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With lifestyle disorders on the rise, young pros would do well to review their health insurance needs and consider buying cover for major illnesses
Most individuals, especially the upwardly mobile young executives, know the importance of a health insurance. However, even they tend to overlook the importance of a critical illness cover. The younger ones often reason that they have enough time to buy one. However, they should reconsider their decision. According to a recent study conducted by private non-life insurer ICICI Lombard, the maximum increment in critical illness incidence rates was experienced in the age bracket of 26-35 years.
Our study has found that the vulnerability to illnesses such as cancer among the younger age group is increasing. In this age group, the incidence rate has doubled in the last three years. The study also noted that spike in critical illness incidence rates was more significant in IT and manufacturing sectors. Other insurers also have a similar story to tell. Not only are lifestyle disorders becoming more rampant, but they are also affecting younger population. While claims for lifestyle diseases like cancer, heart attack and diabetes from people below 40 years of age stood at 23% in 2011-12, it has shot up to 38% in FY2012-13.
And, lifestyle issues seem to be the main culprit. Due to a spurt in lifestyle diseases where people are exposed to various risk factors like diabetes, hypertension and cholesterol disorders, we have noticed an increase in the number of claims for cardiac diseases and cancer, which are covered under major critical illnesses. No, the numbers are nothing alarming. It just point towards a growing trend. Compared to, say, ten years ago, the incidence of critical illnesses among the younger age group has certainly gone up. However, while the percentage of younger people who are now afflicted by critical illnesses has grown significantly, the absolute numbers remain quite low. A smart money manager won't take refuge in percentage figures, but try to act so that s/he has a plan to meet any contingency. That means relying solely on your employer's group policy is not an option anymore, especially as the average cover they offer is between . 2 lakh and . 3 lakh.
An independent health policy of a similar amount, too, may not be adequate to cover treatment costs running into lakhs. That means you have two options: buy a critical illness plan or enhance your existing health cover.
Critical illness policies offer a fixed sum once the illness is diagnosed. They can be bought as riders along with your life insurance cover or as a standalone cover. They can be a valuable addition to your basic health cover if you contract any serious illness. Your health cover will take care of hospital bills, and pay-outs from critical illness cover can be used to fund your travel, food and post-treatment recuperation expenses.
The health cover for hospitalisation and surgical expenses may not be sufficient to meet the high expenses of a critical illness. A bypass surgery or the several chemotherapy sessions can be very costly. It's not just the hospitalisation bills, income for the family is impacted even if the primary wage earner has to take a break from work to recuperate for a couple of weeks or a month. Investing in health insurance can prove extremely useful in case of hospitalisation linked to surgery, as all the hospital expenses including tests are taken care of by the insurer. However, they become futile in case the insured contracts a critical illness such as cancer which demands much larger expenses over long term. It could also come to your aid should you have to travel abroad for treatment.
A critical illness policy is a benefit policy where the sum insured is paid once any of the illnesses is diagnosed irrespective of where the treatment is taken, at home or abroad. In contrast, a regular indemnity-based health plan only pays for hospitalisation expenses incurred within the country. However, many experts don't think critical illness cover is a must. Instead of buying a critical illness policy, a better option would be to enhance the sum insured of your existing health insurance policy. If you have a cover of . 4 lakh - . 5 lakh, you should consider increasing it to . 10 lakh. Ordinarily, a family floater cover of . 10 lakh should be adequate for a family of six – a couple, their two children and parents. However, if you are convinced that a critical illness policy will fortify your protection, you need to evaluate several factors before buying one. For one, you have to make a choice between buying critical illness riders sold as add-ons with most term policies and standalone critical illness covers offered by life as well as non-life insurers. Standalone covers are better than riders, as they are more comprehensive. At present, rider benefit covers on offer are standardised, covering 8-10 illnesses at best. Scope of coverage is much wider in case of independent policies, covering up to 20 illnesses, depending on the insurer. Also, rider benefits are more expensive, as they are packaged as an add-on
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