How To Know How Much Critical Illness Insurance Coverage I Need?
Critical illness insurance pays the policyholder a lump sum if they are diagnosed with any of the dread diseases covered by the insurer. The payout received can be used by the policyholder for any purpose that they want to.
Having critical illness cover is a great way to supplement the protection you enjoy from your health insurance policy. While the latter helps you afford hospitalisation expenses (hospital room rent, day care procedures, etc.) the former takes care of any other expenses that you may incur during your illness. For example, you may use the payout to afford the co-pay portion of your health insurance and to pay for any expenses you incur (home rent, groceries, and so on).
What kind of critical illnesses get covered?
Some of the critical illnesses that get covered under critical illness insurance include cancer of a certain severity, kidney failure, heart attack, blindness, aplastic anaemia, major burns, and Parkinson’s Disease, among others.
How to determine the amount of critical illness insurance coverage you need?
As we can see, critical illness insurance is an extremely important form of coverage. Most of the diseases listed above can leave you unable to go to work, at least temporarily. You might need to take months or even years off from an active working life to receive treatment for health conditions such as a heart attack. During such time, your household expenses don’t stop – a critical illness insurance payout can help you keep food on the table and continue to afford your family’s upkeep.
Thus, it becomes important to choose the correct cover limit on your critical illness policy. At such a crucial time, you would not want to be underinsured. To help you out, we have listed some pointers that you need to keep in mind to arrive at the correct figure –
- Calculate your current household expenses
You need to know how much it takes to run your home each year. Calculate all your expenses, including your home rent or mortgage, groceries, and even the luxuries like eating out and shopping. No expense is too small to be considered.
- Know your present debt
Once you know your expenses, you need to add in your debt. Here is where you include your current loans and liabilities. Remember to consider everything – average monthly credit card bill, EMIs for contents of your home, car loan, personal loans, and so on. Also make a careful note of when each of these loans end.
- Think about future goals and milestones
Perhaps your child harbours dreams of studying in a college in the United States. A critical illness might cause you to stop working and put a stop in these plans. However, with enough of a payout, you could actually help your child afford to turn their dreams into a reality. Even if you have no specific future goals at the moment, a portion of your critical illness insurance payout can be saved up and put into your retirement funds in case you are unable to work anymore after falling ill. This way, you will be financially independent and never have to ask anyone for support.
Keeping these points in mind will help you understand how much of a payout you would need from your critical illness insurance. Remember that insurers offer payouts that go as high as Rs 50 lakhs or more. You can choose the amount that suits your unique needs; no two individuals have the same requirements.
We hope that this article will help you select the right sum insured on your critical illness policy. Good luck!