Health Insurance 2316 views February 7, 2020

Is Critical Illness Insurance Plan Really Worth the Cost?

Critical Illness Plans helps as a financial support in case of critical illness. If resources permit, you should buy a cover of critical illness along with health insurance plan. Critical Illness can either be brought as a standalone insurance plan or as an add-on rider with a life insurance plan or health insurance plan.

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What is a critical illness insurance cover?

Critical illness plans cover provides coverage for the covered critical illnesses which the insured suffers during the term of the policy. Common critical illnesses include paralysis, heart attack, cancer, stroke, kidney failure, etc. The critical illness insurance plan pays a lumpsum benefit to the insured individual on diagnosis of a covered critical illness which provides the option to the insured to use the claim amount of the plan for any purpose as it does not have any restriction or any other sub-limits on the expenditure of the claim amount. The insurance policy comes to an end after paying the benefit under the policy to the insured.

Importance of Critical Illness Plans

The critical illness cover can be availed either by buying a standalone critical illness policy or a critical illness rider. Critical illness plans are important for various reasons. They are discussed below:

  1. The cash outflow when a person is diagnosed with a critical illness is not limited to just hospitalization expenses and leads huge drainage of money. It involves other consequences as well such as inability to work. It may also lead to a change in living standard. Also, the extent of the expenses in such illness is very high as compared to any other disease. In such case you require a critical illness plan to provide you with the required finances.
  2. If your health insurance policy is not enough to meet the treatment cost of a critical illness then you will have to forcefully liquidate some of your existing investment to meet the expenses of the treatment which will hamper your long term planning of finances.
  3. Critical illness plans offer a lumpsum compensation which provides you with higher flexibility to use the money than a health policy as it does not have any restriction on the use of the money received from the policy.
  4. Critical illness insurance plans also offer compensation for treatment of illness as well as any loss in income due to the illness.

Which one you should opt for Critical Illness Plans or Critical Illness riders?

Apart from offering the critical illness insurance cover as a standalone plan, the Insurance providers also provide an option to their customers to opt for critical illness cover as an add-on rider with term insurance plan or health insurance plan. A critical illness add-on rider can be brought at a lower cost and offers the same features and benefits as offered as a standalone insurance plan. The sum assured in a critical illness rider is usually 50% or 100% of basic sum assured of insurance plan on which you are taking a rider. However, flexibility in a rider is restricted to an increase in the Sum Assured at the same level of premium. Hence, a standalone policy is a better option than a critical illness rider.

Factors to consider before buying Critical Illness Plans

1. Critical Illnesses Coverage:

Critical illness policy specifically provides compensation to the insured upon the diagnosis of a covered critical illness. Hence, you must check illnesses that are covered by the policy. You should opt for those illnesses which is common in your family history.

2. Insurance Cost:

The premium to be paid for the critical illness policy is an important factor. Simply choosing a policy which has lowest premium might not fulfil your requirements and give you the required benefits.

3. Critical Illnesses Sum assured:

The Assured amount in the critical illness plans required should be calculated according to the cost of treatment and also the inflation in the cost of treatment. Critical illness plans are generally for duration of one year and requires renewal every year. Hence you should ensure that you can increase the amount of sum assured on the renewal of the policy

4. Restrictions of Age:

The need of critical illness insurance cover increases with increase in age. There is no minimum age required in order to purchase this insurance plan. An important factor to be considered before buying a policy is whether the plan has any age restriction on renewal.

5. Other benefits offered:

Other benefits such as increased assured amount of the plan on next renewal of the policy for claim free years must be ensured. Before buying a critical illness plan you must check the additional benefits offered to you.


Critical illness policy is essential in order to enable you to cure the illness with financial ease and also to provide you support and stability in your weak time. It is suggested to buy either a standalone critical illness insurance cover plan or opt for a add-on critical illness rider on your existing health insurance plan which will ensure your financial security when in need.

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