Critical illness cover is a type of insurance that provides a one-time lump sum payout if you are diagnosed with a serious illness listed in the policy, such as cancer, heart attack, or stroke.
India is witnessing a sharp rise in lifestyle diseases such as cancer, heart disease, and stroke. Long working hours, stress, sedentary habits, and unhealthy diets are increasing the risk of serious medical conditions at younger ages. While regular health insurance covers hospitalization expenses, it may not be enough to handle the overall financial impact of a major diagnosis.
This is where critical illness cover becomes essential. A critical illness policy provides a lump sum payout on diagnosis of specified serious illnesses, helping individuals manage medical and non-medical expenses without exhausting their savings.
If you are wondering what critical illness cover is, it is a type of insurance that pays a fixed lump sum amount when the insured is diagnosed with a listed serious illness covered under the policy.
Unlike traditional health insurance that reimburses hospital bills, critical illness insurance provides a one-time payout after diagnosis of a covered illness, subject to policy terms.
You are free to use the money as needed, it is not restricted to hospital bills.
A critical illness cover in health insurance may be offered as an add-on rider, but it functions differently from standard hospitalization coverage.
The critical illness list varies by insurer, but most policies cover:
Always review the exact definitions in your critical illness policy document.
To explore more such insurance terms, visit the insurance glossary page on Pazcare.
Compare multiple critical illness insurance plans before finalizing.
Treatment for cancer, heart surgery, or organ transplant can cost ₹10–25 lakhs or more in metro cities.
Serious illnesses often require months of recovery, affecting earning capacity. A lump sum helps cover lost income.
Regular health insurance does not cover:
Without a critical illness insurance policy, individuals may dip into long-term savings or investments.
Term insurance with critical illness cover combines life insurance with a critical illness rider.
Understanding exclusions is crucial before buying a critical illness cover.
A critical illness policy follows a structured claim process. Unlike regular health insurance that reimburses hospital bills, this policy pays a lump sum amount once specific conditions are met. Here’s a detailed explanation of each step:
You buy a critical illness cover by choosing:
Premium is based on age, medical history, lifestyle habits (like smoking), and coverage amount. Once issued, your coverage begins but is subject to waiting periods.
Most critical illness insurance plans have an initial waiting period of 60–90 days from policy start date.
After this period ends, coverage becomes active for listed illnesses.
Not every diagnosis qualifies automatically.
The illness must:
After diagnosis, most policies require the insured to survive for a minimum period usually 15 to 30 days.
Why?
Always check the survival clause carefully before buying.
Once:
The insurer pays the entire sum insured in one go.
This payout:
You can use the money for:
In most cases:
However, some modern plans may offer:
Simple example
Let’s say:
The insurer pays ₹25 lakhs as a lump sum even if your hospital bill was only ₹8 lakhs.
The remaining amount can help manage lost income, loan payments, or long-term recovery expenses.
A group policy may not be portable if you change jobs — having personal critical illness cover ensures continuity.
Experts suggest:
For example, if your annual income is ₹12 lakhs, consider a ₹40–60 lakh critical illness cover.
The premium for a critical illness policy depends on:
Younger individuals typically get lower premiums. Buying early ensures affordability.
A serious medical diagnosis affects not just your health but also your financial stability. While health insurance pays hospital bills, critical illness cover provides financial freedom during one of the most challenging phases of life.
For complete protection, consider combining:
This layered approach ensures both medical and income protection.
Critical illness cover is a type of insurance that pays a one-time lump sum amount if you are diagnosed with a serious illness listed in the policy, such as cancer, heart attack, or stroke. Unlike regular health insurance, the payout is not linked to hospital bills and can be used for treatment, recovery, or income replacement.
Critical illness cover in health insurance is usually offered as an add-on rider to your base medical policy. While your health insurance pays for hospitalization expenses, the critical illness rider provides a fixed lump sum payout upon diagnosis of a covered illness.
Critical illness cover in term insurance is a rider attached to a term life policy. If the insured is diagnosed with a listed critical illness during the policy term, the insurer pays a lump sum amount. Depending on the policy, the life cover may continue or reduce after the claim.
Critical illness insurance covers major life-threatening conditions such as cancer of specified severity, heart attack, stroke, kidney failure, and major organ transplant. The exact critical illness list and definitions vary by insurer and policy terms.
Taking critical illness cover with term insurance is beneficial, especially for primary earning members. It provides financial support during serious illness while term insurance protects your family in case of death. However, if you need higher illness coverage, a standalone critical illness policy may offer broader protection.
In most cases, critical illness cover ends after a single lump sum payout, and the policy terminates. Some modern plans may offer multiple claims for unrelated illnesses, but these usually come at a higher premium.
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