Thinking of taking health insurance? Understand the importance of critical illness policy first

Rajiv Jamkhedkar

Akash was a 37-year-old successful banker. He was single who lived in a luxurious flat in Mumbai, was fond of all the good things in life and thought that life was pretty rosy at the moment. Just before Diwali, Akash had a dizzy spell and fainted.

The doctor advised him to get usual tests, and he thought it must be something ordinary. Upon getting the first tests, the Doctor was alarmed and ordered a battery of tests with full body diagnostic. To his utter shock, Akash discovered that he was seriously ill. Both his kidneys had failed. He had known that recently he felt that he lacked energy and was generally weak. He never suspected anything serious. This was a genuine bolt from the blue. As a result, Akash found himself admitted in ICU in one of the prestigious hospitals in Mumbai.

Akash was in ICU for about 60 days. He had just splurged his bonus and savings on doing up his apartment, in buying a fancy TV and home theatre. He had around Rs 10 lakh in savings. The bank he worked at had a policy covering their employees. To Akash’s alarm, the hospital bills kept clocking up fast. Soon, the saving of Rs 10 lakh was over within a matter of 30 days.

The bank promised to take up the matter with reimbursement of hospital bills from the company’s insurance policy. The insurance policy covered another 15 days and then that coverage amount also got over. Akash was now in a panic situation as a kidney failure requires extensive long-term medicines, care, dialysis and sometimes intensive care in the hospital. Who’s going to pay for all this? Akash lost his job six months later and had meanwhile borrowed from friends and family. He was now in debt of Rs 30 lakh.

The story of Akash‘s recovery is long and arduous. Eventually after three years he got a kidney transplant and is now leading a healthy life.

In the three long and tough years, Akash was a mess. This incident took a financial and emotional toll on him. At the age of 37, he had to rebuild his life from scratch.

Akash took five more years to pay back the friends and family what he had borrowed from during his illness. Trust me when I say that the story of Akash is not an isolated case. It is a statistical probability that one in two Indians will suffer from critical illness in their life.

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 et cetera. 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.

Being in the insurance industry, we have witnessed the fall in quality of life of the entire family when one member of the family falls critically ill and is undergoing treatment for a long term. 10 years ago there were not many critical illness policies available in the market.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.