Opinion | Should you buy a critical illness or a disease-specific plan?

  • A critical illness policy pays a fixed sum if the policyholder suffers from one of the 20-30 specified diseases, including cancer and kidney failure
  • Neil Borate asks experts how to choose between a critical illness plan and a disease-specific insurance policy

Insurance policies that cover a single disease like cancer or heart ailment are becoming popular, given the high incidence rates of these ailments and the ensuing expensive treatment. These are seen to be replacing critical illness policies which were, typically, used to enhance the cover of a person who already had a standard health insurance policy. A critical illness policy pays a fixed sum if the policyholder suffers from one of the 20-30 specified diseases, including cancer and kidney failure. Neil Borate asks experts how to choose between a critical illness plan and a disease-specific insurance policy

Critical illness plans safeguard future loss of income

Tarun Chugh, Bajaj Allianz Life Insurance Company
Tarun Chugh, Bajaj Allianz Life Insurance Company

Tarun Chugh, MD and CEO, Bajaj Allianz Life Insurance Company Ltd.

A single-disease plan, as the name suggests, provides benefit against specific or standalone diseases related to heart, cancer etc. Critical illness plans on the other hand cover an array of critical illnesses, giving customers more value for their investment. These are fixed benefit covers, which means a lump sum amount is paid to the customer on diagnosis of the illness covered under the plan. This enables customers to take care of expenses arising due to the illness, which can be related to renting a room near the hospital or taking a second opinion or just travelling. These expenses are not covered under mediclaim plans. The idea behind critical illness plans is to compensate the life assured for future loss of income that may arise due to the critical illness. The payout can enable them meet expenses related to the critical illness, without having to dip into the savings or other investments of the individual or family member. Hence, buying a comprehensive critical illness plan will be an ideal choice after understanding the life goals of the family.

Focus on getting a health plan that covers all serious illnesses

Mahavir Chopra, Coverfox
Mahavir Chopra, Coverfox

Mahavir Chopra, Director, life insurance and strategic initiatives, Coverfox

Riders as well as specialized disease plans are cheap, easy to buy, and do not require much thinking. However, they are lazy solutions for people who do not want to research and buy a complete solution in the form of a comprehensive critical illness plan. The good news is that given the advancement of medical science, we are likely to live longer. But, the bad news is that given our sedentary lifestyles, we are highly likely to be living with a serious illness. Such an illness can result in significant financial burden on you and your immediate family members.

You cannot foretell which disease you may suffer; hence, the ideal solution by far would be to mitigate this financial risk by buying a comprehensive critical illness plan.

It is important, however, to not get carried away by the number of illnesses, and ensure that you focus more on getting a plan that covers you till the age of 70-75 years and covers all the serious illnesses for the moderate stage as well as major stage and does not cease after one disease is diagnosed and claimed for.

Disease-specific plans offer affordable premium

Yashish Dahiya, Policybazaar.com Group of Companies
Yashish Dahiya, Policybazaar.com Group of Companies

Yashish Dahiya, Founder and CEO, Policybazaar.com Group of Companies

One cannot predict the illnesses that one may contract during the course of life. A critical illness plan that covers 13-30 critical illnesses provides better protection. Wide coverage, however, also impacts the premium and can be unattractive to subscribe. A disease-specific plan bridges this gap by offering an affordable premium and by keeping the focus on 1-2 deadly illnesses—cancer and heart ailments. These disease-specific plans offer to pay a part of the lump sum in the early stages of specified illness, compared to critical illness (CI) plans. They have hence also become popular for those whose genetic background indicates a high risk of either cancer or heart issues. While these plans are a great way to start, one must expand this coverage to all critical illnesses to be well protected. One can consider a new class of indemnity-based CI and disease specific (DS) plans that offer (i) cover from stage zero (ii) life-long renewability even after claim and (iii) sum insured year-on-year. These plans don’t offer lump sum but pay for hospitalisation.

Look at disease specific plans for higher sum insured

Sanjay Datta, ICICI Lombard General Insurance
Sanjay Datta, ICICI Lombard General Insurance

Sanjay Datta, Chief–underwriting, claims, reinsurance and actuarial, ICICI Lombard General Insurance

Critical illness is a health insurance plan that pays a lump sum equal to the sum insured on diagnosis of a defined critical illness. Typically, the policy offers equal sum insured for all the illnesses covered under the policy and terminates after a lump sum payout is made. While it makes sense to buy a traditional plan that covers multiple illnesses, there is a pressing need to look at some disease specific plans.

A stand-alone cancer plan is one such example. Advanced cancer treatments usually involve higher costs. In addition, early diagnosis and better treatment options have increased the survival rates and this also can mean much higher costs. By opting for this plan, a customer can have a higher sum insured to take care of such expenses at a premium which is much lower compared to the multiple coverage plans. This is also true for other incidents like a heart attack or undergoing a bypass surgery. Thus, while it is always advisable to buy a traditional CI plan with multiple coverage, one should also look at disease specific plans.


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