July 18, 2024

Critical Illness Insurance or Health Insurance: Should I buy both?

The idea of being diagnosed with a serious illness is overwhelming. However, it is critical to plan for the financial costs associated with medical issues. Every year, countless people encounter serious health issues, with many experiencing the financial pressure that comes with such a diagnosis. While advances in medical technology have enabled the successful detection and treatment of a wide range of serious ailments, the costs of these treatments continue to climb. Medical bills continue to rise, making appropriate financial protection more crucial than ever.

Comprehensive health insurance coverage can cover a wide range of medical bills, but it may fall short when it comes to the costly expenses of treating critical illnesses like cancer, heart disease, or stroke. This is where critical sickness insurance comes into play. Critical illness insurance pays a lump sum upon diagnosis of a covered condition, providing a financial cushion to help manage the expensive expenses of treatment, recovery, and even daily living expenses during a difficult time.

In this article, we will discuss whether it makes sense to buy a standalone health insurance policy or whether we should add a critical illness rider. 

Is it better to get Critical Illness Coverage or Health Insurance?

Considering the medical bills rising every year and after the pandemic, health insurance has become an essential coverage.  It is not an either-or case, but critical illness insurance should be purchased as extra coverage with your basic health insurance policy. Your health insurance coverage covers all of your hospitalization and treatment expenses. However, critical illnesses can have serious long-term consequences. Critical illness benefits are significant because the insurer pays a lump sum when a life-threatening condition is diagnosed, as stated in your policy agreement. The payout can be used to cover lost income. Furthermore, the funds from a critical illness policy can be utilized any way you see fit, making it a great addition to your conventional health insurance policy.

If you are able to relate to the following scenarios, you should consider getting critical illness coverage along with a standard health insurance plan.

If You Are Over the Age of 40 Years: People over the age of 40 are more prone to life-threatening illnesses, thus it is prudent to protect yourself with a sufficient critical illness insurance policy. Instead of waiting until you’re 40, you may buy it in your thirties In reality, many young people are suffering from acute illnesses as a result of their sedentary lifestyle and inherited factors.

If you have a family history of critical illness: The majority of serious illnesses are caused by genetic factors. If you have a family history of heart problems, your chance of developing cardiovascular disease also increases. As a preventative measure, you must get a critical illness insurance policy to ensure a stable future and access the best available medical care. 

If you are the breadwinner of the family: Those who are the sole breadwinner in the family must protect the entire family with critical illness insurance coverage. It must be done if you do not want your loved ones to experience mental or financial distress.

If you work in a stressful environment: An adverse work environment is one of the leading causes of an increase in the number of life-threatening diseases. According to studies, individuals who work in high-pressure environments are more likely to succumb to such diseases at a young age. You can choose to balance your personal and professional lives or purchase a critical illness policy to avoid future financial restraints.

Get Tax Benefits and Medical Insurance: The Indian Income Tax Act of 1961 provides tax advantages to critical illness insurance policyholders. If the policyholder is under 60 years old, the maximum limit for which one can get tax exemption is INR 25,000 each fiscal year.

Section 80D caps the maximum at INR 30,000 for policyholders paying premiums for elderly parents over the age of 60. If the policyholder is under 60 years old and pays a premium for his elderly parents, s/he will be able to get tax benefits of Rs. 55,000.

Why Are Standalone Critical Illness Insurance Policies Better?

A separate or independent critical illness policy can be purchased for yourself or a family member. In this plan, the insurer pays you a lump sum if either you or your family members gets diagnosed with the listed critical illness. Some of the benefits of buying Standalone Critical Illness Insurance:

  1. Coverage for expensive treatments: Critical illnesses sometimes require expensive treatments, which may quickly exhaust a conventional health insurance plan. Standalone critical illness insurance pays a lump sum upon diagnosis, covering the costly expenses without affecting your savings.


  1. Can act as an Income Replacement: Critical illness insurance can limit your ability to work, resulting in a loss of income. The lump sum benefit from a critical illness policy can replace lost income, allowing you to manage home bills and other financial commitments while recovering.


  1. Covers non-medical expenses: Health insurance primarily covers hospitalization and medical expenditures, however, serious illnesses may require non-medical expenses such as home care, travel for treatment, and dietary supplements. Critical illness insurance covers these additional expenses.


So we are saying,

Critical illness insurance is one such product area that has grown in popularity in the insurance industry over time. You can purchase it as a rider to your current health insurance policy or as a separate product, depending on your needs. However, having both is essential to ensuring that you are ready for any unexpected medical emergency.

Purchasing critical illness insurance, even if you have an individual/group/family health plan, is essential since it serves as an additional safety net. If you rely on your group health insurance, it will come in handy if your employer’s policy changes or if you switch jobs that do not offer group medical coverage. Simply said, you should first purchase a standard health insurance policy that covers medical expenses, including serious conditions. Then supplement it with separate critical illness insurance rather than a critical illness rider.

Leave a Reply

Your email address will not be published. Required fields are marked *