All About Critical Illness Plans and How to Choose One

A critical illness (CI) insurance policy is a category of health insurance that provides coverage against life-threatening diseases like heart attack, kidney failure, third-degree burns, organ transplants, paralysis etc. Unlike the regular health insurance policy plan, in CI insurance, the insurance company pays a lump sum amount (equal to the sum assured) when the policyholder is diagnosed with the disease.

Usually, most people purchase a critical illness plan over and above the existing health insurance policy. Any major disease can be emotionally and financially draining, not just for the insured but also for the family of the insured. Since the number of people falling prey to lifestyle-related diseases is increasing, it is paramount that you have a comprehensive health insurance policy and also a critical illness policy. Life is unpredictable, and you must be prepared for all kinds of uncertainties. Like any other insurance plan, critical illness policy allows you to avail tax exemption under Section 80D.

How should you select the best critical illness plan?

While purchasing a critical illness insurance policy, keep the following pointers in mind:

Coverage –

The list of critical illness is vast; the number of illnesses covered may vary from one insurance company to the other. Make sure that you carefully go through the list of diseases covered under the plan and choose a policy that covers the maximum number of conditions.

Waiting Period –

Usually, there is a 30-day waiting period after the policy before the insurance company pays compensation for any type of treatment you may undergo. If you have a pre-existing condition, the waiting period is usually 3-4 years. Look for a policy that has a minimum waiting period. 

Sum Assured –

Always opt for the highest sum assured that you could get as you never know what kind of expenses you may have to incur. Also, in the purview of medical inflation, the cost of treatment is rising everyday; having the high sum assured will help you get sufficient compensation that covers the full treatment cost as well as the rehabilitation. 

Claim Ratio –

Check if your insurer has a good reputation when it comes to settling claims. The claim ratio is the number of claim applications received by the insurance company against the number of applications approved. It is better to look for an insurance that you choose an insurer with a high settlement ratio so that your claim is settled on time, without any hassles.

Built-in Coverage –

Most critical policies offer benefits like health check-up, hospital cash, child education benefit etc. These are an added plus, and if your policy provides these benefits, then you must go for it.

Freelook Period –

Most insurance companies give you a 15-day window to evaluate your plan and check if you need it and if it suits your needs. After the freelook period, you can change the plan to satisfy your specific requirements, or you can surrender the policy and get reimbursement.

How does a critical illness policy work?

Unlike a general health insurance policy, a critical policy does not cover hospitalisation or post-hospitalisation expenses. It does not offer cashless facility or the option to reimburse the costs. It directly gives the insured the lumpsum amount once the insured has been diagnosed with a critical disease. 

What are the exclusions under a critical illness policy?

Even though this plan is known for covering all major diseases, there are certain exclusions. A claim request may be denied under the following circumstances:


  • Illness due to a self-inflicted injury.
  • Disease arising due to drug abuse.
  • Illness arising from cosmetic surgery etc.
  • Critical illness due to congenital diseases.


Critical illness policy is compulsory in today’s day and age as treating any major disease is expensive. Keeping a policy ready will help you face the situation and will help to fight the disease without any monetary fear.