The critical illness insurance policy pays out a lump sum benefit to the insured person if diagnosed with a specific serious condition, such as cancer, heart attack, or stroke. It helps cover the costs associated with treatment and recovery and provides financial support if the insured person is unable to work. The specific diseases covered by critical illness insurance plans vary depending on the insurer and the policy.
If you are looking to buy critical illness insurance, you must wonder if it will also provide financial assistance to your loved ones in the case of death. This article will throw light on this issue and discuss the relationship between critical illness plans in India and the death benefits available under them.
Critical Illness Insurance Plans and Death Benefits
Critical illness insurance is designed to financially aid the insured in the event of a severe illness and typically does not provide death benefits. However, some critical illness insurance policies may include a “return of premium” feature, which means that if the insured person does not file a claim during the policy term, they will receive a refund of the premiums they paid. Different scenarios are discussed below.
- You get a critical illness but pass away within the waiting period: Every policy has a designated waiting period. If you die within this period, your beneficiaries will receive a refund of all the premiums you have paid till then. This will happen only when your policy has a “return of premium” feature.
- You get a critical illness but survive the waiting period: In this case, you or your beneficiaries will receive the total sum insured to cover the critical illness treatment and related expenses.
- Your policy is no longer valid: Your policy may expire, or you may terminate it after a certain amount of time. In such a case, if you become seriously ill and pass away, your insurer can reject your claim on the basis that your coverage was no longer valid at the time the diagnosis was made.
- You are not eligible for a critical illness claim: Death may be accidental or due to an illness not covered under the policy. Your beneficiaries, in this case, will be refunded with premiums paid to date.
Benefits of Critical Illness Insurance
What is critical illness insurance and how it works in the case of death has been discussed so far. Let’s now look at the advantages of critical illness policies like the Niva Bupa Critical Illness plan.
- Plans for critical illness insurance give you peace of mind by eliminating the stress of scrambling to find money in the event of an emergency medical situation.
- A critical illness insurance policy will also pay for medical care received abroad, thus helping you avail quality treatment.
- It is crucial to have critical illness insurance for family well-being as it helps meet expenses when a critical illness leaves you unable to work.
- The claim from a critical illness insurance policy can be used for whatever the insured person sees fit, including paying off debt, covering living expenses, or paying for medical treatments not covered by other insurance.
- Section 80D under the Income Tax Act of 1961 allows you to receive tax benefits on the cost of critical illness insurance.
It is worth noting that critical illness insurance aims to cover both your medical insurance plans needs and the needs of the rest of the family. If you are worried about passing away and how it might affect your family’s finances, consider getting life insurance. Then, you can get a critical illness policy to strengthen your insurance coverage even more.
Further, some critical illness insurance policies may be bundled with life insurance policies, in which case death benefits would be provided by the life insurance portion of the policy. Additionally, some insurers may offer a “living benefit rider,” which can be added to a life insurance policy and would provide death as well as critical illness benefits.