Healthcare costs are rising exponentially, and the incidence of critical illnesses is on the rise in India. A critical illness health insurance policy is designed to offer financial protection and support when one is diagnosed with a covered critical illness. This report delves into the specifics of critical illness health insurance policies available in India.

                                                                                                                                 Subas Tiwari

Definition of Critical Illness Health Insurance

Critical illness health insurance is a stand-alone policy that provides a lump-sum benefit to the policyholder upon the diagnosis of a covered critical illness. It is distinct from regular health insurance policies, which typically cover hospitalization and medical expenses. Critical illness policies offer a fixed payout to help policyholders meet medical costs, loss of income, or other financial requirements during treatment and recovery.

Key Features of Critical Illness Health Insurance Policies:

  1. List of Covered Critical Illnesses:Critical illness policies specify a list of illnesses covered, which usually includes cancer, heart attack, stroke, kidney failure, major organ transplant, paralysis, and more. The number of covered illnesses may vary among insurers.
  2. Lump-Sum Payout:The policyholder receives a lump-sum amount upon the diagnosis of a covered critical illness, irrespective of the actual medical expenses incurred.
  3. Waiting Period:Most policies have a waiting period from the policy inception during which claims related to pre-existing critical illnesses are not covered. The waiting period varies among insurers.
  4. Survival Period:Some policies require the policyholder to survive a specified number of days (e.g., 30 days) after diagnosis to be eligible for the payout.
  5. Renewable and Convertible Policies:Critical illness policies may be renewable annually, and some insurers offer the option to convert them into a comprehensive health insurance policy without a fresh medical examination.
  6. Tax Benefits: Policyholders can claim tax benefits under Section 80D of the Income Tax Act for premiums paid towards critical illness health insurance.

Coverage and Benefits:

Critical illness policies offer comprehensive coverage for a wide range of critical illnesses. The lump-sum payout can be used for various purposes, such as:

  1. Medical Expenses:It covers the cost of treatment, hospitalization, surgeries, medication, and post-operative care.
  2. Loss of Income:The payout can help cover lost income during the treatment and recovery period.
  3. Debt Repayment:Policyholders can use the payout to repay loans or mortgages.
  4. Lifestyle Changes:The money can be utilized for making necessary lifestyle adjustments due to the illness.

Advantages of Critical Illness Health Insurance Policies

  1. Financial Security:Critical illness policies provide a safety net, ensuring that policyholders and their families are financially secure during challenging times.
  2. No Co-Payment:Unlike regular health insurance policies, critical illness policies generally do not require any co-payment at the time of claim.
  3. Supplement to Existing Coverage:They complement existing health insurance coverage by offering additional protection against critical illnesses.
  4. Flexibility:Policyholders can choose the sum insured based on their requirements and affordability.
  5. Peace of Mind:Having a critical illness policy brings peace of mind, knowing that one is prepared for unforeseen medical emergencies.

Critical Illnesses (Major Inclusions)

  • Cancer
  • Cardiac Arrest
  • Open Chest CABG
  • Replacement/Repair of Heart Valve
  • Coma
  • Kidney Failure Requiring Dialysis
  • Stroke
  • Major Organ Transplant
  • Permanent Paralysis
  • Motor Neuron Disease
  • Multiple Sclerosis
  • Brain Tumour/Meningitis
  • Blindness/Loss of Sight
  • Lung Diseases
  • Liver Failure
  • Myocardial Infraction

The list given above is only indicative & illustrative & not exhaustive.

Limitations of Critical Illness Health Insurance Policies:

  1. Limited Coverage:Critical illness policies cover specific illnesses, leaving out several other health conditions.
  2. Waiting Period:Pre-existing conditions may not be covered during the initial waiting period.
  3. Survival Period:If the policyholder does not survive the specified period after diagnosis, the claim may be denied.
  4. Non-Medical Expenses:The lump-sum payout may not be sufficient to cover all non-medical expenses associated with critical illnesses.

Myths and Facts about Critical Illness health insurance:

Myth 1: Critical Illness Insurance is the same as Health Insurance.

Fact: Critical Illness Insurance and Health Insurance are two different types of insurance. While health insurance covers hospitalization expenses and medical treatments, critical illness insurance provides a lump-sum payment upon the diagnosis of a covered critical illness. The payout from critical illness insurance can be used at the policyholder’s discretion, such as covering non-medical expenses, loss of income, or seeking specialized treatments.

Myth 2: Critical Illness Insurance is unnecessary if you have a healthy lifestyle.

Fact: While a healthy lifestyle can reduce the risk of critical illnesses, it doesn’t guarantee immunity from them. Critical illnesses can affect anyone, regardless of their lifestyle. Critical illness insurance provides financial protection during challenging times, allowing policyholders to focus on their recovery without worrying about financial burdens.

Myth 3: Critical Illness Insurance covers all medical conditions.

Fact: Critical Illness Insurance has a defined list of covered illnesses. The list typically includes major conditions like cancer, heart attack, stroke, organ failure, and more. However, not all medical conditions are covered. It is essential to review the policy documents and understand which illnesses are included and excluded from the coverage.

Myth 4: Only older people need Critical Illness Insurance.

Fact: While the risk of critical illnesses increases with age, young people can also suffer from severe medical conditions. Critical illness insurance can be beneficial for people of all age groups, especially those with family histories of critical illnesses or specific health risk factors.

Myth 5: Critical Illness Insurance is expensive.

Fact: The cost of critical illness insurance varies based on factors like the insured’s age, coverage amount, policy features, and medical history. While it may have higher premiums compared to regular health insurance, the financial protection it offers during a critical illness can outweigh the costs.

Myth 6: Pre-existing conditions are covered under Critical Illness Insurance.

Fact: Most critical illness insurance policies exclude pre-existing conditions for a specific period. If the policyholder is diagnosed with a critical illness related to a pre-existing condition during the waiting period, the claim may be denied. It is crucial to understand the waiting periods and policy exclusions before purchasing the insurance.

Myth 7: Critical Illness Insurance covers all medical expenses.

Fact: Critical illness insurance provides a lump-sum payout upon diagnosis of a covered illness. However, it does not cover all medical expenses. Regular health insurance is designed to cover hospitalization and medical treatment costs, while critical illness insurance offers financial support beyond medical expenses.

Myth 8: Critical Illness Insurance provides immediate coverage.

Fact: Like most insurance policies, critical illness insurance typically has a waiting period before coverage becomes effective. This waiting period can vary depending on the insurer and the policy. It is essential to be aware of the waiting period and understand when coverage starts.

Myth 9: You can purchase Critical Illness Insurance after diagnosis.

Fact: Critical illness insurance is meant to provide protection before the diagnosis of a critical illness. Once you are diagnosed with a covered critical illness, you won’t be eligible to purchase or claim the insurance for that specific condition.

Myth 10: Critical Illness Insurance is a guaranteed payout.

Fact: The policyholder must meet specific criteria and undergo a medical assessment for a successful claim. If the diagnosis does not meet the policy’s definition of a covered critical illness, the claim may be denied.

It’s essential to dispel these myths and have a clear understanding of critical illness insurance before purchasing a policy. Reading and comprehending the policy terms and conditions, coverage details, and exclusions are vital to making an informed decision that best suits your needs. If there are any doubts or questions, it’s wise to seek advice from insurance experts or professionals.

Major exclusions Critical Illness Health Insurance Policies:

  • No illnesses/ailments are covered within the first 90 days of taking the policy cover (inception date of the policy)
  • Pre-existing (health) conditions generally within 48 months
  • Congenital defects/anomalies
  • Pregnancy-related complications
  • Drugs & alcohol-related ailments
  • Adventure sports

Here are some tips to consider when purchasing critical illness health insurance:

1. Assess your needs: Evaluate your medical history, family medical history, lifestyle, and the prevalent critical illnesses in your region. This will help you determine the coverage amount and types of illnesses you need to be insured against.

2. Compare plans: Research and compare different insurance providers, their plans, coverage, benefits, and premiums. Look for plans that offer comprehensive coverage for a wide range of critical illnesses.

3. Coverage scope: Check the list of critical illnesses covered under the policy. Common critical illnesses typically covered include cancer, heart attack, stroke, kidney failure, and organ transplants, among others. Make sure the policy covers the illnesses most relevant to your situation.

4. Waiting period: Be aware of the waiting period for specific illnesses. Many critical illness policies have a waiting period before the coverage becomes effective for certain conditions. Opt for a plan with a shorter waiting period if possible.

5. Pre-existing conditions: Understand how the policy treats pre-existing conditions. Some policies may have a longer waiting period or exclude coverage for pre-existing conditions.

6. Sum insured: Choose an adequate sum insured that considers your lifestyle, medical expenses, and potential future healthcare costs. A higher sum insured might result in higher premiums, but it offers better protection.

7. Claim process: Review the claim settlement process of the insurance company. A smooth and efficient claim settlement process is essential during critical times.

8. Exclusions: Carefully read and understand the policy exclusions. Know which situations or illnesses are not covered by the policy to avoid surprises when filing a claim.

9. Renewability and age limit: Check the policy’s renewal provisions and the maximum age until which the policy can be renewed. Opt for a policy with lifelong renewability options if possible.

10. Network hospitals: Confirm the list of network hospitals where cashless treatments are available. Having a wide network of hospitals will be beneficial in emergencies.

11. No-claim bonus: Some policies offer a no-claim bonus, where the sum insured increases if you do not file a claim during a policy year. Consider policies that provide this benefit.

12. Waiting period for claims: In some policies, there might be a waiting period before you can make a claim. Understand this aspect and choose a policy with reasonable waiting periods.

13. Premium affordability: While you shouldn’t compromise on coverage, ensure that the premium is affordable and fits within your budget. It’s essential to pay premiums consistently to keep the policy active.

14. Read reviews and feedback: Look for reviews and feedback from existing policyholders to understand their experiences with the insurance company’s services and claim settlement process.

15. Seek professional advice: If you find the process overwhelming or have specific health concerns, consider seeking advice from a qualified insurance advisor or agent.

Remember that critical illness insurance is not a substitute for comprehensive health insurance. It should complement your regular health insurance coverage to provide additional financial protection against major illnesses. Take your time to research and make an informed decision based on your specific needs and circumstances.


Comparison of Critical Illness Policies in the Indian Insurance Market:

  1. Premiums: Premiums vary depending on factors such as age, health condition, sum insured, and the number of critical illnesses covered.
  2. Insurers and Coverage:Different insurance companies offer varying coverage options and additional benefits, making it essential to compare policies.
  3. Claim Settlement Ratio:The claim settlement ratio of insurers is a critical factor to consider while choosing a policy.


Critical illness health insurance policies in India play a vital role in safeguarding individuals and families against the financial burden of critical illnesses. By offering lump-sum payouts, these policies provide much-needed support during difficult times. However, individuals must carefully assess their needs, compare policies, and select a plan that best aligns with their requirements and budget.

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