Why you should buy a critical illness cover at an early stage

Let's tell you the stories of two different people. We'll call them Amit and Arjun. They are both in their 60s now, and they appear to be quite healthy. But unexpectedly, one evening, Amit falls ill and is diagnosed with renal failure. Upon being rushed to the hospital, his family finds that Amit needs to undergo dialysis and requires a kidney transplant. They have not planned for this kind of an emergency, and they have no insurance in place. So, they are forced to pay for these costs from Amit's retirement fund.

Hearing the news of his friend's sudden illness, Arjun is deeply stressed out. The following day, he suffers from a heart attack. His doctor informs him that he needs to be admitted for an emergency surgery. Arjun isn't very worried about the financial consequences of the same, because he has a health insurance plan in place. But he later finds out that his insurance plan does not cover critical illnesses like heart disease.

Amit and Arjun's stories are not new or unique. They are the stories of many Indians, who are either uninsured, or not adequately insured in case of a critical illness diagnosis.

A critical illness is any life-threatening condition that requires medical and/or mechanical support to keep the body's vital organs functioning. Without these forms of support, the critical illness could lead to the patient's death. Some common kinds of critical illness include:

• Cancer
• Kidney failure
• Heart attack
• Heart valve surgery
• Major organ transplants
• Multiple Sclerosis
• Aorta graft surgery
• Paralysis
• Coma
• Total blindness
• Stroke

These illnesses can be managed or treated by modern medicine. However, the costs of the treatments can be quite high. So, unless you are prepared for these expenses financially, they may drain your savings or investments when you least expect them to.

If you want to secure your future financially and ensure that the cost of any critical illness treatment later in life does not affect your savings, critical illness insurance is what you're looking for. As its name indicates, a critical illness cover offers insurance coverage in case of a critical illness diagnosis.

When the policyholder is diagnosed with any of the critical illnesses covered by the plan, the insurance provider pays out the financial benefits as per the terms and conditions of the plan. The payout can be a lump sum amount, periodic benefits, or a combination of the two. For instance, the ABSLI CritiShield Plan is a critical illness insurance plan that covers heart and kidney disease. The payouts are as follows –

• 30% of the sum assured in case of any early stage conditions
• 100% of the sum assured in case of any major stage conditions

There are also insurance plans that cover specific critical illnesses. For instance , a cancer insurance plan covers different types of cancers of specified stages. The ABSLI Cancer Shield Plan is one such cancer plan that covers both early and major stages of many cancers.

The right time to buy a critical illness cover is when you are still young and healthy. Although it seems like the possibility of developing a critical health condition is almost nil when you are in good health, it is essential to plan in advance and secure your future as early as possible.

Here are the top reasons to buy critical illness cover at an early stage in life.

• Affordable premiums
  The premiums for an insurance policy are decided on the basis of many factors. One of the key deciding factors in the case of a critical illness cover is the age of the applicant. The younger you are, the more affordable the premiums will be. So, when you buy your critical illness cover in your 20s, it will cost you far less than what you may have to pay for the same cover in your 30s.
  
  This is because your risk of developing a critical illness is less when you are younger. So, insurance providers tend to charge premiums for younger policyholders accordingly. This is one of the key advantages of buying critical illness insurance early.


• You can focus on investing for other major life goals
  If you do not have any critical illness insurance cover, you will first have to build up an emergency fund to take care of such a scenario. However, if you buy a critical illness insurance plan when you are in your 20s, you can then focus on planning for your life goals like buying a house, saving up for your children's education, and building a retirement fund.
  
  On the other hand, if you put off getting a critical illness cover, you may have to delay saving up or investing for other life goals. This could set you back by a few years.


• You can maximise your tax benefits²
  Critical illness insurance also offers you tax benefits² under section 80D of the Income Tax Act, 1961. The premiums you pay for your insurance plan can be claimed as a deduction from your gross total income. This brings down your overall taxable income. You can claim deductions up to Rs. 25,000 if you are below 60 years of age. Senior citizens can claim tax benefits1 up to Rs. 50,000.
  
  So, for instance, if you are not a senior citizen and the annual premium for your critical illness cover is Rs. 20,000, you can claim the entire amount as a deduction. On the other hand, if you pay a yearly premium of Rs. 30,000, you can claim a deduction of Rs. 25,000.


• It helps you be prepared for emergencies
  Although many critical illnesses only occur in people who may be in their 50s or above, young people may also suffer from sudden cardiac issues or acute renal failure. So, by buying a critical illness cover early in life, you will be better prepared for these emergencies financially. If you put off buying this kind of a cover, and if you are diagnosed with a critical illness, you will have to pay for the treatment costs out of pocket.

For these reasons, it is essential to buy a critical illness cover at an early age itself. You can now compare and choose the right critical illness cover for your needs online itself. This saves you a lot of trouble and makes it possible to protect your future from the comfort of your home itself. So, ensure that you get a critical illness cover at the earliest. Even if you are past your 20s, it is better to protect yourself now rather than delay it.