Health Insurance and Critical Illness Insurance - Why both necessary?

Following a healthy diet and maintaining an exercise regimen may help keep unwanted diseases at bay. But, sometimes due to hereditary reasons and increasing age, we are at the risk of developing life-threatening lifestyle diseases. The cost of treatment of such diseases may run into several lakhs. Unlike minor illnesses, it could be a financial drain on the family. Thus, if you already have health insurance, it’s time that you think of a second buffer to help you financially in such a difficult situation through buying a critical illness policy.

Let’s understand the difference between health insurance and critical illness insurance:

1. Essential feature: The health insurance policy covers medical and surgical expenses during hospitalisation. Critical illness insurance coverage is not impacted by the hospitalisation expenses. It pays for life-threatening and non-communicable diseases such as cancer, stroke, heart attack, etc.

2. Coverage amount: The health insurance policy will pay the treatment expenses spent during hospitalisation, subject to the conditions and restrictions mentioned in the policy wording. The critical illness pays the lump sum amount equal to your sum assured in case you are diagnosed with any serious ailment. The lump sum amount is paid irrespective of the medical cost.

3. Diseases covered: The health insurance policy covers a limited number of conditions. The critical illness policy covers around 8 to 20 diseases depending on the insurance provider. It is important that you read the policy wording carefully to be aware of the illnesses covered under your policy. Generally, critical ailments like cancer, stroke, heart attack, paralysis, kidney failure, bypass surgery, organ transplant, heart valve replacement, etc. are covered under critical illness policies.

4. Capping on the sum assured: In case of health insurance policy, the capping on the sum assured is defined as Rs. 5 Lakh to Rs. 10 Lakh. The critical illness provides coverage for ailments for which treatment is quite costly. Thus, the coverage for critical illness cover ranges from Rs. 5 Lakh to Rs. 50 Lakh depending on the insurer.

5. Coverage for miscellaneous expenses: Unlike health insurance, the critical illness covers sometimes provide coverage for postoperative care and also loss of pay. It also includes the cost of travelling for medical treatment. Thus, in case you need to go to another state for treatment, the out-of-pocket expense of travel is covered.

6. Usage of coverage amount: In a health insurance policy, the policyholder needs to inform the insurer about the usage of funds. He needs to mention whether the expense is for a check-up or hospitalisation, etc. Only then the claim is processed by the insurance company or the TPA. In critical illness cover, the company pays the lump sum amount to the insured. The insured can use the money in whatever way he feels like. It can be used to pay off the loans, meeting treatment expenses, etc.

7. Benefits: The health insurance policy reimburses the hospitalisation expenses. There is a benefit of availing cashless facility when treated at a network hospital. The insurer or the TPA directly pays the bills to the hospital. Under the critical illness plan, you receive a tax-free lump sum amount if diagnosed with a critical illness. The insured is not required to present original bills to the insurer and can forward the photocopies.

8. Renewal: The health insurance plan continues until the entire sum assured has exhausted and has to be renewed yearly. The critical illness cover expires as soon as the claim is made.

9. Waiting period: Both health insurance and critical illness policy follow the concept of the waiting period. Apart from accidental injury, the health insurance policies generally have a waiting period of the first 30 days. For pre-existing diseases, there is a waiting period of 1 to 4 years. In the case of critical illness cover, the general waiting period is about 3 months.

10. Customized policy for senior citizen: Various insurers offer a customized health insurance policy for senior citizens. Under such a health policy, particular critical illnesses are covered. For example, a separate policy can be bought for coverage of cardiovascular disease without any waiting period.

11. Availed as a rider: The critical illness cover can be bought as a standalone or as a rider as per the affordability. The critical illness rider is available at a much lower cost and offers most of the benefits of a standalone critical illness policy. Though, before buying, you need to be aware of the restrictions and flexibility that comes with a critical illness rider.

Also Read

Thinking of Getting Insured? Learn About Critical Illness Policy First​

Why Critical Illness Insurance is a Must?​

Conclusion

Critical illness can knock your door anytime, and you could end up losing your hard-earned money. Thus, when to buy a critical illness insurance? It is suggested that you buy the critical illness insurance at an early age to help keep the health risks at a minimum and also lessen the premium. Why critical ilness insurance is important? It is important to buy a critical illness plan, though it can never replace a comprehensive health insurance plan. An individual must purchase a health insurance policy for meeting hospitalisation expenses and have sufficient cover for himself and his family members. Once there is sufficient health insurance coverage, one must go for critical illness insurance to cover for treatment of critical ailments and secure himself from paying huge hospital bills during serious illnesses. The health insurance policy is a basic indemnity plan, whereas critical illness cover is a benefit-based plan. Both plans meet different needs and hence, both are necessary and should be bought separately. Many insurers like HDFC Ergo, ICICI Lombard and Max Bupa offer specific plans for critical illnesses. You can contact us at customersupport@insurancedekho.com to get the details and get coverage for all your medical contingencies.