Factor in EMIs & treatment costs while deciding your critical illness coverage
A critical illness policy must cover your hospitalization costs.
EMIs and lifestyle expenses, as your income may stop for a few years.
The number of people being infect with critical illnesses has increase manifold in the last decade.
With the most prominent reasons being pollution, stress, unhealthy food and sedentary lifestyle.
While it is pivotal to take all precautionary measures – exercising regularly.
Eating healthy food – to prevent such diseases.
It is equally important to stay financially protect in case you fall prey to any serious illness.
Rising cost of treatment
Getting the numbers right
In order to evaluate how much coverage you need.
The foremost thing you need to do is calculate the present incomes and expenses of your family.
Atul Rathi, a resident of Delhi, is planning to buy a critical illness cover.
He lives in his recently bought house with his homemaker wife and two kids.
The monthly household expenses of Atul and his family are Rs 30,000.
Apart from a home loan EMI of Rs 25,000.
Now, Atul will evaluate the total expenses his family would incur in the next three years as 2-3 years is the minimum time period that one takes to fully recover from a critical illness.
The total expenses of his family are Rs 55,000 per month.
Which for three years will amount to approximately Rs 20 lakh.
Atul further needs to add the cost of treatment for the critical illness.
Which will be Rs 20 lakh on average.
The total expenses now amount to Rs 40 lakh.
One important factor that Atul needs to keep in mind while calculating the approximate coverage needed is inflation.
While this Rs 40 Lakh amount may seem enough today.
The same amount not be sufficient in the next 5-7 years, considering the high inflation rate.
To beat inflation, the total expenses need to be multiplied by 1.5 – the minimum rate of inflation we expect in the coming years.
In Atul’s case, by implementing the inflation formula, the total expenses would be Rs 60 Lakh.
So now, when looking for a critical illness cover.
Atul must buy a plan with at least Rs 60 Lakh sum assured to smoothly take care of the inured expenses.
Which include treatment cost, paying daily house-hold expenses and monthly EMI.
Choose the right combination
You can choose to buy a critical illness cover as an add-on with your health insurance policy.
Term insurance plan as all these three work in a different manner.
Address different purposes.
Your health insurance plan only pays you for the hospitalization expenses –pre.
Post-hospitalization – up to the sum insured.
A health insurance plan with Rs 10 lakh sum insured.
Upon hospitalization you get a bill for Rs 2.5 lakh.
Now, your insurer will only pay the hospitalization charges.
Rs 2.5 Lakh out of the total sum insured of Rs 10 Lakh.
A term plan pays the dependents the entire sum assured only on the death of the policyholder.
If the life insured survives the policy term, there is no maturity benefit.
Considering the distinguished benefits of health insurance, critical illness.
Term insurance plan, it is always advisable to have a combination of all these three plans.