Critical illness policies better than single-disease covers

A combination of mediclaim policy and critical illness cover will meet your health care needs more comprehensively

The fear of contracting a serious disease such as cancer, kidney failure, heart ailment and others is forcing people to buy covers that will allow them to fund their treatment. And insurers have been quick to see these needs. In recent times, many single-disease policies have been launched by insurers, the most recent being Sampoorn Cancer Suraksha by SBI Life Insurance. These policies cover only one disease, such as cancer, heart ailment, diabetes (and hypertension), dengue, and so on. However, before buying, customers need to look at other options as well.

Less costly and easily available: One positive of single-disease policies is that they are less expensive than a regular mediclaim policy or even a critical illness policy. Since they cost less, a customer can avail of a higher cover for a particular dreaded disease, say, cancer.

They are also easier to buy. Sometimes there are no medical tests. They are sold on the basis of a declaration made by the insured (as it happens in the case of a mediclaim policy and sold to customers aged less than 45).

These policies are also likely to cover that one disease in a more comprehensive manner. SBI Life’s Sampoorn Cancer Suraksha, for instance, pays a part of the sum assured upon diagnosis at the minor stage. It also makes a payout at the major stage, and (depending on the payment structure chosen) at the advanced stage. A critical illness policy is unlikely to make a payout at the incipient stage of the disease, say experts. Single-disease policies also cover you for out-patient treatment and for treatment at home.

Some of these policies also take on board customers who already have a condition. Apollo Munich’s Energy policy, for instance, covers people who already have diabetes or hypertension. “The customer is covered for complications related to hypertension and diabetes from day one,” says Antony Jacob, chief executive officer, Apollo Munich Health Insurance. However, you are more likely to be issued a policy if the disease is at an initial rather than an advanced stage.

Since these are customised policies, they offer better aliment-specific features. “A condition like diabetes or hypertension requires that you manage your condition well so that further complications don’t arise. We offer a health coach to each customer in our energy policy who advises him and monitors his progress,” says Jacob. Customers also get rewarded for managing their condition with a discount of 525 per cent of premium. However, this policy doesn’t come cheap, with the average premium paid by customers being ~25,000.

Narrow coverage: The key negative of these policies is that they cover you for only a single disease. “They don’t offer comprehensive coverage, like a traditional mediclaim policy does,” says Arvind Laddha, deputy chief executive officer, JLT Independent Insurance Brokers. Hence, they can at best serve as an add-on.

One alternative for covering critical ailments is the critical illness policy. “A 30-35-year-old can get a critical illness cover with a sum assured of ~10 lakh for a premium of ~3,500-4,000 which will cover him for around 35 ailments. Even if a single-disease cover is 40-50 per cent cheaper than a critical illness policy, how many can you buy? You should ideally buy a policy that covers multiple diseases,” says Mahavir Chopra, director, health, life and strategic initiatives, Coverfox.com.

For high-risk customers: Single-disease covers cater to people who perceive themselves to be at high risk of contracting a particular ailment. For instance, many people smoke, or work in a polluted environment, and perceive themselves to be at high risk of cancer. They are also targeted at people who have a family history of an ailment.

Some epidemics like dengue generate a lot of fear. “Many people who do not feel the need for a regular health insurance plan consider dengue to be a relevant risk for them and buy our Dengue Care policy,” says Jacob. By paying a small premium of ~524 for a ~50,000 policy or ~682 for a ~1 lakh policy, they derive peace of mind.

Strategy: First, cover your family with a basic mediclaim policy, which will bear the cost of hospitalisation for a wide range of ailments. To keep up with medical inflation, you may hike the sum assured on it periodically. A less expensive way of doing so is to buy a top-up policy, which reimburses you for hospitalisation expenses after the basic policy has been exhausted.

However, when a major ailment strikes, there are several pre- and post-hospitalisation expenses. A person who is employed also suffers loss of income. “A critical illness policy compensates for loss of income. You get a lumpsum payout on diagnosis which you can use to meet expenses other than those incurred on hospitalisation. So, a critical illness cover meets a different need from the one met by your basic mediclaim policy and top-up,” says Chopra. Experts suggest that a critical illness policy should be used to supplement the combination of basic mediclaim and top-up policy.

Finally, you need to decide whether to buy a critical illness policy as a standalone policy or as a Apollo Munich Easy Health Floater Standard MaxHealth Companion Reliance Health Gain (SA ~6 lakh) rider to a life insurance policy. It may so happen that the company that offers the best premium and features on its term policy may not also offer a good critical illness rider. Experts suggest that it is best to purchase the critical illness policy as a standalone product.