Mr. Iyer is spending sleepless nights – not only because he has been detected with cancer, but because his medical insurance provider has informed him that his medical insurance will only cover the hospitalization expenses. It will not cover the rest of the treatment cost. Coupled with this, due to his ill health he is unable to run his business successfully which is affecting the family income as well. While his family is running from door to door, arranging for money, he secretly wishes that he had purchased a critical illness policy that would have not only covered the treatment cost, it would have also taken care of the financial loss due to illness. We will know about different “Insurance cover”.
Sounds familiar? We all know someone or the other who have been gone through this situation and we all know that we might be in this situation as well tomorrow. Isn’t it better to act now than be sorry later?
We know that most people don’t understand the difference between the two and why both health insurance and critical insurance cover are required in someone’s life. In this article, we will clear the confusion and explain both in a simpler way.
- Health Insurance
- Critical Illness Policy
- The nature of insurance:
- Waiting Period:
- Difference between Health Insurance vs Critical Insurance Cover
- Related posts:
Health insurance is basically an all-inclusive plan which covers hospitalization expenses. Some health insurance policies provide additional features like maternity benefits, OPD cover, etc.
Health insurance is basically for individual and family floater basis plan; an individual can turn into a family floater as insurer person married. Health insurance is just for your protecting your health and health insurance works on an indemnity basis, and it means it’ll only pay you after your hospitalization.
But the coverage of a health insurance plan as a family is quite commendable and also it helps you financially too. As young as you will buy a health insurance policy it’ll much beneficial for you and it will be cheaper for you. Talking about the benefits of health insurance then it has some of those benefits that help you to save your money directly.
You can customize your health insurance as per your need, if you want, you can add any rider or critical illness coverage with your health plan. In general, health insurance policies in India offer the following benefits:
- In-patient hospitalization expenses
- Pre & Post hospitalization
- Daycare treatment
- Domiciliary hospitalization
- Organ donor expenses
However, a point to remember is that the benefits may vary from one insurance provider to another.
Critical Illness Policy
A critical illness policy is an insurance policy that covers only life-threatening diseases which are listed by the insurance provider. Life-threatening diseases usually include diseases like cancer, kidney failure, multiple sclerosis, heart diseases, etc.
In a comparison of health insurance, critical illness policy has its own way of function and it works in a specific field of medical service. Critical illness policy protects you from a specific disease, and it only covers the expenses related to that disease. Critical illness policy covers any disease at any time but Health policy covers pre-existing disease after a waiting period.
Let see, so what are the points of a basic difference between the two?
The nature of insurance:
Health insurance typically is available for 1, 2, or 3 years and has to be renewed on completion of the policy tenure by paying a premium. Critical illness, on the other hand, is a policy that is taken for a long period, usually 1 to 20 years.
In the case of a health insurance plan, the insured is reimbursed for the expenses incurred due to hospitalization. This can be done in two ways. If the insurance provider has a tie-up with the hospital, the cashless hospitalization can be availed by the insured. If the insurance provider does not have a tie-up with the hospital, the insurance provider reimburses the policyholder upon submission of the hospital bills. Critical insurance policy, on the other hand, pays out a lump sum amount to the insured person upon diagnosis of the disease. The only condition is the disease has to be pre-specified in the list of critical illnesses covered.
In the case of critical illness policy, neither the hospitalization nor the submission of original bills is necessary. The best thing about a critical illness policy is that the insured individual receives the payment at once and can spend the amount the way he likes. It is not essential to spend the money on treatment only.
In terms of coverage, a critical illness policy has a lesser scope than health insurance. A critical illness policy covers only the specified critical illnesses while a health insurance policy covers a wide range of diseases. Usually, the number of diseases ranges from 6 to 20 diseases that may differ depending on the insurer or the policy chosen. Critical illness policies also cover instances not covered under health insurance like a temporary loss of pay, travel, boarding, post-operative care, etc.
In a health insurance policy, hospitalization due to any cause is covered. Hence, if someone is injured in an accident, the health insurance policy comes in handy.
Both types of policies have waiting periods. In the case of health insurance, the waiting period is usually 30 days from policy inception. Only hospitalization due to accidents is covered during this period. Pre-existing diseases are usually covered after 1 to 4 years of continuous coverage.
Critical insurance policies usually have a waiting period of 3 months. If the critical illness is diagnosed during this period, the same is not covered under the plan. Moreover, there is a survival period waiting clause where if the insured person expires within the specified survival period waiting for a limit which ranges from 28 to 30 days of diagnosis of the critical illness, the coverage amount is not provided. There are some critical illness insurance plans which offer zero-day survival waiting periods.
So, now let us come to the main point. Which is better for you – health insurance or critical illness insurance?
Difference between Health Insurance vs Critical Insurance Cover
|Features||Health Policy||Critical Illness Policy|
|Sum Insured||Can range of 5 Lakh to 10 Lakh||Can range of 5 Lakh to 50 Lakh|
|Premium||Premium depends on your age and sum assured||More than in the comparison of “health Policy”|
|Benefits||Long-range of benefits||Only cover specific disease|
|Coverage||Long-range of coverage.||Cover Limited number of serious disease|
|Waiting Period||For pre-existing diseases or maternity benefits can range from 1 to 4 years from the start date.||The waiting period for a critical illness policy is usually 90 days from the start date of the policy.|
Both the policies are different in nature and hence the one cannot replace the other. Ideally, you should have the right mix of both. While health insurance will take care of the hospital and medical bills, a critical illness policy will cover the financial expenses that may be incurred. Hence, having the right mix of both is essential to sailing through difficult times of life.
It is advisable to buy both plans at the earliest age as the premium amount is also lower if bought at an early age. However, if you have already crossed the age of 30 – 35, we strongly recommend you to buy a critical illness and health insurance cover for yourself, if not yet bought. It will come in really handy during unforeseen circumstances.
Health and critical illness policies have their importance as per need, but we can’t say that everyone should buy both policies because both policies have a way to function and have a different way to serve people.