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Tata Capital > Blog > Wealth Services > Importance of Critical Illness Policy

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Importance of Critical Illness Policy

Importance of Critical Illness Policy

Critical illnesses is not only a threat to your life but also the savings of your lifetime and the future of your family. The treatment cost for critical illnesses is exponential and ever-rising and at the same time, critical illnesses amongst the people are also rising steeply.

The percentage of death globally due to cardiovascular diseases was 31% in the year 2016, now it has increased further. Similarly, earlier cancer was very rare and now almost every alternate house is having someone living or dying with cancer. In 2018, 7, 84, 821 people died due to cancer.

The treatment cost for each chemotherapy can go up to lakhs and there is no surety that the patient would come back after the treatment. People with health insurance coverage often fall short of funds and cannot continue treatment at the best hospitals. However, there is another way to lessen the financial woes to some extent in case of critical illness and that is critical illness policy.

Which diseases are regarded as critical illnesses?

According to the IRDAI, Critical illness refers to the below-mentioned diseases or sickness and treatment for the same–

  • Cancer
  • Heart attack
  • Heart valve surgery
  • Kidney failure
  • Coronary artery surgery
  • Major organ transplantation
  • Multiple sclerosis
  • Primary pulmonary arterial hypertension
  • Aorta graft surgery
  • Paralysis
  • Coma
  • Stroke
  • Total blindness

All these diseases are life-threatening and the treatments mentioned above are very costly. To secure your health and financial position, it is important to cover these illnesses specifically apart from having a regular health insurance plan.

What is a critical illness policy?

The critical illness policy is a fixed benefit health insurance plan, wherein if you are diagnosed with any of the listed critical illnesses, you would get the entire sum insured as a claim and the policy would be terminated. This plan pays the entire money, irrespective of the amount spent on hospitalisation.

Basically, a fixed benefit critical illness plan can be taken along with an indemnity health insurance plan. This is because the hospitalisation expenses would be paid by the comprehensive indemnity health plan, but a critical illness has so many paraphernalia expenses along with hospitalisation including loss of income, mental distress, physiotherapy for an extended period, a nurse at home, etc. So, the amount received as a lump sum benefit from the critical illness plan can be used for those additional expenses which are not covered by any indemnity health insurance plan.

Different policies have different illnesses listed under their inclusion. So, if anyone is diagnosed with any of the listed illnesses and survive the initial waiting period of 30 days post the diagnosis, then the entire sum insured would be payable.

Additional Read: How Wealth Management Can Help You Plan for a Secure Retirement

Who needs a critical illness policy?

Out of the total number of deaths due to cardiovascular diseases, 45% of the people fall in the age group of 40 to 69. So, if you think you are young and do not need a critical illness policy then you might be wrong.

Even if you see the other critical illnesses, for instance, cancer is common in women in the age group of the 30s-40s, especially breast and ovarian cancer. So, there is no certain age for buying a critical illness policy neither is gender-specific.

Anyone who wants to plan and have a proper treatment for critical illness and also doesn’t want the family to sell the last asset for the treatment can buy this policy.

Advantages of critical illness policy

If you are thinking about why you should buy a critical illness policy then here are the benefits of it –

  • The primary benefit is financial support. The critical illness policy coverage is generally a lump sum amount. This can take care of the hospitalization cost, treatment cost, post-hospitalization costs, pre-hospitalization check-ups, etc. as well if you do not have a comprehensive indemnity health insurance plan. This will help the family to stay strong and fight the tough times with little ease.
  • There is a tax benefit which you can enjoy on the premium of this policy. The premium for critical illness policy is exempted from taxable income and you can deduct the same from the taxable income under section 80D of the Income Tax Act of India.
  • Critical illness policies are paid in a lump sum on the diagnosis. So, there is no need to visit the insurance office multiple times for reimbursement, documentation, etc.

Additional Read: What do all first-rate wealth managers have in common?


Critical illness policy can have a crucial role in fighting deadly, life-threatening critical illnesses. As healthcare cost in India is spiking every day and in the absence of no properly maintained free healthcare facilities, it is becoming a nightmare for everyone. So, to keep your family safe and secure, to provide them with good healthcare facilities in need, a critical illness policy is undoubtedly important but it needs to be taken along with a regular comprehensive indemnity health insurance plan. Our specialised team at Tata Capital Wealth can help you pick the right policy which suits your needs efficiently.

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