Home > money > calculators > What is a critical illness plan?

A critical illness plan is a defined benefit health insurance policy. Defined benefit plans pay you a lump sum on an insured event. So unlike a basic health insurance plan that will pay up the costs you actually incurred due to hospitalisation, a critical illness plan will pay a lump sum amount. For this reason a critical illness policy not only helps you pay for incidental expenses, but also supplements your income in case you are unable to work because of the said illness.

There are many types of critical illness plans in the market. While some focus on a few ailments, others cover a wide range of critical illnesses. A typical critical illness policy will cover illnesses such as cancer, coronary artery bypass graft surgery, kidney failure, heart attack, major organ transplant and stroke.

You can either buy this as a stand-alone policy or as a rider with a life insurance policy.

Both life insurance as well as non-life insurance companies offer critical illness plans. Remember to read the exact definition of the illness.

You also need to remember that most critical illness plans come with a survival period of 30 days after the diagnosis of a critical illness. It’s only after the policyholder has survived this period that the claim is settled.

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