase the insured unfortunately passes away during the survival period, then there is no claim paid by the insurer.

Single Lump-sum Payment - The insurer pays the sum insured as a single lump sum payment for the treatment of covered illnesses, subject to crossing the survival period. What is important is that since this is a fixed benefit plan, the sum insured is p aid in full, irrespective of the expense incurred. For example, if the Sum Insured of the policy is ₹5 lacs and the treatment expenses are only ₹3 lacs, the entire SI of ₹5 lacs will be paid to the insured.

Simple Claim Processing - The documentation at the time of a claim under the plan is very minimal given that the policy covers defined illnesses/conditions for which supporting documentation needs to be provided for the claim to be settled The claim can be easily settled based on the diagnosis report(s) submitted by the insured.

Income Tax Benefits under a CI Insurance Policy - The policyholder can avail tax deductions under the Income Tax Act, 1961. Tax exemption can be claimed upto ₹15,000 under Section 80D of the Income Tax Act, 1961. Senior citizens can avail tax benefit up to ₹20,000 under the same section.

Loss of Job / Income - Following a critical illness, it is most likely that the insured may need to stay away from work for a period of time or may even have to give up his/her job based on their health condition. Hence the claim is used as an income replacement for the insured.

Policy Termination on Claim Payment – Unlike a regular Indemnity based health insurance plan, in a CI policy, once the claim is settled on detection of a covered critical illness and crossing the survival period, the CI policy will automatically cease to be in force.

What are the documents that are required to be submitted for a Critical Illness claim?

The Insured will need to submit the below mentioned documents for the processing of Critical Illness Claim:

• Identity proof of the claimant
• Dully filled Claim form
• Copy of Hospital summary/Discharge card/treatment advise / medical reference
• Copy of Medical reports/records
• Copy of Investigation reports
• Doctor’s certificate
• Any other relevant document as requested by the Insurer.

On receipt of claim documents from Insured, Insurer shall evaluate the admissibility of claim as per Policy terms and conditions. Upon satisfactory completion of assessment of the claim, the Insurer will make the payment of benefit as per the contract. In case if the claim is repudiated Insurer will inform the Insured about the same in writing with reason for repudiation. Lack of documents or medical certificates confirming the diagnosis of illness or undergoing of medical/surgical procedure will result in forfeiture of the claim.

In the event of any doubt regarding the appropriateness or correctness of the diagnosis, the Insurer shall have the right to call for an examination of the Insured in concurrence with Insured or his legal representative on the evidence used in arriving at such diagnosis, by a Medical Specialist appointed by the Insurer and the opinion of such Specialist as to such diagnosis shall be considered binding on both the Insured and the Insurer.

In the event of death of the Insured post the survival period, the immediate family member/relative of the Insured and claiming on Insured’s behalf must inform Insurer in writing immediately and send Insurer a copy of all the required documents to prove the cause of death within 14 days. Insurer upon acceptance of the admission of claim under the Policy shall make payment to the Insured or Nominee/legal heirs of the Insured, in case of the death of the Insured post the survival period.

Exclusions under the Critical Illness Policy

Some of the major exclusions under the CI policy are as follows. However go through the entire set of exclusions as available in the policy wordings received from the insurance company along with the policy kit.

• Benefits will not be available for any Pre- Existing conditions or related condition(s) or any complications arising thereof for which Insured has been diagnosed, received medical treatment, had signs and / or symptoms, prior to inception of Insured’s first Policy, unless such a condition is stated in the Proposal form and specifically accepted by the Insurer and endorsed thereon
• Insurer shall not be liable to make any payment under this Policy in connection with or in respect of any Insured Event during the Waiting Period as defined under the Policy
• Any diseases causing the death of the Insured within the stipulated Survival Period, measured from the date of incidence of the illness
• Any medical procedure or treatment, which is not medically necessary or not performed by a Medical Practitioner
• Any congenital Illness/Conditions
• Any Covered Critical Illness arising from Birth control procedures and/or hormone replacement therapy and any complications arising thereof from
• Any treatment/surgery for change of sex or any cosmetic surgery or treatment/surgery /complications/illness arising as a consequence thereof
• Any Covered Critical Illness arising from Treatment by a family member and self medication or any treatment that is NOT scientifically recognized and any complications arising thereof / there from
• Attempted suicide (whether sane or insane) or intentionally self inflicted Injury or Illness
• Sexually transmitted conditions, mental or nervous disorder, , Acquired Immune Deficiency Syndrome (AIDS), Human Immune deficiency Virus (HIV) infection
• Use/Abuse of drugs, alcohol, or other intoxicants or hallucinogens unless properly prescribed by a Medical Practitioner and taken as prescribed
• War, invasion, act of foreign enemy, hostilities (whether war be declared or not), armed or unarmed truce, civil war, mutiny, rebellion, revolution, insurrection, military or usurped power, riot or civil commotion, strikes
• Participation in winter sports, skydiving/parachuting, hang gliding, bungee jumping, scuba diving, mountain climbing (where ropes or guides are customarily used), riding or driving in races or rallies using a motorized vehicle or bicycle, caving or pot-holing, hunting or equestrian activities, skin diving or other underwater activity, rafting or canoeing involving white water rapids, yachting or boating outside coastal waters (2 miles), participation in any Professional Sports, any bodily contact sport or any other hazardous or potentially dangerous sport for which Insured is untrained
• Failure to seek or follow medical advice following the diagnosis of any illness/disease/injury
• Serving in any branch of the Military or Armed Forces of any country, whether in peace or War
• Participation in a criminal or unlawful act with a criminal intent.
• Nuclear contamination, the radioactive, explosive or hazardous nature of nuclear fuel materials or property contaminated by nuclear fuel materials or accident arising from such nature
• Genetic disorders and stem cell implantation / surgery/storage