This article is the second of a series on financial advice for families who are dealing with cancer, written by our guest author and renowned financial planner, Lovaii Navlakhi. Cancer Awakens is very grateful to Lovaii for contributing so whole-heartedly to our site and to our readers. Over to Lovaii!
I met Ajay after a couple of years, at a dinner party. I knew him as a happy-go-lucky guy. But he looked solemn to me; upon enquiring, he said his uncle had passed away a few weeks ago, due to a galloping cancer.
That whole experience: diagnosis, surgery, treatments, hospitalisation, the trauma to the rest of the family, had really shaken him.
When he realized that I was a financial advisor, he took the opportunity to ask lots of good questions. Perhaps others will also benefit from eavesdropping on this conversation!
Ajay – I’m quite familiar with the need for life and medical insurance … can you tell me a bit more about the critical illness cover?
Lovaii: Critical illness rider can provide against all major illnesses like cancer, coronary artery bypass, heart attack, kidney failure, major organ transplants, stroke etc. But before taking any policy, do look at the diseases covered; some cover as few as 6 and others may cover as many as 20 diseases.
Ajay – Since there is a history of cancer in my family, will I be denied cover?
Lovaii: Cancer is only partly hereditary; mostly it is a lifestyle disease. So, even if you have history of cancer in the family, you are not likely to be denied insurance cover.
Ajay – Are there any specific limitations pertaining to cancer?
Lovaii: Firstly, a waiting period of 6 months is applicable for the critical illness rider. So if you are diagnosed with an illness within 6 months of taking the policy, the cover will not be applicable. So, the sooner you take this cover, the better.
Secondly, Cancer is described very precisely: “The malignant tumour characterized by the uncontrolled growth of malignant cells and the invasion of tissue. The diagnosis must be histologically confirmed”.
Thirdly, the term Cancer includes leukemia, lymphoma and sarcoma but the following are excluded.
- All tumours which are historically described as premalignant, non-invasive or carcinoma in situ
- All forms of lymphoma in the presence of HIV
- Kaposi’s Sarcoma in the presence of HIV
- Any skin cancer other than invasive malignant melanoma
- Early prostate cancer which is historically described as T1 (including T1a and T1b) or another equivalent or lesser classification
Finally, you must remember that all treatments like chemotherapy, radiotherapy, etc. in hospitals are covered, however if you take these at home, they will not be covered for claiming medical insurance.
Ajay – Is this protection for me or for my family?
Lovaii: The rider protects you directly and your family indirectly. The Sum Assured compensates against lost income (when you are not earning). It can also be used for your medical expenses if you have inadequate medical insurance.
Ajay – Just how expensive are these plans?
Lovaii: It really depends upon your age when you take the plan. A Critical Illness cover of Rs. 20 Lakhs for 20 years will cost approximately:
For medical insurance, the approximate costs are below:
|Rs. 5.00 lakhs Plan||Rs. 5.00 lakhs Plan|
Ajay – If I take the Critical Illness cover early, will I pay a lot more over the years?
Lovaii: Actually, it is the opposite! The earlier you take the cover, the lower is your premium. What we’re seeing these days is that our modern, stressful lifestyle makes us prone to diseases earlier, that is another reason to go for it early. Moreover, you really need the cover when you are earning, so taking a cover at the age of 45 for 20 years may not make sense if you plan to retire at 60.
Ajay – How can I be sure that the claims will be paid?
Lovaii: Normally, there is no issue if all the criteria are met. For example:
- The policy should be in effect for a certain period (3 – 6 months) before the illness is diagnosed
- You must be first diagnosed as suffering from the Critical Illness during the policy period and you must have survived for at least 30 days following such a diagnosis
- You cannot claim the Critical Illness amount for the same illness twice
Ajay – Can I take medical insurance and Critical illness rider after I have had cancer and have been cured?
Lovaii: If you have already had cancer, it will be called a pre-existing condition
- In medical insurance, pre-existing conditions will not be included until 36 months of continuous coverage
- You may not get Critical Illness cover at all. Some companies may offer it to you, with cancer completely excluded
Ajay – What if I don’t get any illnesses, do I get any money back?
Lovaii: No, these are pure protection plans; you don’t get any money back if you don’t contract the illness. However, in medical insurance, for every claim-free year, you get a bonus of about 5% on the cover, which can go as high as 50% of the basic sum assured.
Ajay – How will my financial advisor help me in this?
Lovaii: Your advisor will help you to review all your options choose the most appropriate plans for you. He (or she) will also help you with all the paperwork, including during claim settlement, if and when the need arises.
Ajay – So what you’re saying is that I’d be well advised to relook at my insurance portfolio and add the Critical Ilness rider as quickly as possible? So even if something does happen to me; my family will be secure and my son can still go to Harvard?
Lovaii: Yes, exactly!
Ajay was smiling as though a load had been shifted off his shoulders.
- Events like illness or death are difficult to deal with, no wonder most people are ill-prepared for it. What steps can you take to be financially prepared for such situations?
- If you don’t already have a medical insurance with critical illness cover, what can you do to research the different policies and zeroing down on one? Have you considered consulting a financial advisor?
- If you already have a policy, what steps can you take to review and update your policies every 2 years?
Lovaii is a Certified Financial Planner and Managing Director of International Money Matters Pvt Ltd. He features regularly on NDTV’s “30 Minutes to Wealth”, CNBC Awaaz and UTV Bloomberg. He is a panelist on various websites like moneycontrol.com, myiris.com, investmentyogi.com, etc. He also writes regularly for Outlook Money and Economic Times. He is the author of “A Guide to Retirement Planning” published for Outlook Money in 2007. He can be contacted on firstname.lastname@example.org. For more details, visit: www.immpl.com.
More from this series
|Title||About the article|
|Part 1: Are You Prepared?||When I ask myself “How many of those 250 million Indians (who will get cancer) are prepared for it?”, I already know the answer: very few. Then there is the ‘cost’ aspect to consider, which most people are even less prepared for.|
|Part 2: Critical Illness Cover||I met Ajay after a couple of years, at a dinner party. I knew him as a happy-go-lucky guy. But he looked solemn to me; upon enquiring, he said his uncle had passed away a few weeks ago, due to a galloping cancer.|
|Part 3: An Unexpected Visitor||What happens when “C” arrives at your door unannounced and you have no medical insurance or critical illness cover? What can you do then?|
|Part 4: How To Make Your Claim||Even if you are among the few who have planned for contingencies, when cancer strikes, it can still be scary and leave you confused and vulnerable. Let’s say that you have medical insurance along with critical illness cover. How do you go about claiming your expenses and redeeming your policy?|
|Part 5: Time To Reclaim Your Life||It has been a very difficult time for you and your family. You’ve dealt with all the turbulence, your treatment is over (at least for now) and it is now time to cope with life again. You have decisions to make, be it changes in work, life-style or managing your money.|