Q. I’m Priya, and I am approaching my retirement. I’ve heard about critical illness insurance. How does it work? Will it provide extra protection in case of a serious illness?
You are right to think of strengthening your insurance shield now, Priya. As retirement approaches, it becomes increasingly important to ensure comprehensive health coverage, including additional layers of protection to the basic plan.
Critical illness insurance is one such important supplement. Let us understand more about this plan before we add it to overall coverage.
What is critical illness insurance?
Critical illness insurance is a specialised policy designed to provide a lumpsum or staggered payout upon the diagnosis of specific severe illnesses or medical conditions outlined in the policy. These conditions typically include diseases such as cancer, heart attack, stroke, organ transplant, and others. The policyholder is entitled to receive the benefit, regardless of the actual medical costs they incur. This payout can be used to cover medical treatment, rehabilitation, lifestyle adjustments, or any other financial requirement during recovery.
How to choose the right critical illness insurance policy?
Carefully review the list of critical illnesses covered by each policy. Consider your family medical history, personal health condition, and lifestyle to determine which policy aligns best with potential health risks. Choose a policy that covers the illnesses most relevant to your situation.
Does it help to add critical illness insurance to enhance health coverage?
Yes, adding critical illness insurance to your health coverage is a prudent decision for several reasons.
Financial security: Critical illnesses often entail significant medical expenses, which can exhaust your savings. A lump-sum payout from critical illness insurance provides a financial cushion to manage these extra expenses without compromising your lifestyle or depleting your retirement savings.
Useful supplement to health insurance: While health insurance covers medical treatment and hospitalisation costs, critical illness insurance can help cover additional expenses like home modification, specialised treatments or alternative therapies that may not be covered by regular health insurance.
Income replacement: Critical illness may lead to a temporary or permanent loss of income, affecting your ability to meet daily expenses and financial commitments. The payment from critical illness insurance can help replace this income, allowing you to maintain your lifestyle during recovery.
Peace of mind: Knowing that you have an additional layer of protection at a critical time can provide peace of mind. It alleviates the stress associated with finance management during treatment and recovery.
Flexibility and versatility: The lumpsum or staggered payout received from critical illness insurance offers flexibility in its use. You can allocate funds to meet your unique needs—medical treatments, debt repayment, or adapting your living space to accommodate your physical condition post the illness.
In conclusion, integrating critical illness insurance into your healthcare portfolio, especially when you are close to retirement, offers an invaluable extra layer of financial protection. It acts as a safety net in the event of a debilitating illness, providing both peace of mind and the necessary resources to navigate medical expenses.
Nonetheless, you must examine the policy details minutely—terms, scope, and exclusions—to ensure it is the right fit for your needs and the terms of the existing health policy. Do seek the help of a financial advisor before you commit to a policy so that you can be sure your decision aligns with your need for financial security.
International Money Matters Pvt Ltd is a 20-year-old SEBI registered financial planning-cum-investment advisory boutique. Please click here to find out more.
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Updated: 27 Oct 2023, 12:44 PM IST