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Critical Illness Insurance Tax Benefits Need To Know Future

cancer insurance policy

Date: 23 Nov, 2022

Author: ssrajdeep

Critical illness insurance provides coverage for life-threatening diseases such as Stroke, Cancer, Kidney failure, etc., that are expensive to treat. Most critical illness insurance plans cover 36 critical illnesses, while there are plans that cover up to 64 critical conditions. A few ailments that come under critical illness are:

How Does a Critical Illness Insurance Plan Work?

A critical illness cover pays you the entire sum insured if you diagnose with any of the critical illnesses mentioned in the policy document. You can use this amount to treat the ailment in India/abroad or keep it for later use. Your insurer will never ask you how you’ve spent it. The policy will cease after the payment of this lump sum amount. 

How is a critical illness insurance plan different from a cancer insurance policy?

Coverage:

A cancer insurance plan covers a wide range of cancer. On the other hand, a critical illness insurance plan covers only certain types of cancers that are at the terminal stage.

Premium:

The premium of a cancer insurance policy is lower than that of a critical illness cover.

Payout Policy:

A critical illness cover will pay you only for advanced-stage cancer treatment. In contrast, a cancer insurance policy pays you a percentage of the sum insured if you are diagnosed with early-stage cancer. And will pay you the remaining sum insured if you’ve been diagnosed with advanced-stage cancer. Suppose you purchased a cancer cover of Rs.10 lakh at the age of 35. Unfortunately, at 45, you’re diagnosed with early-stage of cancer.

As per the terms of the plan, you’re entitled to get 25% of the sum insured, i.e., Rs.2.5 lakh. After getting this amount, your policy will continue for the rest of the plan period, but your sum insured will be Rs.7.5 lakh, which you’ll receive if you get diagnosed with advanced-stage cancer during the plan period of the cover. Further, several insurers will give you a waiver in premiums after you diagnose with early-stage cancer.

Pre-existing Conditions:

Getting benefits of a critical illness cover will be challenging if you’ve any pre-existing conditions. While you can buy a cancer insurance policy even if you’ve any pre-existing condition other than cancer.

Benefits of Critical Illness Insurance:

Read Also: Importance of Insurance During the Rent a Car

Tax Deduction Under Section 80D:

If you’re under 60 years, then as per Section 80D of the IT Act, you’re entitled to get a tax deduction of up to Rs.25,000 in a financial year. For senior citizens, the upper cap of this benefit is Rs.50,000 in a financial year. 

You can claim the deduction under Section 80D for the following payments:

At last, here are a few essential points you should know about tax deductions under Section 80D.

Bajaj Finserv Critical Illness Insurance Policy covers 50 major ailments and provides high coverage of Rs.50 lakh and above. It has a waiting period of 30 days and offers lifetime renewability.

By ssrajdeep

Rajdeep is a well-known financial advisor with the ability to keep track and predict market trends with the utmost accuracy. He has been managing portfolios for over 10 years now, helping his clients achieve their dreams of security, financial freedom and total peace of mind.

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