Critical Illness Insurance

This article is all about Critical Illness insurance cover, however, before I even start about what is this insurance let me first give you some statistics around one of the most common Critical Illness – CANCER.

Cancer statistics

A research published in ‘The Lancet’  journal about Cancer in India mentioned that :

• 7,137 of 122 429 study deaths were due to cancer, corresponding to 556 400 national cancer deaths in India in 2010.
• 395 400 (71%) cancer deaths occurred in people aged 30—69 years (200,100 men and 195,300 women).
• At 30—69 years, the three most common fatal cancers were oral (including lip and pharynx, 45 800 [22·9%]), stomach (25 200 [12·6%]), and lung (including trachea and larynx, 22 900 [11·4%]) in men, and cervical (33 400 [17·1%]), stomach (27 500 [14·1%]), and breast (19 900 [10·2%]) in women.
• Tobacco-related cancers represented 42·0% (84 000) of male and 18·3% (35 700) of female cancer deaths and there were twice as many deaths from oral cancers as lung cancers.

 

What happens when a CI is diagonosed

This is more of a financial blog and hence I would rather want to avoid discussing the emotion setback which happens to the family when a member is detected with a Critical Illness. What hits alongside with the emotional pain is the financial burden to get the critically ill family member the rightful medical treatment in the best possible hospital which their money can afford. And for the unfortunate ones who do not have sufficient funds – they wait painfully for the next stage of the illness till it engulfs their dear family member.

 

It really Costs a Fortune !

Critical Illnesses are termed critical for two rightful reasons – one they have a terminal end (death) if not treated timely and secondly they are extremely costly to treat and hence many times people can’t afford to get themselves treated. While there are statistics available in the public domain on cancer deaths, the cost of treatment has been closely guarded. It varies from one hospital to another – however a common baseline is that it costs lakhs (in millions) to get treated. For example, a cancer treatment may require several rounds of chemotherapy (radio active treatment) which often ranges around 1-2 lacs per session plus associated costs like travel, lodging and subsequent medications. This ends up hitting a financial bottom line of a family from any where 5 lacs to 20 lacs. And in many cases despite of spending a fortune on medical treatement, the ill family member succumbs to the illness. You can’t really let your family member die without giving them a chance of the medical facility – can you ?

 

Can We Ease the Pain ?

I would refrain from commenting upon easing of the emotional suffering of the family members who are perhaps facing one of the biggest challenge of their lives. However, if we want to look from a financial perspective, definitely the suffering can be reduced or rather eliminated if a Critical Illness insurance cover has been taken for the ill member. If the person suffering from the Illness had a critical illness insurance cover, the insurance company would disburse a lump sum amount (sum assured) to the respective person. For example, if the cover was taken for Rs. 20 lacs, the entire amount shall be provided in one go to the insured person and the amount can be used for any purpose. A few examples where such lumpsum amount can be used are :

• Hospital Bills – Considering the hospital bills for treatment of the illness can reach in several lakhs, the most likely utilisation is towards meeting the medical bills including any subsequent post treatment medical expenses.
• Paying of Liabilities – Often there are liabilities such as housing loans, loans taken for medical treatment and other such liabilities. When going through the treatment, a person faces a possibility of not being able to make through the treatment and hence he / she may want to repay any existing liabilities which may pinch their family members later. Or even if a person survives, they may not be able to earn a decent living to service such liabilities and hence may want to pay them off.
• House Modification – Critical Illnesses at times ends up leaving a person physically challenged whereby they can not continue to live a normal life. For example, a person can no longer climb steps, their bathrooms need modification, etc. The lump sum can then be used to perform such costly modifications in the house property or purchase mobility accessories to continue living life as normally as possible.
• Regular Source of Income – If a person is fortunate enough to make through his treatment, the next harsh reality is to generate a regular source of Income. In some cases people are no longer able to continue with their profession owing to health reasons. Term Insurance doesn’t provide any benefits as the person survived his illness. Critical Illness cover comes up handy to provide the much required lumpsum which can then be used to provide the regular source of investment income.

 

I have Medical Insurance (MediClaim)- Do I still Need Critical Illness Insurance cover

Definitely yes ! The answer lies in the way MediClaim works and its utility. A few of the differences between MediClaim & CI are :

• Medical insurance operates on the concept of reimbursement of medical expenses unlike CI cover which gives a lumpsum to be used for whatsoever utility.
• On an average MediClaim cover is generally taken for less than 5 lacs which is mostly adequate for normal hospital and surgical treatments. However, the amount generally ends up being grossly insufficient for treatement of critical illnesses.
• CI is cheaper than MediClaim ! The rationale being – the limited number of illnesses covered under CI and the probability of those illnesses hitting a person is much lower than the general category of illnesses covered by MediClaim policies.

 

Illustration of Critical Illnesses (CI)

The number of CIs covered vary from one insurance company to another. However, on an average most CI insurance policies cover the following :

• Cancer
• By pass Heart surgery
• Heart Attacks
• Kidney Failure
• Major Burns
• Major Organ Transplants such as stem cells, heart, kidney, liver, pancreas, etc.
• Paralysis – Permanent loss of limbs, brain disease or spinal cord, etc.
• Stroke
• Coma

Generally excluded are :

• Diseases contracted in the presence of HIV
• Previously occured diseases
• Diseases occuring within 30-90 days of the coverage
• Self inflicted diseases, suicides, dangerous professions, war, etc.

 

How to Take this Cover

Even though you would want to take a CI cover, at times it is not that easy in India to get this insurance. Not every insurance company provides a CI cover and many don’t provide stand alone CI covers. A few insurance companies will provide a CI cover only as a ‘rider‘ or simply putting as an addon if you would take their vanilla Term Insurance cover from them. A few tips to get this insurance cover is :

• Earlier the better : The younger you are, the cheaper the CI cover is. Hence don’t delay and get your cover today.
• Rider Along with Term Insurance : Many insurance companies provide CI cover as an addon to their existing Term Insurance cover. Go for this option.

 

Conclusion

I hope that I have been able to point out how damaging a critical illness can be on your family’s well being as well as financials. It is better to take a preventive measure against these diseases which are on the rise with every passing year. It is quite possible that a family won’t leave any stone unturned to get their family member treated by the best possible medical facility. However, in this quest they would end up expending a major part (if not all) of the savings or even end up entering deep in loans for years to pay. Once you have taken this insurance cover then atleast you would be better geared from a financial perspective to fight against the illness and avoid uprooting the financial stability of your family. I sincerely wish that no one gets hit by these illnesses in the first place ! Have a healthy life.

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