Critical Illness Insurance

Critical illness Definition Critical illness is a serious health condition that has a debilitating effect on an individual’s lifestyle and requires a considerable amount of money towards treatment. It may also lead to loss of income due to inability to work. Critical illness Coverage Critical illness policies are a kind of health plan that provide benefits if you are diagnosed with certain ailments. These benefits are available irrespective of whether your condition needs hospitalization or not. Critical Illness Insurance – A Story Everyone Should Know Everyone in insurance industry knows stories like the widow who would have nothing without the life insurance proceeds of her late husband’s policy, the construction worker who would be destitute without his disability payments. These stories are important. They serve as reminders to us all that our jobs really do make a difference in the lives of others. Critical Illness insurance has stories, too – stories about how this product made a difference in the lives that it has touched. But it’s much more than that. The very genesis of Critical Illness insurance is “its own” story. It is a story about a man who saw that science and medicine were keeping people alive, only to have them become financially destitute as a result of surviving their illnesses. The story begins on the morning of December 2, 1967 as a small South African family leaves home to visit friends in Cape Town for Saturday afternoon tea.  Not wanting to arrive empty-handed, they stop along the way at a road-side bakery. A few minutes later, as 25-year-old Denise Darvall and her mother exit the bakery and cross the street, they are struck by a passing motorist. Denise’s mother is killed instantly, but Denise is rushed to a nearby hospital where, despite every effort, she is declared brain dead later that day. One can only imagine the pain felt by her father, who had witnessed the tragedy and was suddenly faced with the loss of both his wife and daughter. He was approached by a young Dr. Christiaan Barnard, who reportedly said, “We’ve done our best, and there is nothing more that can be done to help your daughter. There is no hope for her.” This led to Barnard making a bold proposal that Mr. Darvall could do to his team and humanity a great favor if he would let them transplant his daughter’s heart. Darvall simply responded, “If there’s no hope for her, then try to save a man’s life.” The following day, a team of 30 physicians operated for nine hours on Louis Washkansky. Louis had once been healthy. He had served in the military, and had led an active life of swimming, playing soccer, and weightlifting prior to the decline in his health. By 1967 he had been diagnosed as diabetic and had suffered three heart attacks that led to congestive heart failure. His doctors gave him only a few months to live and had talked with him about the concept of a heart transplant. This was more of a theoretical discussion since none had ever been done, and the odds of finding a suitable donor were slim. Young Denise Darvall was the perfect match – her unfortunate event provided the right donor, at the right time and the right place. The transplant worked! Denise’s heart was able to beat new life into Louis Washkansky. Unfortunately, complications set in, and Louis died of double pneumonia on December 21, 1967. He had lived for only 18 days, but that was long enough to convince the world that a fully successful heart transplant was possible. Over the next 15 years Dr. Christiaan Barnard and his brother Marius continued to perform transplants and treat countless other people with critical medical conditions. They understood that they must treat the whole person, and not just the disease. Marius, in particular, was able to see the destructive financial results of having a critical illness and empathized with his patients. He witnessed the adverse impact on health and recovery when a person needed to work full time while undergoing cancer treatments. He saw lives shattered that should have been celebrating. Most importantly, he understood that if advances in medical science were going to be meaningful, he would need to find a way to treat or cure the financial ailments that plagued his patients. Dr. Marius Barnard was now on a mission. Over the next decade, he searched for the right treatments for this problem. Eventually, he came to the conclusion that an insurance product was the only possible solution to this complex but important issue. He approached one insurer after another, tirelessly trying to convince them to develop a product. Success finally came when Crusader Life agreed to front this new product idea, provided they could get meaningful reinsurance support. The first critical illness insurance product was issued on August 6, 1983, and it covered heart attack, stroke, cancer and coronary artery surgery. Since then critical illness has migrated around the world and is now being sold in more than 50 countries. The product has grown, changed and matured since that first Crusader Life product was released, but it remains as important as ever. Despite these changes and improvements the product still holds a unique place in insurance. It was not created by an actuary from the “home office,” a chief marketing officer in the field or a “think tank” in a large insurance company. Critical illness insurance was created, by a physician who saw it as an essential component of treating the critically ill. Selling Critical Illness Insurance The Critical Illness sales process differs from that of many other personal insurance lines. Producers that market Critical Illness insurance see that it affords them an opportunity to provide true value to the consumer. Insurers and advisors distributors realize that the unique aspects and history of this product make it both simple and complex to market. Simple: Perhaps the most obvious aspect of this product is that it is relatively new in India and as such remains extremely underpenetrated. Given this situation, the conversation with the client is most successful when focused on building awareness of the need, rather than selling the price, “bells and whistles,” or dealing with the complexities of replacement. For the most part, clients are a blank slate when it comes to their knowledge of Critical Illness insurance and the risk associated with not being insured. This affords the insurance distributor an opportunity to provide real value to the client. Complex: Now the conundrum – the salesperson can focus on selling the need, but doing so can be complex. Demonstrating the value of Critical Illness insurance requires an educational process that is very different from other forms of insurance. It is so “new” that few consumers will understand the need for, or value of, the product on their own. Nor are they likely to know anyone who has purchased the product, much less someone who has benefited from the financial relief provided when experiencing a catastrophic medical situation. The educational process of helping the client’s understand the need for this form of protection and the potential consequences of not safeguarding against the high out-of-pocket cost so often associated with surviving cancer, heart attack, stroke, kidney failure or major organ transplant, can be viewed as a series of logical steps. Utilize the power of story: Like most insurance products, Critical Illness insurance is best sold through stories. Sharing stories about people who have suffered a critical illness and not had the resources available to ensure the best treatment options. A regular review of newspapers, magazines, and news media outlets will provide a plethora of stories. When possible, contrast this with a story or two about an insured whose Critical Illness policy made a difference in their treatment choices.Supplementing this with the rather unique story behind the development of the first Critical Illness insurance product by Dr. Marius Barnard further helps consumers understand the critical importance of this product. Share Statistics: Exercise caution when utilizing statistics throughout the sales process. Statistics rarely sell insurance, but may be used to emphasize the importance and provide scope in terms of the risk. Understanding that half of all males (a third of all females) will develop cancer but that most will survive, is an important statistic. Identify Gaps: Few clients fully understand the gaps and limitations inherent in their various other forms of coverage. Nor have they considered the huge financial strain that can arise from a critical illness, or the regret that may be experienced if they find their care options limited as a result of financial issues. Personalize the Issue: Few successful sales, however, are based upon the abstract implications for the population as a whole. Instead, they are driven by personalization. Help the prospect understand that cancer survival rates. Ask them what they would do if their spouse needed expensive out of network care and they couldn’t afford it. Lastly, stress that expending cash equals choice.All clients want choice when it comes to making important life and death decisions. Treating a critical illness can be expensive. It is often emotionally and physically draining but it doesn’t need to be financially exhausting as well. For most, even a small Critical Illness benefit can make all the difference in the world. The job of our industry is to help consumers understand that there is a tremendous cost associated with surviving a critical illness and that this products offer strong value and peace of mind. Critical Illness Insurance Comparison Most people think that additional critical illness cover is unnecessary if they already have health insurance in place. However, if one were to be diagnosed with a critical disease, requiring special treatment, there is a good chance that one’s health plan will not cover the entire expense. This means that one will either need to pay from one’s savings or rely on critical illness cover. Before one decide‘s to avail critical illness coverage, it is important to compare critical illness insurance and do adequate research into all the available options. Life and general insurance companies provide critical illness plans, the former as riders along with life insurance policies. There are several factors that must be considered when one does a critical illness insurance comparison. Below are a few considerations that can be used as a guide to conduct research.

• Entry Age Most individuals find it hard to accept and plan for the risk of critical ailments when they are young. However, such ailments can strike anyone at any age. Availing coverage at an early age is more prudent. This is because insurers provide a lower premium for individuals who are younger as they are in good health and there is less risk of pre-existing conditions. If one waits until h/she gets older, there is a higher risk of contracting lifestyle illnesses like hypertension or diabetes, which can increase the premium on critical illness insurance plan.
• Sum Insured The best way to decide the sum insured is to understand what the insurance company offers. Having a clear understanding of the benefits available under the policy will help one make a better decision on the amount of protection needed. This is why it is advisable to compare critical illness insurance plans offered by various insurers before making a decision.
• Critical Illnesses Covered Not every plan covers all kinds of critical illnesses. A few examples of such ailments include stroke, multiple sclerosis, heart attack, and certain types of cancers at different stages. A critical illness plan will only pay the benefits for conditions that are listed in the policy document. This is why it is important to read these terms before signing any contract. In addition to the illnesses that are covered, the terms and conditions will state the severity of the condition to be covered under the plan. Buyers must also understand the process of filing for claims if the need arises. Being aware of the documents that are needed and the various formalities that need compliance can save one’s time and effort, when the need arises. Individuals must also check the benefits that are available at the time of renewal, if one has not filed any claims during the year.
• Policy Term Most insurance companies have limitations on the entry age of a person, when they are buying such a policy the first time. In addition, there are limitations on the maximum duration in which one can renew the policy. When doing a critical illness insurance comparison, individuals should choose a plan that offers maximum renewability because this means one will be covered until an older age, which is when one is more likely to suffer from critical ailments that require coverage.

Why Should One Buy Critical Illness Plan? Well, because of the simple reason that it serves a unique purpose which is served neither by life insurance nor health insurance. Life insurance provides a lump sum in case of death of insured but not a penny if the insured survives a critical illness. Health insurance, more often than not, comes with clear exclusions on critical illnesses. Here’s a medical fact that further justifies the wisdom in getting a critical illness cover. 95% of the people suffering a heart attack survive but take a long time to recover financially and switch to their old lifestyle. The figures are strikingly parallel for stroke and cancer patients. Diagnosis of critical illness is in itself a life changing event that can shatter one’s dreams oozing out all the savings. In this age of inflation, where rising medical costs keep haunting the common man, getting critical illness cover is just the right thing to get financial assistance against unforeseen medical contingencies. What should one look Out for before buying this cover?

• Illnesses Covered– Critical illness policies differ widely in terms of the diseases being covered. Most of the insurers cover 8 critical illnesses, but some can cover up to 20 illnesses.
• Know the Deal– Make a note of the sum assured being offered under a plan along with additional benefits such as hospital cash benefit and surgical benefits. Other question to ask is how extensive is the insurer’s network of hospitals.
• Read the Fine Print Finely– When buying a critical illness cover, it is pivotal to know not just the inclusions but also the exclusions. One should also pay a note to the claim process and waiting period clauses.
• Insurer’s Credibility– Perhaps the most important factor to consider while buying a critical illness cover is to check out the claim settlement ratio of the insurer for the last few years.

Keep in Mind While applying for critical illness cover, one should specify whether or not one has a medical condition. At times, one medical condition might give rise to another medical condition, sometime later in life. Hence it is imperative on your to be honest with the insurer about personal medical history. Many insurers need the applicant’s to go through a medical test as a pre-requisite for getting the critical illness cover. Medical Insurance VS Critical Illness Cover Critical Illness Cover is quite different from a standard health insurance plan. Here are few points of difference between them.

Health Insurance Plans	Critical Insurance Cover’s
It works on the basis of recurrent benefits. So, if one was hospitalized multiple times in a year, he can get the medical benefits from his insurance policy multiple times, provided his claim is valid and he does not exceed the suminsured limit	It provides a one-time fixed benefit and is to be touched only when the treatment costs are very high. So, if one was diagnosed with a critical illness within the policy tenure, he gets the sum assured in full, at one go and then the benefit ceases
The pre-requisite for filing a claim is hospitalization for more than 24 hours.	The pre-requisite for filing a claim is getting diagnosed with a critical illness (irrespective of whether or not the insured was hospitalized)
It provides the expenses incurred on pre and post hospitalization.	It provides the expenses incurred not just on hospitalization or treatment but extends a bit further to make up for the overdue debts and   lost income due to illness.
Critical illnesses are treated as exclusions in a health plan.	Only critical illnesses as stated in the policy document are covered.

  How to File a Claim for Critical Illness policy? If there arises a need to file a claim, one needs to contact the insurance company and register the claim. Usually, following documents are required to file a claim:

• Duly filled claim form
• Photocopy of ID card
• Medical certificate obtained from a doctor which conforms the critical illness diagnose
• Detailed discharge summary

After receiving above documents, insurance company claims team would check them to ensure their authenticity. A written communication would be sent to the insured regarding approval/disapproval of a claim.Additional documents may be required depending upon the claim.   Checklist for Choosing the Best Critical Illness Plan While buying a critical illness cover, check for the below parameters.

Parameters	Excellent Scenario
Sum Insured	Coverage should be 4-5 times of the annual income.
Waiting Period	Low
Premium	Low
Number of Disease Covered	Extensive
Maximum Renewability Age	High

The need for a critical illness policy is now more than ever. The 21st century sedentary lifestyle is giving rise to all kinds of illnesses, most of which are critical in nature. All studies indicate a steady rise in the instances of people falling prey to critical illnesses. While the number of cases of critical illnesses is increasing, the age of people developing such illnesses is consistently decreasing. This only goes on to show that one is now more vulnerable than what the earlier generation was in their working years. Critical illness policy offers peace of mind to the insured and his family by providing financial assistance on the diagnosis of a critical illness. The lump sum amount in a critical illness insurance plan can be used for the treatment of the medical condition or even paying off a mortgage.

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Author

Girish Malik Director & Deputy Principal Officer Xperitus Insurance Brokers

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