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How Does A Critical Illness Insurance Policy Work?

Updated On Sep 30, 2021

Our life is full of uncertainties and mishaps, which makes it important for us to be prepared for the future, especially financially. Sometimes, unforeseen events can lead to hospitalization with high costs of treatment which can potentially exhaust the financial savings of the people. Therefore, the health insurance providers and insurance regulatory bodies have rolled out an extensive and cost-effective solution to this problem which is the health insurance covers. These health insurance policies provide necessary financial support to the people for the medical expenses and it also offers a wide range of perks apart from the hospitalization compensation.

Critical illness health insurance plans are specific types of health insurance plans that look after the treatment of life-threatening chronic diseases. It covers a range of chronic diseases like diabetes, stroke, heart diseases, etc. and helps the people in receiving quality treatment without money being a constraint. Some of the common inclusions of a critical illness health insurance plan are hospitalization costs, room rents, ambulance charges etc. by offering lump sum payments.

How Does A Critical Illness Insurance Policy Work?

About Critical Illness Health Insurance Plans

Critical illness health insurance plans are comprehensive health insurance policies that offer financial backup to the policyholders cost-effectively. It covers for the expenses of the policyholders as the cost of treatment of life-threatening diseases have increased due to the rapid rise in inflation. Let us look at some of the common key features and perks of critical illness health insurance plans:

Must Read: Best Critical Illness Plans To Buy In 2021

  • This plan comes with the lump sum payment of the claim amount which can also compensate for the loss of income of the policyholder due to the treatment of chronic disorders.
  • Along with the savings of the taxes, smooth claim processings and shorter waiting periods are also a part of this plan.
  • Policyholders can enhance the coverage of their existing plan with the addition of top-up plans depending on their financial budget.

How Does A Critical Illness Health Insurance Plan Work?

Under a critical illness health insurance policy, the claim amount is provided in lump sum payments to the policyholders after the diagnosis of the chronic disease. At the time of the claim request, the claim amount along with the other perks are made available to the policyholder by the health insurance provider. This claim amount under critical illness cover can be used according to the needs of the policyholder, like it can be used to compensate for the loss of income incurred due to the treatment of the policyholder. Therefore, the ultimate motive of a critical illness health insurance plan is to help the individuals in compensation for their high costs of treatments, receive quality treatment, and stay stress free.

Benefits of A Critical Illness Insurance Policy

Let us look at some of the perks of having a critical illness health insurance plan:

  • Critical illness health insurance plans offer perks after the completion of a short waiting period of around 3 months, from the date of purchase of the policy.
  • To make a claim under this policy, you can receive the entire claim amount based on the diagnosis report of your critical disease, which must be issued by an authorized doctor or hospital.
  • Under section 80D of the Income Tax Act, you can save taxes from the premium payments under this policy and you can also avail cashless treatment facility at the linked hospitals of the health insurance providers.
  • The covers also offer add-on plans, super top-up covers, top-up plans, and much more to enhance your existing critical illness insurance policy


A critical illness health insurance plan is a wise option for people with pre-existing chronic diseases, medical history of life-threatening disorders, etc. as it offers a huge sum of claim amount under this plan. It is important to carefully read the policy related documents of a critical illness plan to avoid any confusion at the time of the claim settlement process.

Must Read: Critical Illness Policy Vs Regular Health Insurance Policy

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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