Wearing a helmet can prevent head injuries during an accident. But if the accident does not happen, do you complain about the cost of buying a helmet? People who are already covered by health insurance think they do not need an additional layer of protection. However, the moment they face the cost of treating cancer, organ transplant, Alzheimer's or a bypass surgery, the need for getting a critical illness cover is felt. By that time, it is too late. No insurance company will give you a cover when you are not healthy. Given the high cost of treatment it is important to buy a critical illness policy along with a basic health insurance plan, says Subrata Mondal, executive vice-president, IFFCO Tokio General Insurance. In an interview with Kumar Shankar Roy, the insurance expert shares his insights into the nature of critical illnesses, the direct and indirect costs involved.
What is the relevance of a critical illness benefit policy if a family has medical insurance acquired through an employer or standalone?
A medical insurance plan is an indemnity cover which reimburses the policyholder the cost of medical expenses. A critical illness benefit policy, on the other hand, pays a lump sum amount upfront on the diagnosis of a critical illness. A critical illness plan offers an additional layer of protection, over and above the basic indemnity plan by providing financial assistance to a policyholder on the diagnosis of a critical illness.
Based on claim experience, can you tell us what are the amounts involved in the case of 4-5 critical illnesses that afflict Indians?
The cost of treating critical illnesses is higher compared to common ailments. For instance, a single drug to treat cancer can cost anywhere between Rs 75,000 to Rs 1 lakh and a single chemotherapy cycle can cost Rs 1 lakh to Rs 2 lakh. Cumulatively, cancer treatment can go upwards of Rs 10 lakh in India. Similarly, kidney transplant can cost upwards of Rs 6.5 lakh while dialysis can cost Rs 18,000-20,000 per month.
Just like cancer, treating congenital heart disease, coronary artery disease and valve prolapse can be expensive. Though the cost of treatment varies, expenses can easily reach Rs 3-5 lakh or even more. Given the high cost of treatment, it is important to buy a critical illness policy along with a basic health insurance plan.
Apart from the money required to treat critical illness or a critical injury, what is the amount of money that is needed for the maintenance of the family if the affected individual is the sole breadwinner for the family?
Treating a critical illness takes time and money. If one is a sole earning member and is diagnosed with a major illness, it is quite likely that one will have to skip work to get treatment for it. This can lead to loss of monthly income and an increase in expenses due to frequent visits to the hospital and the high cost of medical care. The treatment cost, therefore, may differ from person to person as it is based on the financial status of the family. We at IFFCO Tokio recommend that the cover should be approximately 4-5 times of the annual income of the family.
We have seen many life insurance companies launch fixed benefit insurance plans. They do not ask for hospital bills and pay on the diagnosis. Compared to these fixed benefit insurance plans, where do critical illness benefit policies offered by general insurers stand?
The fixed benefit critical illness plans offered by general insurers also provide lump sum payouts on the diagnosis of critical illnesses, thus not insisting for hospital bills.
You have recently launched a critical illness benefit policy. How is your product positioned given the available products in the market? What is your product's USP and premium cost?
There are many critical illness plans in the market covering a number of critical illnesses. The key features of the IFFCO-Tokio Critical Illness Benefit Policy are one of the widest coverage for critical illness covering up to 25 critical illnesses, policy tenure options for one year, two year and three year policy. Also, the policy provides sum insured options of Rs 1 lakh to Rs 1 crore, tax saving under Section 80 D, all family members can be covered in a single policy including parents and parents -in-law. A person up to the age of 50 years can buy the policy without any medical tests. There is lifelong renewal too.
The premium rates are affordable. For example, the premium starts from Rs 0.70 per day for a sum insured of Rs 1 lakh for a person less than 25 years of age. For the higher sum insured of Rs 10 lakh and Rs 1 crore, the same person can buy the policy at Rs7 per day and Rs 70 per day, respectively.
Many critical illness policies cover a number of ailments. Should the number of ailments covered be the sole factor for purchasing a product? What does claim experience show about the most common critical illness ailments --- which ones happen more than the others?
A critical illness policy must cover an extensive number of critical illnesses. IFFCO Tokio’s Critical Illness Benefit Policy offers the widest coverage, including 25 listed critical illnesses, medical events or surgical procedures, including organ transplant, Alzheimer's, bypass surgery, blindness, deafness, loss of speech and loss of limbs during the policy period. Other than coverage one should compare sub-limits, waiting period restrictions, tenure and premium before buying a policy. The personal details like family history and lifestyle play an important role in the selection of an appropriate plan. A few frequently intimated critical illnesses are cancer, kidney failure, major head trauma, myocardial infarction and stroke.
Give us an idea of what should be the sum insured taken for a critical illness benefit? Should this amount be a function of the existing plain vanilla medical insurance cover already bought?
Depending on your family history and standard of living you should choose the right amount of sum insured. Given the high cost of medical care, one should have a sum insured of minimum Rs 10-15 lakh covering the basic cost of treatment with the cost for care and recuperation.
Although the amount for a basic medical insurance cover and critical illness cover are not correlated, yet for a person having a family history of critical illness or in advancing age the sum insured must be chosen cautiously.
What are the tax benefits of buying critical illness benefit policies?
The premium paid for IFFCO-Tokio Critical Illness Benefit Policy is exempt under Section 80D of the Income Tax Act.