A good health insurance policy is the most significant safety net against a medical emergency.

However, traditional health insurance policies cover only hospitalisation and sometimes the costs associated with hospitalisation.

This begs the question – What if you’re diagnosed with an illness but not hospitalised?

Or, if you’re unable to work because of illness, how will your bills and EMIs be taken care of?

This is where non-indemnity or critical illness policies come into play.

What are Critical Illness Health Insurance Policies?

Some health conditions cause significant complications to your health and, god forbid, your life. These are severe illnesses that usually need more expensive treatments and an extended stay in the hospital, but there’s still no guarantee that they will be cured. These illnesses are called critical illnesses. Some of them include cancer, open heart surgery, first heart attack, etc.

Critical Illness Health Insurance Policies cover these severe illnesses that can significantly impact your health and finances. These policies usually offer a lump sum payout (or in instalments, depending on the policy) when you are diagnosed with an illness that is present in the policy's Critical Illness list. This pay-out can be used for any expense you may have, not just for your medical treatment.

These are also called non-indemnity policies and can either be purchased as an add-on to your existing health or term policy or as a standalone policy.

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Tips to check when you're purchasing a critical illness health insurance policy:

  • Survival Period — After being diagnosed with a critical illness, you must live for a particular time mentioned in the policy wording. Only then will the payment be disbursed. This is called the survival period. Always opt for policies with the least survival period within your budget.
  • Payout Structure: When purchasing the critical illness rider or policy, you can opt for one of two payment structures – Lump Sum or Instalments. If you opt for a lump sum payout, you will get the entire amount in one go, and if you opt for the latter, the payout will be disbursed over a period of time. The availability of this option also varies depending on the insurer – go for an insurer and policy based on your financial needs and preferences.
  • Age Limit: Some critical illness policies have an age limit. You should check which age limit the policy covers these illnesses to ensure that it doesn’t catch you off guard.
  • Check Exclusions: No policy covers all critical illnesses. Each insurer has a specific list of all the critical diseases they cover. It should be enough for most people if an insurer covers at least 30 common critical ailments. However, do consult an IRDAI-certified insurance advisor before purchasing any policy.
  • Coverage: If you purchase Critical Illness cover as a rider, especially in term insurance, the payout may or may not be from the assured base sum. Some policies offer this cover over and above the base sum assured, while others reduce this amount from the base cover. Choose a policy that provides the maximum coverage within your budget.
  • Waiting Periods: Like other policies, critical illness policies (and riders) have waiting periods before certain ailments are covered. Try to opt for the best policy with the least waiting periods within your budget.
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What are the best critical illness health insurance policies?

  • Niva Bupa CritiCare:

NivaBupa CritiCare Covers 20 Critical Illnesses, with a cover starting at ₹ 5 lakh up to  ₹ 2 crore. One unique feature of this plan is that you can cover up to 2 adults with the same policy. CritiCare is available as an add-on to your NivaBupa policy and has a survival period of 30 days.

  • HDFC ERGO Critical Illness Platinum:

This policy covers up to 59 critical illnesses, with a cover amount of ₹ 1 lakh to ₹ 5 crore. It also has one of the lowest survival periods, at just 7 days. However, one significant downside is that this is one of the most expensive plans in the market.

  • Care Critical MediClaim:

Care Critical MediClaim covers 32 critical illnesses, with payouts starting at ₹ 10 lakhs to ₹ 2 crore. One unique feature of this policy is that it doesn’t have a specific illness waiting period. However, this has a pre-existing disease waiting period of 4 years. This policy also covers OPD expenses of 1% of the sum assured or ₹ 25k, whichever is lower.

  • Aditya Birla Activ Secure:

Activ Secure by Aditya Birla covers up to 64 illnesses—one of the highest in the industry. There are 3 variants of this policy that cover 20, 50, and 64 illnesses, respectively. This policy has a unique feature: if you get diagnosed with more than one critical illness on the list simultaneously, you can get up to 1.5x of the sum assured. However, pre-existing diseases are excluded from this policy altogether.

Should you buy a Critical Illness Health Insurance Policy?

Purchasing a critical illness policy or rider offers a few significant advantages to policyholders. For starters, it provides financial security to you and your family if you’re diagnosed with a critical illness. The payout you receive from the insurer can be used for various expenses such as your children’s education, EMIs, daily expenses, etc, and not only for your medical treatment. This is the only instance where you are not providing a bill to your insurance company, and this amount is disbursed whether or not you undergo the treatment.

A Critical Illness Rider is available in both health and term insurance. However, opting for this rider with your term policy may be slightly better. This is because:

  1. The payout may be higher in term insurance and
  2. The premiums in term insurance are fixed, unlike health insurance. Once you start making payments, the premium gets locked and does not change for the policy's tenure. However, in health insurance, the premiums will increase as per your age bracket and inflation, affecting the additional premium for the rider.

That said, you must also consider the potential downsides — adding riders to your policy will increase your premium. You must ask yourself whether this increase is worth it.

Apart from this, the critical illness rider may not cover all illnesses. Even if an illness is covered, the rider may get activated only under specific conditions.

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Conclusion

Healthcare costs are rising yearly, making purchasing a health insurance policy important. But, apart from the policy itself, it may be beneficial for you to consider a critical illness rider. This is because, in the case of an unexpected illness such as cancer, your existing policy may or may not cover the whole treatment.

Apart from this, if you’re the only breadwinner, it would seriously impact your family's finances. This is where the critical illness rider truly helps. This amount can be used even for non-medical expenses such as rent and EMI, which allows you to relax until you’re cured without worrying about paying bills after treatment.

But as always, you should compare and understand policies from different insurers to see which best suits your needs and budget.