Why Do You Need A Critical Illness Insurance Plan?

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It is rightly said that health is wealth. Though you may take the necessary precautionary measures to remain in the pink of health, there may be instances of medical emergencies. Making out-of-pocket expenses to cover medical bills may result in a huge strain on your finances. For this purpose, it is necessary to invest in a health insurance policy. Purchasing such a policy provides much-needed financial protection.

Understanding critical illness policies

One type of health insurance available in the market is a critical illness plan. Such an insurance may be brought as a standalone policy or as a top-up to your existing policy. A critical illness policy, also known as dread disease plan, covers specific illnesses on a pre-determined list of your insurance policy. In case you are diagnosed with any of the critical illness specified in the policy, the insurance provider is liable to make a lump sum payment.

Benefits of a critical illness policy

There are numerous advantages of purchasing a critical illness policy. Following are six major benefits.

  1. Covers medical treatment not covered by your health plan

Purchasing a critical illness policy offers a wider scope of coverage than your existing health plan. It covers various conditions and diseases such as heart attack, stroke, cancer, kidney failure, major organ transplant, multiple sclerosis, and blindness, among others.

  1. Acts as an income replacement

In case you are the sole breadwinner of the family, diagnosis of a critical illness may leave your family in a financial crunch. A critical illness insurance plan ensures that you have a financial back-up. The income that you used to earn from your employment may be compensated with the lump sum amount provided by the insurer. This will help your loved ones meet their financial obligations.

  1. Serves as fund for any purpose

The payout amount from a critical illness plan may be used for any motive. You may use the amount towards medical expenses of your disease. You may also use it to maintain the same lifestyle that you used to have before diagnosis. The amount may also be used by your loved ones to meet various expenditures such as daily expenses, children’s educational fees, and repayment of a loan, among others.

  1. Offers peace of mind

One critical illness benefit is peace of mind. You do not have to worry about making last-minute arrangements for the required finance. You are assured that your critical illness policy will offer financial protection. It helps you focus on your speedy recovery instead of worrying about making financial arrangements.

  1. Offers lower rates upon early purchase

Like most health insurance plans, it is recommended to buy critical insurance at a younger age. Since premiums generally depend on age, you may invest in one as early as possible to enjoy maximum benefits at a lower cost.

  1. Offers tax benefits

The good news is that critical illness insurance provides health insurance tax benefits according to the Income Tax Act, 1961. The premiums payable towards your policy may be exempted from tax up to INR 25000 under Section 80D. In case you are a senior citizen, you may enjoy a higher limit of INR 30000, and reduce your tax liability to a greater extent. It is also important to note that that the lump sum amount payable by the insurance provider upon diagnosis of the illness is exempt from tax.

Indeed, critical insurance offers a plethora of benefits. It offers additional financial support to help you get through challenging times. You may, therefore, seek comprehensive coverage by investing in a critical illness plan, and enjoy the numerous benefits it has to offer.