Do you need a critical illness cover?

Almost everyone takes a Mediclaim. If they don't, it's because their office covers them. But where critical illness is concerned, there is a lot of ambiguity.

Here we clarify your doubts.  

How it differs from Mediclaim

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

If you have medical insurance, whatever you spend -- within the limit of the cover -- will be reimbursed. As a result, all your expenses will be cleared.

Under a critical illness cover, you will not be reimbursed; you will be given the entire amount for which you are covered. Let's say you get a heart attack. If you have a critical illness cover of Rs 1,00,000, then this amount will be given to you because you got a heart attack. How much money you spend on your treatment is irrelevant.

If you have Mediclaim, however, whatever you spend on hopitalisation will be reimbursed. So, if your insurance is for Rs 1,00,000 but your expenses, Rs 75,000, then you will get just Rs 75,000.

With critical illness cover, you get the benefit of the entire cover; with Mediclaim just the reimbursement within the cover limit.

What's covered?

This one is self-explanatory -- only critical illnesses are covered. You will, however, have to check and see what illnesses the insurance company calls critical.

Cancer, stroke, coronary artery surgery, renal failure (failure of both kidneys), multiple sclerosis, major organ transplants like kidney, lung, pancreas or bone marrow, paralysis, arota graft surgery and primary pulmonary arterial hypertension are the common ones.

However, if you die within 30 days of the illness being diagnosed, you will not get the cover. You will also not get the cover if the illness is diagnosed within 90 days of taking the policy.

What's more, you have to be careful to see if you will get compensated.

Let's say you suffer from heart failure or angina. Heart failure occurs when the heart cannot pump blood fast enough to meet the needs of the body. Angina is pain or discomfort due to lack of oxygen to the heart muscle.

Technically, neither of these are heart attacks so you will not get the critical illness cover.

If you do suffer a minor heart attack that is not termed as critical, you will not get cover.

Or, if you have a cancer growth that has been operated and taken out and the cancer has not spread, it might be excluded since the insurance company will no longer view it as critical.

Once your illness is diagnosed by a registered medical practitioner and supported by ample evidence (X-rays, laboratory tests and reports), the insurance company will get it reconfirmed by a registered medical practitioner on their board. If they decide it is critical, payment will be made.

Why would you take critical illness when you have Mediclaim?

A number of reasons actually.

Most importantly, Mediclaim only covers your expenses when you are hospitalised. It also covers pre-medical expenses -- for 30 days prior to hospitalisation -- and post medical expenses -- 60 days after being discharged.

But, in the case of critical illness cover, you are given the benefit whether or not you are hospitalised.

For instance, you may be diagnosed with cancer but not hospitalised. Nevertheless, you are paid your cover.

Your Mediclaim comes into effect only when you are hospitalised.

Secondly, it is only recommended to people who have a history of certain illnesses in their family; critical illness cover will only include certain illness.

Moreover, it provides a welcome financial boost at a time of emotional stress and financial hardship.

Let's say you have a critical cover for Rs 1,00,000. You are also covered by Mediclaim for the same amount.

If your bills amount to Rs 75,000, you will get Mediclaim as well as the critical Illness cover (Rs 1,00,000).

The critical illness cover is not a substitute for medical insurance cover; it complements Mediclaim.

For instance, if you had a kidney failure and needed a kidney transplant, a Mediclaim policy may not cover donor expenses. So the money you get from a critical illness cover will take care of it.

The age factor

Mediclaim is normally from five years of age upto 75 or 80 years. For a child less than this age, a policy can be taken out only if a parent also is insured.

Where critical illness is concerned, the insurance companies have different criteria.

Some start from the age of six while others only from 20 years onwards. Some provide it only till 59 or 60, while others go up to 65 years.

Made a claim?

There are a list of illnesses that will qualify for the critical illness cover. Once you get paid for any of them, the entire cover expires. So if you have a critical illness cover of Rs 1,00,000 and get a heart attack, the entire payment is made and the policy terminates.

If you want a fresh policy, you can apply for one. The only caveat: heart related illnesses will no longer be covered. Remember, even the insurers want to lower their risk.