One of my friend’s mothers was diagnosed with cancer few months back. The treatment lasted for six months costing him Rs.11 lakh. Even after such a huge expense his mother did not live further. Although he was able to bear the cost due to his government job, the emotional loss which he suffered cannot be compensated with any kind of insurance.
Every one cannot be a government servant. Government too is reducing some of the benefits due to very heavy health claims. Moreover, there has been steady increase in the cost of critical illnesses recently. A liver transplant today cost Rs 30 lakh. Treatment like cancer, heart attack, kidney etc. cost anywhere between Rs 7-10 lakh. For a middle class family, this is not in the budget either in present or in the future. What makes things worse is that there is frequent occurrence of these even among the young generation. Much to be blamed is the lifestyle we are living.
However, many general insurance companies have started covering critical illnesses in their health insurance policies. Some offer it as a rider along with base policy while some companies have come out with a standalone policy. Life insurance companies, on other hand has been offering CI rider from a very long time. But, there is a vast difference in the coverage and the claim process between the two.
What is Covered– Critical illness policy; in general, cover some of the common illnesses like Cancer, Heart Attack, Kidney Failure, Stroke, Bypass Surgery, Major Organ Transplant, Paralysis, Hypertension, and others. The exclusion from these varies with respective companies. Some companies, who have started business recently, have come out with policies where they cover 32 illnesses. How much complications it will it lead to –still to be seen in the claim settlement.
How they cover ?
Life Insurance-Life Insurance companies cover critical Illness as a rider along with base policy. The rider premium is based on the age and term of the life insured. However, IRDA has restricted the amount of cover which an insured can take through this rider. Now, CI rider premium cannot exceed 20% of the base policy premium which indirectly lower the sum assured for the rider.
Health Insurance– Health Insurance companies offer this in two variant. Some like Apollo Munich Health Insurance has it as a rider which can be attached to the base policy while some like Star Health has introduced it as a standalone policy, although not in total isolation.
Health insurance can be taken as an individual or as a floater if family needs to be covered. However, CI rider is not given on a floater basis. What this means is that if a family of four is covered under a floater policy and the proposer wishes to go for a critical illness rider, he will have to buy it for each individual covered in the base policy. For example Mr.X along with his wife and two children has a sum assured of Rs 5 lakh through a floater policy. If Mr.X wishes to go for CI rider, then he will have to take a rider of Rs 5 lakh or less on each of his family members, including children, covered in the base policy. The rider SA can vary subject to maximum of Base Policy SA.
Claim Process:
Life Insurance: In a life insurance policy critical illness rider claim is settled once in a life time. The moment you take a claim, the rider ceases and the base policy continues. In some policies even the Life Insurance policy ceases with the CI rider claim. In no circumstances, the rider can be added again.
Health insurance: In a health insurance policy CI rider can be claimed maximum three times in whole life. This means if an insured is diagnosed with an illness and claim for it, he can again take the rider on renewal of base policy, subject to exclusion of illness he has already claimed.
Cost optimization
There is a major difference between Life Insurance and Health insurance when it comes to CI rider coverage. In life insurance, once an insured is diagnosed, a lump sum is paid and the policy ceases. However, apart from CI treatment the insured has to bear the hospitalization cost. This can only be claimed if you have a health Insurance policy. In long term, this can lower your cost as benefits in health insurance (NCB and exclusions) increases once you continue with a company for certain number of years. This does not happen in Life Insurance.
Hence, a life insurance CI rider might increase the premium for the agent but may not provide you the benefits you are looking for. Even among health insurance policies the coverage can vary with respective companies. Compare suitable options and lay your decision only after considering your requirement.
Have you availed CI rider? What is your experience with claims?
Share your views in comments section…
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Thanks! Nicely explained.
Thanx Prashant for appreciation.
Hi I recently took appolo optima restore of 5 lakhs my age is 24 health insurance previously im unaware of it Im working in IT sector is apollo optima restore covers critical illness or not and my question is that how much ideally a person requires insurance cover either term or health insurance in life
Looking for a reply
Mohan,
On thumb rule basis at your age you should have at least 15-20 times of your annual income as the coverage for the term insurance. So if you have an income of Rs 4 lakh then 60-80 lakh coverage you should take. For an exact requirement you will have to do a need analysis based on your expenses and goals requirement. On health insurance its difficult to conclude as how much will be sufficient but an estimation can be done based on the city you are living in and what cost you may have to incur on various treatment.At times premium is a good constraint for availing high coverage. In my view a 5 lakh cover is good for an individual at your age. As you add dependents you can enhance this coverage based on size of your family.
Apollo Munich optima restore does not give you critical illness benefit.