POSTED BY November 22, 2013 11:25 pm COMMENTS (8)

ONHello Experts,

Please review my inference below and correct me wherever i might have gone wrong factually.

**How it is not worth to take any CI (Critical Illness policy) from any company ?**

*Answer : I was advised by my own conscience after reading so many articles here and other websites that one must need to go for Critical Insurance for a decent sum insured so that as soon as the critical illness is diagnosed by the doctor, certain sum would be handed over which would be helpful in times of need.*

*Companies suggested were Bharti Axa & Max Bupa*

*After Calculating the premium for self aged 31 years till the time i attain 65 years, this is what i found.*

*Sum Total of all premiums paid till 65 years of age (Bharti Axa) for Sum Insured of 5 lakhs = Rs. 362095 *

*Sum Total of all premiums paid till 65 years of age (Max Bupa) for Sum Insured of 10 lakhs = Rs. 618461 *

% of premium paid vs Sum Insured (Bharti Axa) = 72 %

% of premium paid vs Sum Insured (Max Bupa) = 62 %

Plus Bharti allows the sum insured to be reinstated after a claim whereas Max Bupa does not.

**Hence there is no point in paying 62 & 72 % of premiums for next 34 years which could be better invested in a financial product which can provide immediate liquidity along with returns at least matching the inflation.**

Any insurance is taken against a risk that is unforeseen. It is not an investment but protection against risk. The blind optimist in us feels that we would not get cancer next year. The pragmatist in us ought to take over at this point and plan for any eventuality (CI) by insuring ourselves paying a fraction of the cost. If we have the capacity to set aside the sum assured in a short period of time then that would be great. For others, a critical insurance plan is best. Spending 5 min having a conversation with people who have been left high and dry because of CI would convince us beyond doubt.

Thanks for sharing that Midhun Manmadhan

Oh, ok… got it… Thank you Vinay and Ashal….

@Vinay: very timely post 🙂 … i was thinking to buy 1 in coming weeks…. Now, i will have to do more research and then decide …….. Thank you.

Dear Viren, CI policies are very complex product and there are very strict T&C under which a CI ‘ll pay the sum assured. Most of the time, these T&C can not be fulfilled. Like after you are diagnosed with a CI, you must live at least 1 month to claim Sum assured. then there are complex medical terminology which being a non medical person for me are not understandable. In few threads in other sites, it was discussed and interestingly even Doctors were saying that for the given T&c, it’s near impossible to get claim.

Now coming to dear Vinay’s original post, HE is assuming that till age 65 if nothing happens in terms of CI, a good chunk of money is already paid as %age of sum assured. so why one should not create his/her own CI emergency fund?

Hope I’m able to clarify it to you.

Thanks

Ashal

I did not get the points…..

My understanding from Vinay’s post is: we would be almost wasting money in CI because the SA that we get at 65th year is comparable with the premiums paid…… However, my understanding of CI was that it gives the SA as and when the person is diagnosed with some CI…. if this is true then, why the age factor? I mean why it is assumed that the person won’t get any CI till he reaches 65 years of age….?

Did I read the question incorrectly or I am not aware of CI?

Note: as of now, I do not have CI and I was thinking to buy one….

Mr Viren

There is no age factor i have mentioned.

What i meant is that if i have CI policy as indicated there is no point in paying the insurance company 62% or 72 % of sum insured till the end of your term (You have taken), instead one can invest in some instrument which is readily available and can grow more than the sum insured.

Mr Ashal would be able to explain more i guess as i am feeling short of words to convey the exact thing what i mean. I couldnt be more clear than my illustration. Suggest you to read it again please.

what if you get the CI next year ? Why not pay Rs. 10000 for 1 year rather than 10 lakhs ?

Dear Vinay, CI policies are a complex product which a normal person can not understand at all. So your basic thinking is right. It’s advisable to create one’s own Critical Illness buffer fund.

Thanks

Ashal