Should I Add a Critical Illness Rider to My Insurance?

Ans: Hi Thangavelu, good to know that your wife is doing well. To answer your first query, yes you can declare your critical illness and avail the rider for it. Another option is to purchase a new plan for critical illness from an insurer of your choice. The insurer will ask a set of questions and based on that the coverage will be provided. However, most of the insurers will keep the PED in the Permanent exclusion list. As far as your query on continuation of policy is considered, you can continue with the existing health policies you have.

Any medical condition which arises after the waiting period of the policy will be covered in the health policies. Which is why check for the waiting periods associated with different ailments in your policy document.

Ans: Taking the right health insurance coverage is crucial, especially given the rising medical costs. With your current family floater policy of Rs. 22.5 lakhs and considering your wife's family history, it’s essential to evaluate your needs. Here’s a comprehensive guide to help you decide on additional coverage and whether a critical illness or cancer policy is necessary.

Current Health Insurance Coverage
Your existing policy has served you well, accumulating a bonus of Rs. 7.5 lakhs, increasing your coverage to Rs. 22.5 lakhs. This is a good base, especially since you’ve prioritized a public sector insurer due to concerns over private insurers.

Public sector insurers have a reputation for reliability and fewer complaints. Your choice is wise, given your specific concerns.

Assessing Your Coverage Needs
Health insurance needs can vary based on several factors, including age, family medical history, and lifestyle. Considering these factors, let's analyze your situation:

Age: At 49 and 44, you and your wife are approaching an age where medical issues become more common. Your daughter, at 16, still has a relatively low risk.

Medical History: Your wife’s family history of heart problems and cancer is a significant factor. This history increases the likelihood of needing substantial medical care in the future.

Rising Medical Costs: Medical inflation in India is high. Treatments for severe illnesses can easily exceed Rs. 20 lakhs, especially in metropolitan areas.

Given these points, it might be wise to consider additional coverage. A coverage of Rs. 30-50 lakhs could be more appropriate.

Evaluating the Need for Additional Coverage
To determine if you need more coverage, consider these aspects:

Hospitalization Costs: Major treatments and surgeries can be very expensive. Even with Rs. 22.5 lakhs coverage, a few hospitalizations could exhaust your policy limits quickly.

Treatment Advances: Medical technology is advancing, leading to higher costs for newer treatments and procedures.

Geographical Location: If you live in a metro city, medical costs are generally higher compared to smaller towns.

A top-up or super top-up policy could be a cost-effective way to increase your coverage without significantly increasing premiums. These policies kick in after a certain threshold is met, offering higher coverage at a lower cost.

Critical Illness and Cancer Policies
Given your wife's family history, a critical illness policy or a specific cancer policy could be beneficial. These policies provide a lump-sum payment on diagnosis of specific illnesses, which can be used for treatment, recovery, or even daily expenses.

Critical Illness Policy: Covers a range of severe illnesses like heart attack, stroke, kidney failure, and more. It provides financial support at a crucial time, helping to cover costs that may not be included in a regular health policy.

Cancer Policy: Specifically designed for cancer treatment. Cancer treatment can be prolonged and expensive. This policy ensures that financial constraints do not hinder the treatment process.

Benefits of Critical Illness Policies
Lump-Sum Payment: On diagnosis, you receive a lump-sum amount which can be used for any purpose, giving you flexibility.

Wide Coverage: Covers several major illnesses which can be financially draining if not insured.

Peace of Mind: Knowing you have coverage for major illnesses can reduce stress and allow you to focus on recovery.

Benefits of Cancer Policies
Specialized Coverage: Tailored specifically for cancer, ensuring comprehensive coverage for all stages of the disease.

Enhanced Support: Provides financial support for expensive treatments, ensuring quality care without worrying about costs.

Flexibility: The payout can be used for treatment or other related expenses, providing financial flexibility during tough times.

Premium Considerations
Health insurance premiums do rise with age and medical inflation. To manage premium costs while ensuring adequate coverage, consider the following strategies:

Top-Up Plans: As mentioned, these can provide high coverage at lower premiums compared to base policies.

Family Floater Plans: These can sometimes be more economical than individual plans, especially when covering multiple family members.

Regular Review: Periodically review and adjust your coverage to match your current needs and financial situation.

Practical Steps to Enhance Coverage
Assess Your Needs Regularly: Health needs change over time. Regularly assess your insurance coverage to ensure it aligns with your current and future needs.

Consider Top-Up Policies: If you find your current coverage inadequate, a top-up policy can provide additional coverage at a reasonable cost.

Evaluate Critical Illness and Cancer Policies: Given your wife's family history, these policies can provide financial security in case of serious illnesses.

Consult a Certified Financial Planner: They can provide personalized advice, ensuring your insurance strategy fits within your broader financial plan.


You’ve taken commendable steps to ensure your family's health and financial security. Your proactive approach to health insurance is admirable. It’s evident that you care deeply about your family's well-being, and you're making informed decisions to protect them.

Final Insights
Ensuring adequate health insurance coverage is crucial, especially with rising medical costs and potential health risks. Your current coverage of Rs. 22.5 lakhs is a good start, but considering additional coverage could provide more security.

A top-up policy could enhance your coverage cost-effectively. Given your wife's family history, a critical illness or cancer policy could offer additional peace of mind and financial support.

Health insurance is not just about covering hospital bills; it's about securing your financial future against unforeseen medical expenses. By carefully evaluating your needs and considering additional coverage options, you can ensure comprehensive protection for your family.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

Ans: Hello;

It is certainly a good thought.

But please do some research on coverage, sub-limits and exclusions, if any.

Seek help of an insurance advisor, if needed.

Objective is to get the desired claim, if required, without hassles.

Best wishes;

Ans: Hi Ritu! Having a separate critical illness policy could indeed provide an added layer of financial security. While a family floater health insurance plan typically covers hospitalization and medical expenses, a critical illness policy focuses specifically on major illnesses (like cancer, heart disease, or kidney failure), providing a lump-sum payout upon diagnosis. Here’s a look at the pros and cons:

Pros:

1. Lump-Sum Payout: Critical illness insurance provides a lump-sum amount on diagnosis, which can be used for treatment, lifestyle adjustments, or even household expenses if you or a family member cannot work due to the illness.
2. Income Replacement: If you or your spouse were unable to work due to a critical illness, this payout could cover lost income and help maintain your family’s lifestyle.
3. Flexible Usage: Unlike regular health insurance, the payout is not restricted to hospital bills. You can use it for any need, like home modification, recovery aids, or even travel for treatment.
4. Additional Coverage: It covers illnesses that often have high treatment costs that regular health insurance may not cover fully, especially if there are co-payments, sub-limits, or high deductibles.

Cons:

1. Limited Coverage: It only covers specified critical illnesses listed in the policy. If you’re diagnosed with a condition not on that list, you won’t receive a payout.
2. Waiting Periods and Survival Clauses: Many policies come with a waiting period (30 to 90 days), and you may need to survive for a certain period after diagnosis (usually 30 days) to claim the payout.
3. Premiums Increase with Age: Critical illness premiums can be higher as you age, so it’s usually more cost-effective if purchased early.
4. Can Overlap with Health Insurance: If your family floater policy has a large sum insured, it might cover most hospitalization costs even for serious illnesses, making a critical illness policy seem redundant in some cases.

Given that you have a young family and if your current health coverage isn’t very high, adding critical illness insurance could be a good idea. It’s worth discussing options with your insurer to tailor coverage to your family’s needs, ensuring a balance between adequate protection and affordability.