What you need to know before buying critical illness cover

Most individuals, especially the upwardly mobile young executives, know the importance of a health insurance. However, even they tend to overlook the importance of a critical illness cover. The younger ones often reason that they have enough time to buy one. However, they should reconsider their decision. According to a recent study conducted by private non-life insurer ICICI Lombard, the maximum increment in critical illness incidence rates was experienced in the age bracket of 26-35 years.

"Our study has found that the vulnerability to illnesses such as cancer among the younger age group is increasing. In this age group, the incidence rate has doubled in the last three years," says Sanjay Datta, chief, underwriting and claims, ICICI Lombard. The study also noted that spike in critical illness incidence rates was more significant in IT and manufacturing sectors.

Other insurers also have a similar story to tell. "Not only are lifestyle disorders becoming more rampant, but they are also affecting younger population. While claims for lifestyle diseases like cancer, heart attack and diabetes from people below 40 years of age stood at 23% in 2011-12, it has shot up to 38% in FY2012-13," adds Munish Sharda, director, direct sales force, Aviva India.

And, lifestyle issues seem to be the main culprit. "Due to a spurt in lifestyle diseases where people are exposed to various risk factors like diabetes, hypertension and cholesterol disorders, we have noticed an increase in the number of claims for cardiac diseases and cancer, which are covered under major critical illnesses," informs Suresh Sugathan, head, health insurance, Bajaj Allianz General Insurance.

No, the numbers are nothing alarming. It just point towards a growing trend. "Compared to, say, ten years ago, the incidence of critical illnesses among the younger age group has certainly gone up. However, while the percentage of younger people who are now afflicted by critical illnesses has grown significantly, the absolute numbers remain quite low," says Arvind Laddha, CEO, Vantage Insurance Brokers. And that is the point. A smart money manager won't take refuge in percentage figures, but try to act so that s/he has a plan to meet any contingency. That means relying solely on your employer's group policy is not an option anymore, especially as the average cover they offer is between Rs2 lakh and Rs3 lakh. An independent health policy of a similar amount, too, may not be adequate to cover treatment costs running into lakhs. That means you have two options: buy a critical illness plan or enhance your existing health cover.

Hospitalisation Expenses

Critical illness policies offer a fixed sum once the illness is diagnosed. They can be bought as riders along with your life insurance cover or as a standalone cover. They can be a valuable addition to your basic health cover if you contract any serious illness. Your health cover will take care of hospital bills, and pay-outs from critical illness cover can be used to fund your travel, food and post-treatment recuperation expenses.