Buy cancer care for comprehensive cover

Buy a critical illness plan first for coverage against several major ailments, then think of a cancer cover if you want comprehensive protection

Life Insurance Corporation of India (LIC) recently joined the ranks of life insurers such as HDFC Life, ICICI Prudential Life and Aegon Life by launching a cancer cover for policyholders. While financial planners are of the view that one is better off buying a critical illness cover, which covers several major ailments in one policy, industry insiders say that a disease-specific policy like cancer cover should be considered as it offers more comprehensive cover against this dreaded ailment at an affordable price.

“A policyholder can get multiple diseases and covering only for a specific illness like cancer can be limiting. There are many other illnesses like strokes, paralysis or heart attack which are also critical in nature, so buying a cancer cover would be only partially useful. Policyholders should look at a critical illness cover as it includes more diseases,” says Suresh Sadagopan, founder, Ladder7 Financial Advisors.     

Industry insiders say that while a critical illness plan is useful, such a product covers diseases only when they reach the major stage of illness. “Standalone cancer care plans offer cover at any stage of cancer, even if it is the starting or first stage,” says Santosh Agarwal, head of life insurance at Policybazaar.com. For instance, in LIC’s Cancer Cover the policyholder will get 25 per cent of the sum insured at the early stage of cancer and premiums will be waived off for the next three years. So, if the policyholder buys a cover for Rs 10 lakh, he gets Rs 2.5 lakh at the early stage. At the major stage of cancer, 100 per cent of the sum insured less the previously paid claim for early-stage cancer is payable. Even other insurance companies offer similar benefits, like waiving off future premiums and compensation at every stage of cancer. 

In a critical illness plan, the sum insured is paid only once. “When an illness like cancer strikes, the financial impact is not only in terms of the cost of treatment but also in terms of loss of income, in case the patient is an earning member. Therefore, it is important to get a product where the future premiums are waived off on diagnosis of cancer,” says Srinivasan Parthasarathy, senior executive vice president-chief actuary and appointed actuary, HDFC Life.  

If policyholders buys HDFC Life’s Cancer Care-Platinum plan, they have to pay an annual premium of Rs 2,710 (inclusive of taxes) for a 35-year old male living in Mumbai for a sum assured of Rs 10 lakh and for a policy term of 20 years. On the other hand, if the policyholder were to buy a standalone critical illness policy, such as Apollo Munich's Optima Vital Plan in which 37 critical illness are covered, his annual premium for a person with a similar profile and sum assured would come to around Rs 4,426 (inclusive of goods and services tax).

Insurance industry executives say that a cancer care plan is suitable for anyone who is a breadwinner or has dependent parents and spouse. “If the policyholder wants to buy a critical illness cover, that's fine, but he should also have a standalone cancer plan as premiums are lower and it covers cancer from the very first stage,” says Rajeev Chugh, chief financial officer at Aegon Life Insurance. He further adds that one needs to adopt a portfolio planning approach even in insurance, and a policyholder should focus on cancer as a specific category, given its high frequency and its impact on family finances.