Knowledge Centre

Understand the Difference Between Critical Illness Insurance and Normal Health Insurance

The idea of having one health insurance plans to match all medical requirements may not be a great idea. Ideally, one must have a health insurance plan with cover for life threatening illnesses, because the usual health insurance plan does not cover you against major ailments. You might think that your normal health insurance policy will cover the treatment cost in case you are diagnosed with a critical illness, but this might not be the case in reality! Our usual health plans are usually indemnity based plans, which means you need to make claim for every hospitalization to get benefit. On the contrary, a health insurance plan for critical illness gives you lump sum benefit in one goes to ensure you make-up with all the expenses that you incur to deal with a life threatening ailments.

What’s the whole game about Benefit plan or critical illness insurance?

Regular health plans reimburse your medical expenses and cover hospitalization costs. On the other hand, critical illness insurance is a benefit plan that pays you a round sum if you are diagnosed with any of the critical illnesses that are covered.

Some of the Diseases (critical illness) covered are:

  • Paralysis

  • Heart attack

  • Coronary artery bypass surgery

  • Multiple sclerosis

  • Major organ transplant

  • Stroke

  • Cancer

The critical illness insurance plan will pay a lump sum if it is determined that you have any of the aforementioned conditions. You may use this money to repay debt, treatment expenses, replace lost income, or make lifestyle changes required for recovery.

Why do regular health insurance plans seem insufficient to tackle such critical ailments?

Regular health insurance plans aren’t that huge with sum insured and they function with indemnity basis, which means paying expenses only in case of hospitalization. Critical illnesses on the other hand need much higher sum insured, as we believe a single critical illness can easily bring life to standstill and it needs much higher pay outs to make life a little simpler from the financial angle. Hence, a usual health insurance plan may or may not cover critical illness that effectively as critical illness insurance may do in the longer run.

Premium amounts

The normal health insurance cost is higher because it covers a wider scope of possible events. Thus, the premium amount is also higher. On the other hand, the best medical insurance for critical illness covers only certain pre-determined medical conditions. If you are diagnosed with one of the covered illnesses, you receive the entire sum assured as a lump sum benefit. However, you are allowed to make only one claim during the policy duration. Therefore, you are able to avail of a higher coverage by paying a lower premium.

Insurance coverage

A regular health insurance usually includes hospitalization due to a medical condition or accident, pre and post hospitalization expenses, domiciliary treatment, and day care procedures amongst others.

Critical illness plans cover specified diseases, which differ from one insurer to another. This kind of insurance policy covers events that are outside the purview of regular health plans. These include travel, loss of income, boarding, and postoperative care. Funds are also available for costs incurred due to change in lifestyle after the diagnosis.

When you decide to buy critical illness insurance in India, you need to consider some factors

Waiting period

Most of the critical illness plans have a specified waiting period. Insurance companies like HDFC Ergo require you to wait for at least 90 days from the date of purchase before you may file a claim under the policy.

Sum insured

When choosing the sum assured, it is important to consider inflation in the future as treatment costs for critical illnesses are constantly rising.

Number of diseases covered

When you buy critical illness insurance online, you may receive a lower premium amount, making it a cost effective option. However, it is vital that you check the number of diseases covered under the plan.

What is the typical claim process for critical illness insurance?

Unlike indemnity based health plans or usual health insurance plans, critical illness insurance will not make multiple claim payments. Once you are diagnosed with any of the critical illnesses and your insurer approves your claim depending upon the coverage of the policy mentioned you get the entire sum insured in one go without submitting any bills to show the expenses made as per the sum insured. Your policy then gets closed and will not continue in most of the cases. You can use the sum insured payout for alternate income source, manage debts if any or pay for your medical bills.

Both health plans and critical illness policies are important. The benefits, inclusions, and exclusions under both these types of insurance plans are different. So it is advisable to avail of both options to avoid any financial distress in the future. 

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales

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