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A critical illness insurance policy offers coverage that helps policyholders handle expenses related to life-threatening critical illnesses and lifestyle diseases such as kidney failure, stroke, liver disorders, and paralysis, etc.

The plan provides the policyholder with a lump sum payment to cover expenses for the critical illness. “It covers expenses like consultation fees, and the cost of medicines and treatment. Policyholders can also use the lump sum amount as financial support for their families," said Rakesh Goyal, director, Probus Insurance Broker.

How does the plan work?

With a typical health policy, the insured person needs to opt for cashless treatment or submit bills to get reimbursement for claims up to the extent of expenses incurred. However, in the critical illness policy, the insurers pay a lump sum amount equal to the sum insured, even if the costs incurred are lower.

Policyholders can file a claim once they are diagnosed with a critical illness. The policy refers to a survival period ranging from 14-30 days after the policyholder is diagnosed with such an illness. During this survival period, one needs to submit all necessary documents to the insurer, who after a proper investigation, pays the lump sum amount.

A critical illness policy doesn’t provide coverage for deaths. Since there are no such benefits, the insurer will not pay any claim amount if you die due to a critical illness.

However, Naval Goel, founder and CEO of policyX.com, said that if you buy critical illness cover along with a life insurance policy, the sum assured under critical illness cover gets added as an extra coverage to the base sum assured of the life insurance . If diagnosed with any critical illness, the insured receives a sum equivalent to critical illness cover after the survival period. Further, on the death of the insured, the nominee gets the sum assured equivalent to the life insurance cover. “You must also know that the insurer doesn’t cover the hospitalization costs in case of a life insurance with critical illness cover," said Goel.

Benefits: The primary use of a critical illness policy is the replacement of income. The insurer pays a lump sum amount that helps in treatment as well as meets the daily expenses of the sufferer. Besides, the premiums are usually on the lower side and provide tax benefits.

Exclusions: The policy will not pay you any money during the survival period. Further, the policy won’t cover any treatment that is not medically necessary or not performed by a medical practitioner. Goel said, “The policy doesn’t cover diseases due to lifestyle habits such as smoking, drinking, drugs and substance abuse. Other exclusions are HIV, pregnancy or childbirth issues, miscarriage or congenital disease death within 30 days of diagnosis."

Who should buy it?

Experts say the critical illness policy is beneficial for those with a family medical history. Also, primary earners can consider buying the policy if they want financial support for their family.

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