Page 148 - Ebook health insurance IC27

The Insurance Times

Q8. What benefits are produced by critical illness policies ? On what factors
are critical illness products designed ? List out the common diseases
covered.

Ans. Due to advancement in medical science, more and more people are surviving
major diseases like Cancer, Strokes, Heart attacks etc. Medical care has increased
life expectancy resulting in people surviving Critical Illnesses, that would previously
result in death.

This however requires a substantial amount of medical costs, reduces ability to
work and causes major change in lifestyle. Thus, the financial security of the
individual and his family gets severely threatened, when a person is diagnosed
with criticalillness. Thecritical illnesspolicy eases thefinancialpressureby providing
a lump sum payment on diagnosis of a covered product. The proceeds are a cash
benefit and thus can be used by the insured for any purpose.

In Indian context, insurance companies offer this product in two forms:
(i) Accelerated CI benefit product, as a rider to a life insurance policy, and
(ii) Stand-alone CI product , offered by many non-life and standalone health

insurance). In the CI product, the death benefit is accelerated and the
benefit amount is paid if the insured is diagnosed of any specified critical
illnesses.

Under the second type, the benefit is payable on diagnosis of critical illness,
and is not linked to any death benefit. The list of covered illnesses vary from
insurer to insurer, and often products are designed based on the following
factors :
(i) It is a condition perceived to be serious by potential customers, is high cost

and can hamper lifestyle.

152 Guide for Health Insurance