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: 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.

Ans: I truly appreciate your clarity. Let us assess it carefully.

Assessment of Your Current Coverage
You both have ECHS coverage. ECHS is a comprehensive scheme for ex-servicemen.

It covers major illnesses and many critical treatments at empanelled hospitals.

The facilities are usually cashless in these hospitals.

It is great that you have this cover. It reduces financial pressure for most treatments.

But it does not cover all possible scenarios fully.

Sometimes certain new therapies or expensive drugs are not covered.

Also, ECHS coverage may have some limits or long waiting periods for some treatments.

Some private hospitals may not be fully under the scheme.

Need for Additional Critical Illness Cover
At 57, critical illness insurance can be expensive.

You rightly said it seems unaffordable now.

Generally, premiums rise sharply with age.

A critical illness cover pays a lump sum if diagnosed with serious illness.

But given your age and high premiums, the cost-benefit is not favourable.

It is also often limited to a certain number of illnesses.

Since you have ECHS, you have a strong base cover for treatments.

This includes treatments for cancer, heart issues, etc.

So, ECHS takes care of most critical illnesses from a hospitalisation view.

Recommendations
Given your retirement and limited affordability, skip buying new critical illness cover.

It is better to strengthen your savings and keep a health emergency fund instead.

Set aside some money in safe options like liquid mutual funds or FD.

This can be used for non-hospital expenses if a critical illness occurs.

Expenses like home care, special diet, travel, and other non-medical costs can be met from this fund.

Review your ECHS benefits booklet in detail.

Check what illnesses and treatments are covered and where.

If needed, visit an ECHS polyclinic and clarify your doubts with them.

Also, maintain good health practices.

Eat a balanced diet, exercise moderately, and take regular check-ups.

Managing stress and staying active helps reduce health risks.

Exploring Alternatives to Critical Illness Insurance
Instead of insurance, focus on boosting your emergency health corpus.

Keep at least 6-12 months of expenses in an easily accessible account.

This should be separate from your usual savings.

Avoid putting large sums in long-term products now.

Keep funds accessible for any sudden need.

In case of any serious illness, your first line of defence is ECHS.

If there is any shortfall, your emergency corpus will help.

Additional Points for Financial Security
If you have any investments in mutual funds or stocks, review them carefully.

At this stage, avoid risky investments like small caps or thematic funds.

Shift more to conservative or balanced options.

Do not take loans or withdrawals from your retirement corpus.

Keep your expenses in check and avoid high-luxury spends now.

If your children are financially settled, avoid gifting large amounts.

Focus on your own and your wife’s comfort and security.

If you have any life insurance policies (LIC or others), review if premiums are needed.

Sometimes, old policies may no longer be useful if there is no financial dependent.

Also, check your will or estate planning documents.

Make sure they are up to date and your wife knows about them.

Benefits of Not Taking Critical Illness Cover Now
Premiums at your age are very high.

ECHS already covers hospital costs for most serious illnesses.

So, you save on insurance premium money.

You can use that money to build a medical emergency corpus.

No need to worry about claim denials for pre-existing conditions.

Less paperwork and no extra policy to manage.

You also avoid the disappointment of policies that do not pay for newer treatments.

Instead, you can use your emergency corpus flexibly.

Best Way Forward
Do not buy additional critical illness insurance.

Focus on building a liquid medical emergency corpus.

Use your ECHS as the primary cover.

Maintain good health and keep your expenses under control.

Review all existing investments and make them more secure.

Keep 1-2 family members informed about your ECHS and other investments.

This ensures no confusion in emergencies.

If you feel unsure, consult a Certified Financial Planner.

They will guide you in balancing investments, health costs, and retirement income.

Finally
ECHS gives you a strong base of health coverage.

At this stage, a critical illness policy is too costly and not needed.

Focus on an emergency corpus, healthy habits, and careful investing.

You have done well by thinking ahead.

With these steps, you can enjoy your retirement with confidence.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: It is upto the Insurance company to approve any rider or not because all proposals are subject to underwriting / evaluated by their underwriters. Premiums may differ (but not much) from one company to the other with whom you can check for this rider also or else you take this Term Insurance.