Did you know that your term insurance plans can bring you additional tax deductions for health insurance? It sounds pretty confusing, right? You already know what term insurance is, i.e. a traditional and pure form of life coverage in exchange for a premium, where the insurer pays the sum assured to your nominee in case of your sudden demise within the policy period. Term insurance premiums are also eligible for tax deductions under Section 80C from your gross income, up to Rs. 1,50,000. But that is not the only deduction that you can expect from your term insurance policy.
Adding a critical illness rider or any other health-related rider to your term insurance plan can help you maximize your tax deductions from the policy. You can pay the applicable premium for the rider and get deductions under Section 80D up to Rs. 25,000 (non-senior citizens) or Rs. 50,000 (senior citizens). This is how you can create the right combination of life and health coverage, with attractive tax benefits in turn. This rider is also available with traditional health insurance policies. Coming to critical illness insurance, what about those with pre-existing ailments? Are they eligible for this coverage? Let us find out in this article.
Critical Illness Coverage- What It Entails
Critical illness coverage ensures financial support for the policyholder in case they are diagnosed with any listed critical illness, as per the policy’s terms and conditions. This helps the policyholder receive quality healthcare treatment while enabling the family to replace lost income for a specific duration alongside. The huge costs of treating critical illnesses may otherwise deplete savings and ruin families financially. This is where critical illness insurance/riders come in as a saviour.
The critical illness coverage amount thus ensures the following:
- An amount that covers the treatment and care costs
- Payments for recuperation expenses
- Funding lifestyle changes
- Replacing lost income
The insurance company takes the risk of insuring the policyholder with risks of them suffering from a critical illness in the future. Hence, the eligibility and coverage price depends on factors such as age, the nature of your job, lifestyle habits, healthcare history, etc. You should note the inclusions and exclusions with regard to critical illnesses in the policy. Most policies or riders pay the entire sum upfront upon the diagnosis of the illness, and the policyholder and their family can use the same in any manner they see fit. But is critical illness insurance possible with any pre-existing health condition?
Buying Critical Illness Coverage with Pre-Existing Medical Conditions
There are no definite regulations regarding buying critical illness insurance with any pre-existing ailment. Eligibility for purchasing the same will depend on the following:
- Earlier medical diagnosis and reports
- The pre-existing health condition in question
- The severity level of the condition
The insurance company may classify you as a high-risk customer once you reveal your pre-existing ailment or any other diagnosis. This may lead to higher premiums for your preferred coverage. Otherwise, the insurance company may not include your pre-existing ailment in the list of critical illnesses covered in the policy/rider. In addition, if your earlier diagnosis was made in recent times, then your application may not obtain approval.
You should remember that disclosing your pre-existing ailment is crucial for avoiding problems in the future. The insurance company may not just reject claims if you are found out, but it may also terminate the policy anytime upon learning that you concealed such information. Here are some other points that you should note:
- Pre-existing conditions are usually classified as those diagnosed by physicians within a period of 48 months prior to the policy being issued by the insurance company
- You will get your policy or rider without any additional costs only if your health conditions are absolutely fine at present and if the diagnosis took place long back and was milder
- You will have to pay higher premiums for critical illness coverage if the medical condition has a severe nature. Still, you have been given a positive certificate by your medical practitioner.
- The status of your earlier diagnosis and present health condition may lead to the insurance company excluding your disease from the list of illnesses covered in the policy
- If the insurance company feels that your health history is associated with sizeable risks, they may come down after some time. It may postpone the application for later.
- Your application may be rejected if the insurance company opines that your present health conditions and earlier diagnosis are of a severe nature and you are an excessively high-risk proposition for the insurer
These are the crucial factors that you should keep in mind while applying for critical illness coverage with your insurance plan. In addition, remember that transparency is non-negotiable while informing the insurance company about your health condition and history.