Critical illness is an illness that is a major illness affecting an important organ of the body. Examples of critical illnesses – heart attack, stroke, cancer, kidney, lungs, liver failure etc. The longer that we are living, the more the chances of any of these critical illnesses striking us. 99% of clients that I have met are usually aware of hospitalisation policy, for example, a “Mediclaim” policy.

They are not aware of the risk of the outgo on account of major illnesses that critically threaten a patient’s life. Critical Illness typically requires ICU, nursing, specialised medicines and tests that are costly. Typical critical illness such as cancer can cost upwards of Rs 20 lakh. Most of the hospitalisation policies for medical treatment do not cover such large amounts. It is therefore important to have a separate insurance policy for the risk of major illness striking us.

The difference between a hospitalisation policy and critical illness policy is this – hospitalisation policy gives you reimbursement of all the hospitalisation costs such as surgery, ICU et cetera. It will not cover many items such as medicines, cost of stay of the relatives, some diagnostic costs, and nursing cost required at home. Sometimes in chronic illness, these other costs are higher than the main surgery or the hospitalisation cost.

Unlike hospitalisation insurance, critical illness policy will pay you a lumpsum upon diagnosis of a critical illness. It is not dependent on submitting hospital bills and is therefore not a reimbursement policy. For example, if one has a critical illness of Rs 30 lakh and one is detected with a major liver disease, he/she will get a lump-sum claim of Rs 30 lakh without requiring any bills or other questions.

Many of the critical illnesses are chronic in nature which means they are present for a long time and require long-term care and treatment. This automatically increases the cost of treatment and burden of this cost falls on the financial savings of the patient.

Today it is a happy development that most health insurance companies offer critical illness plans. There are many life insurance companies who offer critical illness “rider” to be added on to life insurance plans. This money is the cash that will sustain the person for all myriad costs that he/she will have to incur in order to treat herself back to health.