The rising costs of medical care and the long, stressful hours of work with limited physical activity are all contributing towards an unhealthy lifestyle amongst many adults today. While your medical insurance may partially or fully cover the costs of your medical expenses, any unforeseen major disease adds to the financial burden as it may not be covered by your basic health insurance plan.
In such cases, a critical illness insurance plan is necessary. Critical Illness insurance pays a tax-free lump sum if the insured is diagnosed with a life threatening, major illness. Cancer, major organ transplant, heart attack, kidney failure, coma etc. are all included under critical illness. It is found that majority of claims come from the core illnesses covered. More expensive plans usually have a wider range of diseases covered and may look more appealing. But it is important to know if you can afford the cost and if it is worth to you or not.
The importance of critical illness plans cannot be stressed enough. It is a common misconception that medical insurance is enough to take care of you and your family financially in case a medical emergency arises. But critical illnesses are a lot more expensive than regular ailments which results in many families being unable to pay the medical bills. Some of the benefits from health insurance plans are listed below:
- Lump sum: As mentioned earlier, critical insurance plans pays a lump sum to the insured in case he/she is diagnosed with the pre-defined critical illness. Your medical insurance may take care of the cost of medication and treatments, but you might have to disburse your savings for the ongoing expenses like rent, school fees, etc.
- Control over your money: Critical illness cover is a living benefit; it pays you and not your beneficiary. The amount received from the critical illness claim can be used however you please. You have complete control over the money and it can be used to pay bills, invest or even seek advance treatment. This alleviates your financial burden due to the illness.
- Financial independence: The critical illness plan lets you be financially independent, even with your illness. With this benefit, you can still invest your money in major financial goals like property investment, starting a business, retirement etc.
- Younger benefits: By rule of thumb, it is recommended to get a critical insurance plan that is 3-5 times the annual income of the insured. It is recommended to go for the critical insurance plan at a younger age as you will face lower premiums and a higher sum insured. However, premiums also depend on the plan and the insurer, and not just the patient.
Many people are often confused between life insurance and critical illness insurance plans. Life insurance is the income benefit for your beneficiaries after death. If you are single, life insurance doesn’t make sense, however you should consider getting critical insurance. For families, you can opt for the critical illness insurance along with the life insurance or as a standalone product.
In both plans, you make regular premium payments. Life insurance pays the claim to your beneficiaries in the form of regular payments or a lump sum, whereas critical insurance claims are paid out to you all at once for living expenses and other costs.
Medical bankruptcy is more common than you think. Medical care is an expensive, but inevitable affair. While some people lose over 2 weeks of work due to illness, many mortgage their houses and borrow loans from friends, family and financial institutions. It would be unfair to say that medical costs alone contribute to bankruptcy. A lot of people who declared bankruptcy had low income and very few savings. Lack of financial planning is another major factor contributing to medical bankruptcy.
It was found that people with a basic medical insurance plan were more likely to go bankrupt than people without any health insurance at all. This is because of their lack of understanding of the policy coverage and the assumption that the basic insurance plan will cover costs for major diseases. This led them to believe that savings for medical emergencies or investing in a critical illness plan are not necessary.
The best way to avoid medical bankruptcy, would be to avoid the medical bills. The first step to doing that, is to read the fine print of your health insurance plan. It is essential to know completely well what is and isn’t cover and how the coverage is provided. Next, preventing and managing major diseases which have the most expensive treatment is crucial. A critical illness insurance plan is your best bet as it will ensure that you have the financial cushion you need during your illness and till you recover.
Finally, it is often said that prevention is better than cure and the major illness insurance plan exemplifies this saying. Make sure you invest in your health and secure your future, financially and physically with the right insurance plan for you.