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Critical Illness Insurance Cover for the Self Employed

Team AckoMay 23, 2024

It is crucial for individuals who work for themselves to obtain proper insurance, as they may suffer financial losses if they become seriously ill. Moreover, the situation can become even more dire if they are the main provider for their family. They could end up with significant debt while their family struggles to cover daily expenses.

This is why self-employed individuals should consider getting a basic health insurance plan with a critical illness rider or a separate critical illness insurance plan. With a critical illness insurance plan, the payout from the insurer is not tied to the actual expenses incurred. All the insured person has to do is provide proof of their critical illness, and they will receive the agreed amount.

For self-employed people, making efforts to buy a good health insurance policy is more important than someone who is covered under an Employer's Group Insurance. So, how does one select an insurance plan that not only covers medical costs but also protects against financial hardships resulting from illness for self-employed individuals?

Here are some important factors to consider when purchasing a critical illness health insurance plan. Take a look:

Critical

Contents

What is Critical Illness Cover for Self Employed?

Critical Illness Cover for self-employed, people are a health insurance policy that pays a specific amount of sum assured to the policyholder in case he/she gets diagnosed with one of the major illnesses listed under the policy. Such an illness can be expensive to treat considering the rising costs of medical treatment. This is where a Critical Illness Cover can help with the financial aspect of availing treatment for the disease. This type of health insurance is more flexible as compared to a normal health insurance policy. A pre-decided, lump sum amount of money is paid to the policyholder upon diagnosis.

For example:

Mr A bought a Critical Illness cover with a sum assured of Rs. 25 Lakh. Unfortunately, he was diagnosed with cancer. He received the claim amount of Rs. 25 lakh upon diagnosis under his insurance policy. He used the claim amount to avail quality treatment from a good healthcare facility and fought cancer. He did not have to use saved money for getting his illness treated.

Types of Critical Illness Plans:

Critical Illness is a type of health insurance plan that provides financial help if the policyholder is diagnosed with any of the listed diseases or suffers from a specific event like major burns, stroke, a disability, major head trauma, etc. A Critical Illness can be a life-altering illness that has a direct effect on the daily life of a person. Such a disease has a deep impact on daily activities, for example earning a livelihood.

Importance of Critical Illness Insurance for Self Employed:

A critical Illness can hamper one's life without a strong financial backup. Thus, it is of utmost importance that a person, especially if he/she is self-employed to select a good Critical Illness cover. Self-employed persons need to buy health insurance coverage for themselves. This means they have to take the effort of searching for a suitable policy, get familiar with the terms and conditions of the plan and pay for insurance. This is a bit more time-consuming as compared to being automatically covered with health insurance when working for a company. As health insurance is one of the upsides of being employed. Here is why it is important for a self-employed person to buy a Critical Illness insurance policy:

Instant claim settlement

A Critical Illness cover is not like any other health insurance policy. It provides a one-time solution for your financial needs if diagnosed by a major illness or an unfortunate event like a heart attack or accidents like major burns.

Freedom to use sum assured

A compared to a health insurance policy, the sum assured of the Critical Illness cover can be used for any types of treatment. There are no caps i.e. restrictions on using the claim amount.

Peace of mind

When you buy a Critical Illness cover you are sure to receive a financial backup if ever the unfortunate thing happens i.e. you get diagnosed with a Critical Illness. Buying a Critical Illness cover is just a proactive measure to secure your finances against a possible major illness.

Key Features and Benefits of Buying Critical Illness Cover for a Self-employed Person:

Critical illness insurance can be beneficial for someone who has a family history of illnesses like cancer or heart problems. This health plan can be bought online at a lower rate by comparing plans from different insurers. Here are the key features and benefits of a Critical Illness plan:

High Sum Assured: The sum assured of a Critical Illness cover starts from Rs. 1 lakh and can be as high as Rs. 1 Crore depending upon the plan you choose. This amount can act as income replacement if the illness is so severe that the policyholder cannot earn a livelihood.

Full payout: The sum assured of the policy is paid out in one go upon the diagnosis of a listed critical illness.

30+ medical conditions covered: A lot of Critical Illnesses are covered under this type of health insurance. A Critical Illness plan provides consolidated coverage against many medical conditions.

Coverage against disability or accidental death: A Critical Illness plan not only covers diseases but also disability or accidental death. This is similar to a term insurance plan but with extra benefits.

Survival period: Insurance companies usually have a survival period of 30 days. This is the time a person needs to survive after the diagnosis of Critical Illness to avail the benefit of the plan.

Pre-existing diseases: Critical illness cover usually does not offer coverage for pre-existing diseases.

Also, read: Employee Group Health Insurance

How to Choose the Right Critical Illness Health Insurance Plan?

A Critical Illness plan will probably be as one of the main financial backups in case you face the unfortunate situation and suffer from any of the listed ailments. Thus, it is imperative to choose a plan that will provide the best financial solution at the time of need. The following list of tips will help you choose the right Critical Illness plan:

Decide the amount of sum assured you need A Critical Illness health insurance plan can offer different amounts of sum assured based on your requirements. Thus, you need to know the approximate amount you will need in order to sustain if you suffer from a major illness.

Number of dependent family members A number of dependents will help you decide the sum assured for the plan. It is needless to say that more the dependents, higher should be the sum assured of your Critical Illness policy.

Your age The availability of a Critical Illness plan depends upon the age of the insured person. Some insurance companies do not offer this cover for people over the age of 60 years. While others offer life-long renewability. Remember to check the entry age before buying this insurance plan.

Financial Status There is a simple logic behind the cost of Critical Illness insurance plans. Higher the sum assured, higher will be the cost of the policy. You need to consider your financial status and the need for buying this type of insurance before making the payment.

Consider the terms and conditions of the plan: An insurance policy is a legal contract between you and the insurance company. You will be covered under certain terms and conditions of the insurance policy, and you need to have an idea of what these terms are. Don't hesitate to contact the insurer if certain things in the policy confuse you. The customer cares executive will explain the insurance policy in detail.

List of Diseases Covered Under Critical Illness Health insurance plans:

Here are the diseases usually covered under a Critical Illness health insurance plan:

Stroke	Aorta Graft Surgery	Primary Pulmonary Arterial Hypertension	Multiple Sclerosis	Permanent Paralysis Of Limbs
Coronary Artery Disease	Open Heart Replacement	Aplastic Anemia	End-Stage Lung Disease	End-Stage Of Renal Diseases
End-Stage Liver Disease	Coma	Major Burns	Motor Neuron Disease	Terminal Illness
Bacterial Meningitis	Parkinsons	Blindness	Speech Loss	Deafness
Muscular Dystrophy	Paraplegia	Hepatoma	Paralysis Multi trauma	Congenital Disability Benefit
Heart Valve Surgery	Benign brain tumour	Alzheimer's disease	Quadriplegia	Apallic syndrome
Brain surgery	Cardiomyopathy	Creutzfeldt Jakob disease	Goodpasture syndrome	Multiple system atrophy
Pneumonectomy	Progressive Scleroderma	Progressive Supranuclear Palsy	Pulmonary artery graft surgery	Systemic lupus erythematosus
Major head trauma	Ovarian Cancer	Vaginal Cancer	Breast Cancer	Cervical Cancer
Endometrial Cancer	Fallopian Tube Cancer	-	-	-

Inclusions:

Inclusions are things that are covered under an insurance policy. As far as a Critical Illness plan is concerned, all listed diseases are covered under the plan. If the policyholder is diagnosed with any of these diseases, then he/she can raise a claim and receive the sum assured.

Exclusions:

Exclusions are things that are not covered under the Critical Illness plan. Here is the list of such exclusions, please check with the insurance company once before buying Critical Illness insurance:

A listed critical illness that is diagnosed within the waiting period.

Any ailment that is not covered under the plan.

An illness contracted due to lifestyle choices, for example, excessive smoking, tobacco, alcohol, drugs, etc.

A critical condition related to pregnancy or childbirth is not covered.

Treatment-related to HIV/AIDS is not covered.

Difference Between a Critical Illness Coverage and a Regular Health Insurance Policy

Before you go ahead to purchase a critical illness plan, find out how it is different from a regular health insurance policy:

Type of Insurance

Health insurance acts as indemnity insurance, meaning you pay for actual expenses up to a specific limit. You can use the policy repeatedly as long as your annual coverage isn't used up.

On the other hand, critical illness insurance is a fixed benefit plan. When you file a claim, you receive the entire amount insured, regardless of actual expenses.

Coverage

A regular health insurance plan typically includes various benefits such as ambulance charges, reinstatement of the insured amount, home-based hospital care, and coverage for post-accident treatments. Once the waiting period is completed, a health insurance plan might also provide maternity benefits and begin covering specific pre-existing conditions as per the policy terms.

Critical illness insurance provides protection against a specific range of serious illnesses. The extent of coverage offered varies depending on the insurer. Some of the critical illnesses covered may include organ or bone marrow transplants, certain types of advanced cancers, heart diseases, and more.

Policy Duration

Regular health insurance plans, as well as critical illness policies, usually need to be renewed annually. If otherwise, the insurer will let you know during the purchase.

Waiting Period

A regular health insurance policy will come with a waiting period before it starts covering certain diseases. But you will be eligible for the sum assured from a critical illness policy right after your diagnosis is confirmed.

Claim Payment

Once you are diagnosed with a critical illness, the sum assured will be directly paid to you. Moreover, this type of insurance also pays for medical costs.

A regular health insurance policy will pay for your medical expenses if you seek treatment at a network hospital. You will get the cashless facility, which means the insurer will directly pay the bills with the hospital without you having to bear any expenses. If you pay out of your pocket, you will have to seek reimbursement later by submitting the relevant documents.

Cost of Premium

Traditional insurance includes coverage for a wide range of expenses, such as hospitalization, surgery, and diagnostic tests. So, the premiums are usually high for a comprehensive health insurance policy.

In contrast, critical illness policies provide a lump sum payment if you develop a specific severe illness covered by the policy. Critical illness policies offer lower premiums than traditional health insurance because they cover fewer medical services.

Conclusion

A self-employed person might have more financial responsibilities as compared to other types of employed people. Since a Critical Illness plan can be highly beneficial in terms of income replacement, it is a good move to include it in the health insurance portfolio to make it stronger.

Frequently Asked Questions:

1) Which types of health insurance plans should a self-employed person include in the portfolio?

A self-employed person should consider including Individual health insurance policy, a Family-floater plan to cover loved ones, Critical Illness plan, and a senior citizen health insurance policy (if applicable) in their portfolio.

2) Why is health insurance important?

Health insurance is important because it takes care of your financial liability when you face a medical emergency. You get insurance coverage for prolonged hospitalization, day-care procedures, ambulance charges, etc. Additionally, features like daily hospital cash enable you to avail cash benefits for daily use when hospitalized.

3) What happens to the sum assured if I cross the survival period?

The policyholder can make a claim for the sum assured if he/she crosses the survival period. The sum assured will be paid, and you can use it for treating the illness.

4) What is the process to make a claim under a critical illness health insurance policy?

To file a claim for a critical illness, you must provide proof of the disease within 30 days of the confirmed diagnosis. The insurance company will review the documents, verify the policy terms, and process the claim. However, there may be a waiting period of 90 days from the start of the policy where certain illnesses are not covered.

5) How many times can I make a claim under a critical illness insurance policy?

You are usually allowed to claim for each disease covered under the plan once during the policy period.

Also, read; One Crore Health Insurance

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet; and is subject to changes. Please go through the applicable policy wordings for updated ACKO-centric content and before making any insurance-related decisions.