Young, Restless, And Uninsured: Why Younger Generation Needs Critical Illness Cover
Insurance is not as expensive as you might think. Policybazaar's Amit Chhabra breaks it down.
Most millennials, often labelled as carefree risk-takers, are surprisingly underprepared for life’s bigger risks—like critical illnesses. Armed with an 'it won't happen to me' mindset, many young Indians overlook the necessity for a critical illness cover. But the harsh reality is that lifestyle diseases like heart problems, cancer, and respiratory issues are no longer waiting for middle age to strike.
Amit Chhabra, chief business officer of general insurance at Policybazaar.com, says, "Chances of a critical illness or infectious disease striking have gone up significantly. We see a lot of young people having heart problems, cancer, respiratory problems."
What Is Critical Illness Insurance?
Critical illness insurance provides a lump sum payout upon diagnosis of specific illnesses like cancer, heart attack, or kidney failure. This money can be used for treatment, recuperation, or even to compensate for income loss. Unlike standard health insurance, which only reimburses hospital bills, this policy offers financial flexibility.
The rise of lifestyle diseases among India’s youth is well-documented. According to the Indian Heart Association (2024), 50% of all heart attacks in India occur in people under the age of 50 years, with 25% happening in those under 40 years. A 2023 Lancet report also found that cancers, particularly breast and colorectal, are rising among individuals aged 20-39 years.
The Cost Of Ignorance
Medical emergencies are expensive, especially when they involve critical illnesses. In India, treating cancer can cost anywhere from Rs 10-25 lakh, while a heart bypass surgery can set you back by Rs 3-5 lakh. Without a financial safety net, these costs can derail life plans, force families into debt, or eat into life savings.
Insurance is not as expensive as you might think. Chhabra broke it down with an anecdote. "I am 37 years old, and my health insurance policy of Rs 10 lakh costs me Rs 25,000 annually. But I also have a super top-up plan that takes my coverage to Rs 1 crore for just Rs 1,300 more. That additional Rs 90 lakh costs me less than a fancy dinner for two!"
Top-Ups Vs Super Top-Ups
Top-up plans come with a deductible that applies to every claim. For instance, if one has a top-up with a Rs 1 lakh deductible and faces two medical emergencies in the same year, one will need to pay Rs 1 lakh out of their pocket for each claim.
Super top-up plans are far more practical as the deductible applies only once during the policy year. "Let’s say you have two accidents in the same year," explains Chhabra. "With a super top-up, the entire claim amount beyond the deductible would be covered, regardless of the number of incidents."
How Much Coverage Do You Really Need?
A 2023 study by Niti Aayog suggests that for urban millennials, a critical illness policy with coverage between Rs 25 lakh and Rs 1 crore is essential, given the high costs of advanced treatments in metro cities.
Selecting the right critical illness policy requires understanding your personal and financial needs. According to Chhabra, the coverage amount is critical, "Maximise your coverage. For me, Rs 1 crore is the answer because it’s too cheap not to do it."
He advises combining base policies with super top-ups to expand coverage in an affordable manner. Policies should cover a wide range of illnesses, including those that are common due to lifestyle changes, and buyers should pay attention to the waiting period, typically 90 days. Evaluating premium affordability early in life can also lead to significant savings over time.
Disclosing Pre-Existing Conditions: Key To Hassle-Free Claims
Pre-existing medical conditions are a significant factor in health insurance claims, often leading to denials when not disclosed. Chhabra stressed the importance of complete transparency. "You must very carefully declare any health condition that you've ever had. Be it something that happened 10 years back, 20 years back, or even a minor hospitalisation."
He elaborates that non-disclosure not only voids the policy, but also results in financial loss. "Claims will get denied if there is a non-disclosure, which essentially means that you lied. Not only is your claim denied, but you even lose all the premium that you had paid," warns Chhabra. This underscores the importance of declaring even seemingly minor conditions like past dengue treatment or brief hospitalisations.
IRDAI’s Five-Year Moratorium: A Safety Net
To address disputes over claim denials, the Insurance Regulatory and Development Authority of India introduced a five-year moratorium, providing a safeguard to policyholders. Under this provision, claims cannot be denied for non-disclosure after five years of continuous coverage.
Chhabra acknowledged the importance of this move, but cautioned against using it as an excuse to avoid honest declarations. "The IRDAI’s five-year moratorium is great, but I would still urge every consumer to declare a pre-existing condition," he emphasised, adding that honesty not only fosters trust, but also ensures the legal validity of your contract.
Millennials are all about redefining priorities, from pursuing passion projects to prioritising mental health. However, rising health risks cannot be ignored. As they say, insurance isn’t about expecting the worst, but being prepared for it.
