Health insurance plans are evolving with changing times. Insurance companies are offering different types of health insurance plans. There are normal health plans which provide an exhaustive coverage, illness-specific plans which cover specific illnesses, hospital cash plans which pay a fixed sum on hospitalization, senior citizen plans for older individuals and critical illness plans which cover specified list of illnesses. While a normal health insurance plan provides the required coverage, other plans are designed to cater to specific requirements. Take the instance of critical illness plans. Do you know how they work?
• What are critical illness plans?: Critical illness plans are health insurance plans which cover a list of specific illnesses. If the policyholder is diagnosed with any of the covered illness during the term of the plan, the Sum Insured is paid in lump sum.
Many individuals believe that if they have a comprehensive health insurance plan, they can give critical illness plans a miss. Is it true? Are critical illness plans required when you already have a health insurance plan?
They are and if you need reasons, here's why:
• Critical illnesses involve substantial finances: It is no mystery that treatment of critical illnesses involves huge expenditures. You might need expert medical opinion, complicated treatments, special medicines, etc. for treating such critical illnesses. Besides being complicated, all these medical heads involve huge expenses. Though your health plan covers the costs involved in treatment of critical illnesses, the coverage proves insufficient most of the time. Critical illness plans come in handy in these situations. These plans provide benefits over and above your health plan claim. These benefits, thus, help in meeting extra costs of treatments associated with critical illnesses. As such, a critical illness plan supplements your health insurance coverage.
• Critical illness plans pay a fixed benefit which can be used in multiple ways: Another good feature of critical illness plans is their benefit payout. If you are diagnosed with any critical illness which is covered by the policy, you get the Sum Insured in lump sum. The benefit paid does not depend on the actual cost of treatments incurred. That is why, critical illness plans are also called fixed benefit plans. This fixed benefit makes the plan useful. Other than paying for the treatment costs, you can also utilize the benefit for meeting other financial obligations. For instance, when you lose your job, the benefit from your critical illness plan can be used for meeting your family's lifestyle expenses. If you require round-the-clock care, it can be arranged using the funds provided by your critical illness plan. Thus, the critical illness plan benefit can be used in multiple ways.
• Premiums are low: If you are worried about the additional premium outgo on a separate critical illness plan, relax! The premiums charged by critical illness plans are very low and easily affordable. In fact, the benefit promised by the policy far outweighs the minimal premium charged by it. So, you can easily buy a critical illness plan even if you have a regular health insurance plan.
• You can save tax: Another reason, though not primary, which favors critical illness plans is tax saving. The premiums paid for critical illness plans qualify for tax exemption under Section 80D. You can avail a maximum tax benefit of up to Rs.60, 000 under this section. Interesting, isn't it?
Critical illness plans, thus, make sense and you should definitely buy one. However, there are some points which you should remember in context of these plans which are as follows:
• Every plan covers a list of specified illness. Before buying, check the covered illnesses and choose a plan which covers maximum illnesses.
• There is a survival period after which the benefit is paid. This period ranges from 30 days to 90 days. The survival period means that you should survive for the specified number of days after being diagnosed with a covered critical illness. Only after the survival period is over would the benefit be paid.
Heed these points before you buy a plan. Remember that a critical illness plan is important and can work wonders when you fall victim to any major illness. So, arm yourself with a critical illness plan for a complete health insurance protection.