Buy minimum Rs 20 lakh indemnity cover for protection against cancer

Supplement this with a fixed-benefit plan to manage ancillary expenses

November 7 is National Cancer Awareness Day. An estimated 2.7 million people had cancer in 2020. About 1.39 million new patients are registered each year and 0.85 million succumb to it annually. One in nine Indians is at a risk of developing cancer by the age of 75 (data source: cancerindia.org.in). Given these stark statistics, it is important to buy adequate protection against this ailment.

Variety of covers

Several types of policies are available. One, there are fixed-benefit cancer plans. Says Peuli Das, chief insurance officer, Future Generali India Life Insurance Company, “This cover pays the policyholder a lump sum on the diagnosis of cancer of a specified severity.” The amount paid varies depending on the stage at which the disease is diagnosed.

Two, there are cancer policies tailor-made for people who do not have an indemnity cover and have already suffered from cancer. Says Siddharth Singhal, business head, health insurance, PolicyBazaar.com, “They will find it difficult to get a normal health insurance policy and can go for these specialised plans.”

Three, there are critical illness covers. These are fixed-benefit plans that make a lump-sum pay-out on the diagnosis of any one of the critical ailments they cover, including cancer.

Four, regular health insurance plans also cover cancer. Says Singhal, “If a person purchases a health insurance policy while he is healthy and is later diagnosed with cancer, his hospitalisation expenses will be covered.”

Cost-effective coverage

Fixed-benefit cancer plans are cost-effective. Says Das, “The premium rates are significantly lower than that of a regular health insurance plan and are also guaranteed for 5 or 10 years.”

They sometimes offer an income benefit. Says Das, “The insurer pays an additional amount equivalent to 2 per cent of the sum assured each month, for 60 months on the diagnosis of major-stage cancer.”     

These plans can act as effective income-replacement tools.

According to Nayan Ananda Goswami, co-founder and head of sales and service, Sana Insurance Brokers, “A number of ancillary costs arise -- such as attendant’s costs -- which will not be covered by an indemnity cover. A fixed-benefit plan can take care of them.” He adds that the pay-out from them could be used to pay for alternative medicine, which a normal hospitalisation cover may not cover, or cover only up to a limit.

With a cancer-specific indemnity cover, the buyer is comprehensively covered for this one disease. Says Apaar Kasliwal, executive director, PolicyBoss.com, “A regular health insurance cover may have limits on expenses incurred under certain specific procedures. A cancer-care plan covers all possible procedures of all stages, minor or major.”

Section 80D tax deduction is available on these plans.

Limited options

A person who has suffered from cancer and now wants an indemnity cover will have to choose from a limited number of cancer-specific indemnity plans. Says Singhal: “These plans may also have other limitations. The sum insured may not go beyond Rs 10-15 lakh. Unlimited ‘restore’ benefit, which can take care of repeated hospitalisations in a year, may not be available.”  

Buy indemnity cover first

First, make sure you are covered for hospitalisation expenses through an indemnity cover.

Next, cover yourself for ancillary costs through a fixed-benefit plan. If you buy a cancer cover, you may be able to purchase a higher sum insured. If you go for a critical illness plan, for the same premium you will get a lower sum insured (but coverage for a wider range of diseases).

Remember that a fixed-benefit plan cannot be a replacement for an indemnity plan. Says Goswami, “It is a fallback option for times when a big disease strikes and costs spike.”

Avoid going for a low sum insured, since cancer treatment typically costs a lot of money. In a fixed-benefit plan, choose the longest tenure you can afford. Finally, Das cautions about failing to make all relevant disclosures related to pre-existing diseases.