Do I need critical illness insurance

June 23, 2020 by Research Team

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Critical illness (CI) insurance is a long-term insurance policy to cover specific serious illnesses listed within a policy.

If diagnosed with a serious illness, the insurance company will provide single lump-sum payment.


The payment is made when you survive a certain period (typically a month) after confirmation of the diagnosis.

You can buy a CI cover either for yourself or jointly with your spouse.

What is covered?

The number of critical illnesses varies from insurer to insurer. Most insurance companies cover:

  • Cancer of specified severity
  • Angioplasty
  • Heart attack of specified severity
  • Open heart replacement or Heart valve surgery
  • Surgery to aorta
  • Cardiomyopathy
  • Primary Pulmonary hypertension
  • Open chest CABG
  • Blindness
  • Chronic Lung Disease
  • Chronic Liver Disease
  • Kidney failure
  • Major organ/ bone marrow transplant


  • Apallic Syndrome
  • Benign Brain Tumour
  • Brain Surgery
  • Coma of specified severity
  • Major Head Trauma
  • Permanent paralysis of limbs
  • Stroke resulting in permanent symptoms
  • Alzheimer’s Disease
  • Motor neurone disease with permanent symptoms
  • Multiple Sclerosis with persisting symptoms
  • Muscular Dystrophy
  • Parkinson’s Disease
  • Poliomyelitis
  • Deafness
  • Loss of Speech
  • Medullary Cystic Disease
  • Systematic lupus Eryth. w. Renal Involvement
  • Major Burns
  • Aplastic Anaemia


What is excluded?

  • Death within 30 days of diagnosis of CI or surgery.
  • CI diagnosed within first 90. days from the inception of policy.
  • HIV/AIDS infection
  • Illness due to smoking, tobacco, alcohol or drug intake.
  • Any dental care or cosmetic surgery


  • Illness occurring due to internal or external congenital disorder.
  • Critical conditions or consequences due to pregnancy or childbirth, including caesarean.
  • Infertility treatment
  • Hormone replacement treatment
  • Treatment done outside India
  • War, terrorism, civil war, navy or military operations


What are the benefits of CI plan?

CI benefit irrespective of hospitalization

Hospitalization is not required because diagnosis is enough to get CI benefits.


On submitting medical documents confirming diagnosis, you will receive a single  lump sum amount.

Financial support


You can spend the money to pay for cost of your treatment, recuperation expense, clear any debts, pay your rent or mortgage, pay for medical bills or to adapt your home to your particular needs.

Tax-free payout

The one time lump sum amount paid on diagnosis of a serious illness is tax-free.


Protection against untimely death

In case of an untimely death, your nominee will receive the lump sum payout. However, this amount is paid only when you survive the 30 day period after diagnosis of an illness.

What to consider before you buy a CI plan?

CI plan does not cover hospitalization costs. The lump sum paid is as per your policy amount.


So you will still require a health insurance plan to meet these expenses.

Also, the policy has well-defined terms and conditions for diagnosis of an illness.

For instance, you need to undergo specific tests, by specific physician to confirm diagnosis of the illness.


Payout is made only for the specific illness (as per the severity mentioned in the policy). There are many illnesses which are excluded.

Do consult your financial advisor to help you understand the policy details before buying a critical illness plan.