Mumbai: The reality of today’s fast-paced world is that critical illnesses like lung diseases, cancer, and chronic health ailments, among others, are on the rise. Hence, it has become increasingly important to understand the meaning of having a term insurance policy that also looks after your medical expenses with the added benefits of a critical illness cover.

While a critical illness policy offers cover against critical illnesses, you can also save more tax by adding this cover to your term insurance. Not only will you have a strong insurance back-up, but you can also rest assured about your long-term financial planning with the tax benefits under this cover.

What Is A Critical Illness Insurance Policy?

Unlike paying you mere hospital expenses as in regular health insurance, term plans with critical illness cover can do much more for you. You will receive a fixed amount under such a critical illness policy if you are diagnosed with any critical ailment covered under it.

The benefit of critical illness policy is that the sum assured kicks in as soon as the policyholder gets diagnosed. Such policies are very helpful as the lump sum can be used to make payment for the diagnostic test and treatment and meet various other household expenses. Moreover, once the payment has been made, the policy lapses.

Buying a critical illness policy is crucial in these uncertain times.Hence, it will be in your best interest to select the term insurance policy that is most suitable for you. You can choose to buy term insurance and strengthen your cover by adding a critical illness policy rider as a second layer of protection.

Which Critical Illnesses Are Covered Under Critical Illness Policy?

A critical illness policy covers illnesses, the list of which might vary from insurer to insurer. Check out some of these common ailments that are covered in such policies –

• Stroke
• Cancer
• Heart attack (Myocardial infarction)
• Major organ transplantation
• Benign brain tumour
• Paralysis
• Alzheimer’s disease
• Liver disease (end-stage)
• Aorta graft surgery

Your critical illness policywill only cover critical illnesses like the ones mentioned above, along with the benefit of life cover. Another benefit of having a critical illness policy is that you get paid a lump sum benefit when you are diagnosed, and that is irrespective of what medical expenses occurred. Unlike regular individual health insurance, this policy will pay you lump sum regardless of where your treatment or surgery is conducted, i.e., in your country or outside.

How To Save Tax With Your Critical Illness Insurance?

Tax saving investments act as a part of your broader investment portfolio, and term insurance plans with critical illness cover offer solutions not only for your financial planning but also double up as perfect tax-saving instruments. An ideal way of saving tax while looking out for your long-term financial goals is by opting for such a  critical illness policy.

Section 80C & Section 80(D):As per the Income Tax Act of 1961, you can claim deductions up to Rs. 1,50,000 under Section 80C for the premiums you pay towards your policy. You can also claim of deduction of Rs. 25,000 in a year for the premiums you pay under Section 80(D), and the limit is extended up to Rs. 50,000 in the case of senior citizen policyholders.

Section 10(10D): On the other hand,Section 10(10D) of the Income Tax Act also offers tax benefits to the life insured. The maturity benefit and death benefit provided in a term insurance policy are tax-free. As long as your annual premium is less than or equal to 10% of the sum assured for the policy, you will have no problems saving tax under this section.

You should ensure that all your premiums for your critical illness policy are not cash payments. In order to avail tax deductions, the premiums should be paid via netbanking, credit or debit card, or by cheque.

Why Choosing a Renowned Insurer Is Essential For You?

No matter what policy you buy and how much coverage you have, choosing the right insurance partners is equally pertinent. Before you decide which insurance company you want to buy a critical illness cover from, ensure that you have done thorough research. You can search online for the top insurers in your country who offer an insurance policy that fits just right in your budget.

Once you have found the top names, it is always best to compare the prices, additional charges, and most of all, their reputation. It is vital to know everything from their claim settlement ratio to their insurer ratings, quality of services and their reputation.

It is crucial to have the right insurer and an ideal cover like term insurance backed up with a critical illness cover, which can offer you maximum protection with partners you trust.