Page 49 - Insurance Times April 2024

What survival period means for your

critical illness plan

H ealth insurance helps a policyholder take care of critical illnesses may divide cancer into various stages and
any sudden or even planned hospitalization
count it separately. Another insurer may just have 25
expenses. But it may not be of much help if
illnesses in the policy but can count all cancer types as one,"
prolonged hospitalization due to a critical ailment
at elephant.in (Alliance Insurance Brokers).
leads to loss of job and income. The family may struggle to says Kalpesh Chavan, senior vice president & product head
meet daily living expenses, in addition to the mounting Moreover, some illnesses in the list could very well be
healthcare costs. This is precisely where critical illness (CI) uncommon. "When we spoke to a seasoned actuary about
policies or riders can help. In such cases, the insurance the significance of the number of illnesses, we understood
company gives a lump sum payout if the policyholder is
that the top 6 illnesses account for more than 90% of critical
diagnosed with a CI, unlike in the case of indemnity-based illness claims. Further, when you look beyond the top 10
insurance which only covers hospital expenses within the illnesses listed in any plan-the claims are rare. So, a majority
coverage limit. The lump sum payout in critical illness policies of these long lists are often filled up with rare medical
can be used for any purpose.
conditions, with very low probability of their occurring," says
There are two different ways to insure oneself against Cis-a Mahavir Chopra, founder, Beshak.org.
rider offered by life insurance companies along with the main Avoid going by numbers and read the fine print. "It is better
policy or even a stand-alone policy or rider offered by health to reach out to an insurance advisor. If not, the second-best
insurance companies. Yet, many people buy such riders or
option could be opting for a policy having 25-30 critical
policies without understanding their nuances. Take for illnesses," says Chavan.
example the survival period clause. Having a policy does not
mean the policyholder will get the money on day 1 itself after Term insurance with CI rider versus a stand-
she gets diagnosed with a CI. She must survive for a few days alone CI policy
before the claim is cleared. If a policyholder dies during the Primarily there are two ways to get adequate CI cover-a CI
survival period, she will not be eligible for the claim. rider with a term plan and a stand-alone CI policy by a health

"Generally, insurance companies offer a survival period of insurer. The first is convenient as it does not require
30 days in their policies. Very few insurers offer an option
to reduce it. A couple of insurers such as Bajaj Allianz
General Insurance levies 5% loading in premium to reduce
it from 30 days to 15 days and additional 5-10% to reduce it
to 7 and zero," says Nisha Sanghavi, a certified financial
planner and co-founder of Promore Fintech.

Also, there is a waiting period of 90-180 days during which
the policyholder will not be eligible to make any claim.

Another important parameter to gauge the usefulness of a
policy is the number of CIS it covers. A few insurers only cover
10-20 diseases while others may include up to 60 or more.
One may feel that more is better in such cases but it is a
misconception. "An insurance company having 60 or more

44 April 2024 The Insurance Times