What is Critical Illness Insurance: Critical Illness Benefits & Who Needs It

Critical Illness Insurance

What is a critical insurance policy?

Bangladesh experienced 18.74% death by stroke and 1.51% death by kidney failure in 2020.  Moreover, there are around 1.5 million cancer patients in Bangladesh. The treatment costs of these critical illnesses in Bangladesh are very high. For example, treatment of a single cancer patient needs approximately BDT 639,000 annually. Critical illness insurance protects you in the event of a future major illness.

The critical insurance policy covers the insured against life-threatening critical diseases like kidney failure, end stage liver failure, stroke, cancer (excluding skin cancer), benign brain tumor etc. Depending on the premium payment and type of coverage, a critical insurance policy covers the extravagant expenses for treating critical medical illnesses including ambulance costs, hospitalization costs, doctor appointment costs, test/diagnosis, surgery costs etc.

This plan can help you manage your finances against critical illness treatment. The coverage limit may vary but this will keep you afloat in a dire situation.

How does critical illness insurance work?

In simple words, critical illness insurance pays a lump sum amount to cover various costs (hospitalization, tests, doctor visit, medication etc.) for the treatment of life-threatening diseases.  

However, there is more to it. Let’s assume some scenarios to better understand how it works.

Mr. Ahmed, aged 40, buys a Critical Illness Insurance Protection Plan (CIIPP) with a face value of BDT 1 million. The following could be some probable outcomes.

Scenario 1: Survives till 80 years without any claim. In this case, he would receive BDT 1 million as Maturity Benefit.

Scenario 2: Survives till 80 years and had a minor Critical Illness claim of BDT 250,000. In this case, he would receive 750,000 as Maturity Benefit.

Why do I need critical illness insurance?

The lifestyle of the 21^st century is making people vulnerable to all kinds of illnesses, many of which are critical in nature. On one side, the number of people getting affected by a life-threatening illness is increasing while on the other side, people get affected by such illnesses in the early stages of their lives. With these insurance benefits, you can meet the cost of medicine, doctor consultation fees, and hospitalization expenses.

Hence, you need to plan and ensure your financial solvency while looking for yourself at the same time. A critical illness policy can not only save your hard-earned money but also support you during and after being diagnosed of any unexpected life-threatening disease.

Features of Critical Illness Insurance Plan

Critical illness insurance benefits

There are several benefits of this insurance as follows

Lump sum payment options

On the diagnosis of a critical illness, the insurer pays a lump sum for the treatment of the covered illness.

100% Premium back options

In the happy likelihood of the insured remaining healthy and does not have to use the protection element until end of the coverage period, he/she is entitled to 100% payback of the total premiums paid throughout the term of the policy.

Critical insurance benefit coverage

As the life expectancy in Bangladesh is increasing, life insurance for critical illness provides coverage until the policyholder’s age is 80 years. Moreover, several minor and major critical illnesses are covered under the plan.

Advantages of critical illness insurance

Tax advantage/cash benefit

As per the Income-tax Ordinance Act 1984, an insured person will receive up to 15% income tax rebate with insurance benefits (it is treated as an investment). It is always advisable to consult with a professional income tax practitioner to know the exact rebate amount you may avail with your existing insurance plan.

Flexibility to allocate money as needed

A policyholder gets lump sum money from the insurance provider to cover the medical cost of critical illness. If needed policyholder can use this money for other necessities along with medical needs.

Simple application of questions with yes or no answers

The application process for a new policyholder is very simple with just a few ‘yes’ or ‘no’ answers. This ensures a hassle-free experience for the applicant.

Various maximum lifetime benefit amount

This includes diagnosis benefits, surgery benefits, , return of premium etc. The amount may vary from BDT 200,000 to 20,00,000.

What Does Critical Insurance Cover?

*The list is not exhaustive

How to Select an Ideal Critical Illness Insurance Plan

While picking up the ideal critical insurance provider, pay attention to the following.

Sum insured: A lump sum amount equal to sum insured

Higher sum assured provides you a greater safety net for tough times. So, always pick the provider that offers a high sum assured amount.

Waiting period: Shorter is better

The waiting period to get the coverage should not exceed the first 180 days from the day of policy enrollment.

Survival period: 30-90 days

Select a provider that offers a survival period of 01 to 03 months.

Number of diseases covered: 52 illnesses, depending on the provider

Coverage for more illnesses means the insurance plan is wider. Usually, insurance providers offer coverage up to 52 diseases (including minor & major diseases).  

Renewability age: Either maximum age or lifelong renewability

Choose an insurance provider’s plan that comes with a high age limit of renewal or lifelong renewability to maximize the benefits.

What are the main differences between Critical Illness Insurance Plan and Health Insurance Plan?

Many people do not know or understand that there are a few major differences between CI Insurance and Health Insurance. Both life and critical illness cover the costs of medical treatment as per the state of the policyholder.

However, CI Insurance provides more extensive support while Health Insurance offers only basic coverage.

Meaning

Critical illness covers life-threatening diseases like cancer, kidney failure, benign brain tumor etc., and pays you a round sum to combat the hardship. On the flip side, regular health insurance reimburses your basic medical expenses including hospitalization costs.

Benefits

Regardless of the need for hospitalization, the policyholder gets a lump sum payment if he/she is diagnosed with a covered illness. The claim amount can be used at the discretion of the policyholder.

For health insurance, the insured must submit the bill of hospitalization or other related medical expenses. Upon verification of the bills, the insurance company reimburses the policyholder. Sometimes, cashless facilities are available at network hospitals.

Coverage

Critical Insurance offers comprehensive coverage for what is considered a critical illness. The number of diseases covered may vary from provider to provider. Nonetheless, up to 52 life-threatening diseases are a good standard.

Health insurance provides coverage for a variety of situations like accidents, pre-existing diseases. Some even cover maternity-related costs.              

Waiting period

Critical illness plans have a defined waiting period. It may differ slightly from one provider to another provider but usually doesn’t go beyond 30-180 days from the start date of the policy.

There is no defined waiting period for a health insurance plan. It depends on the severity of the illness. For instance, pre-existing diseases or maternity benefits can range from 1 to 2 years from the start date.

FAQs - Critical Illness Insurance Policy

How Do I Buy Critical Illness Insurance?

If you want to buy a Critical Illness Insurance Protection Plan (CIIPP), you may visit the nearest MetLife Agency or Customer Touch Point or Sales Office to discuss with a Financial Associate. Alternatively, you can visit www.metlife.com.bd/find-agent.

What Does Critical Illness Insurance Provide for Assistance?

Recovering from your financial loss for medical treatment may not be easy. If any critical illness strikes at an older age or during retirement when income stops, the situation can be even worse. The insurance provides a lump sum amount to the policyholder for assistance.

Which Critical Illnesses Qualify for this Insurance?

There are many illnesses that are covered under this insurance i.e., stroke, cancer, benign brain tumor, kidney failure, first heart attack, major burn etc.

What Are The Pros Of Critical Illness Insurance?

ü  It pays out if you are diagnosed with a critical illness

ü  The lump sum payment is tax-free

ü  It can be combined with life insurance

ü  It can help cover your rent, debts, monthly salary and other expenses

ü  Policyholders have the flexibility to choose the level of coverage

What Are The Cons Of Critical Illness Insurance?

ü  Age restrictions

ü  Premiums can be high

Importance of Critical Insurance

The cost of major illness treatment is very high which can burn out your savings. Critical illness benefits can cover all medical expenses and other costs. So, yes, it is worth buying it.

Is there any medical test required before purchasing a critical illness rider?

Yes, it is needed to undergo medical tests before purchasing a rider.

 [A1]