Many millennials, often perceived as carefree and adventurous, may not fully consider the long-term risks associated with health. A common belief of “it won’t happen” often leads to the neglect of essential precautions, such as critical illness insurance.

However, the reality is that lifestyle-related illnesses—such as heart conditions, cancer, and respiratory disorders—are increasingly affecting younger individuals. These conditions no longer wait for middle age, highlighting the importance of proactive health and financial planning.

Dear Lykkers, Amit Chhabra, Chief Business Officer of General Insurance at Policybazaar.com, highlights this growing concern: "Chances of a critical illness or infectious disease striking have gone up significantly. An increasing number of younger individuals are experiencing health challenges such as heart conditions, cancer, and respiratory issues.”

What Is Critical Illness Insurance?

Critical illness insurance offers a one-time lump sum payment upon the diagnosis of certain major illnesses, such as cancer, heart attack, or kidney failure. The payout can be used for various purposes, including covering treatment expenses, recovery costs, or replacing lost income. Unlike traditional health insurance, which typically reimburses hospital expenses, critical illness policies provide more financial freedom to manage the challenges of a serious health condition. The prevalence of lifestyle-related diseases among young individuals in India has been steadily increasing. Recent reports highlight that a significant percentage of heart attacks occur in individuals under the age of 50, with a notable portion affecting those younger than 40.

The Cost of Ignorance

Medical Emergencies Are Expensive: Treating critical illnesses in India can be financially crippling. Cancer treatments can cost Rs 10-25 lakh, while heart bypass surgeries may range from Rs 3-5 lakh. Without a financial safety net, these costs can derail life plans, push families into debt, or deplete life savings.

Affordable Insurance Options: Insurance isn’t as expensive as people assume. Chhabra explains that for a 37-year-old individual, a health insurance policy offering coverage of ₹10 lakh typically comes with an annual premium of around ₹25,000. But he also have a super top-up plan that takes his coverage to Rs 1 crore for just Rs 1,300 more. That additional Rs 90 lakh costs less than a fancy dinner for two!"

Top-Ups vs. Super Top-Ups

Top-Up Plans: These come with a deductible that applies to every claim. For instance, if your top-up plan has a Rs 1 lakh deductible and you face two medical emergencies in the same year, you’ll need to pay Rs 1 lakh for each claim.

Super Top-Up Plans: These are more practical, as the deductible applies only once during the policy year. Chhabra explains, "If you have two accidents in the same year, a super top-up will cover the entire claim amount beyond the deductible, regardless of the number of incidents."

How Much Coverage Do You Really Need?

A 2023 study by Niti Aayog recommends that urban millennials consider critical illness policies with coverage between Rs 25 lakh and Rs 1 crore, given the high cost of treatments in metro cities.

Maximise Your Coverage: Chhabra advises, "Rs 1 crore is the answer because it’s too cheap not to do it." Combining base policies with super top-ups is a cost-effective way to expand coverage. Policies should also cover a wide range of illnesses associated with lifestyle changes.

Understand Waiting Periods: Typically, critical illness policies have a 90-day waiting period. Evaluating premium affordability early in life can lead to significant savings over time.

Transparency Is Key

Declare Pre-Existing Conditions: Non-disclosure of medical history can void your policy and result in denied claims. Chhabra emphasizes the importance of full transparency when purchasing insurance, cautioning that claims may be rejected in cases of non-disclosure, which is viewed as providing false or incomplete information. IRDAI’s Five-Year Moratorium: This provision ensures claims cannot be denied for non-disclosure after five years of continuous coverage. However, Chhabra urges honesty: "The IRDAI’s five-year moratorium is great, but we would still urge every consumer to declare a pre-existing condition."

The Takeaway for Millennials

Millennials are shifting their focus toward personal growth, including passion projects and mental well-being. Yet, the growing prevalence of health risks highlights the importance of preparedness. Investing in critical illness insurance is no longer just an option; it’s a practical step to safeguard against life’s uncertainties and protect financial stability.