Some people think that health insurance and critical insurance are identical. However, that is a common misconception. While having the similar purpose of covering medical issues, critical illness and health insurance are two very different types of coverage with different goals.
Let’s attempt to comprehend the unique requirements of both plans and determine why there is a need to buy health insurance and a critical illness insurance separately.
Your hospitalisation-related medical and OPD costs are covered by health insurance. It typically has a lengthier waiting period and may not cover all conditions.
Critical illness policy:
Critical illness insurance can pay for life-threatening conditions like cancer, MS, kidney failure, bypass surgery, etc. As soon as one of the critical illnesses on the policy list is diagnosed, the policyholder can request the coverage amount. The cost of hospitalisation is not related to or covered by this policy.*
How much is the coverage?
The range of coverage for both health insurance policies and critical illness plans varies.
The health insurance plan covers accidents and a wide range of illnesses. It even includes coverage for pre-existing conditions and maternity health after a specified amount of time. *
The critical illness insurance policy only covers the number of critical diseases mentioned in the policy, which can range from 6 to 12. The policy document may also state that, if indicated, it also covers situations like temporary travel and boarding, surgical care, and loss of income.*
What are the benefits?
One of the health insurance plan’s benefits is the reimbursement of hospitalisation costs. When receiving care at a network hospital, the insured person may use a cashless payment option in which the TPA or insurance provider pays the hospital directly. Your health insurance plan might continue after filing a claim until the whole amount of coverage has been used. It can also be renewed annually.
A critical illness insurance plan has a specific set of benefits. Following a diagnosis of a predetermined critical illness, the insured receives a tax-free* lump payout. The insured need not produce the original invoices; photocopies are acceptable. The insured can use the entire sum because it is given to them all at once. Furthermore, critical sickness coverage ends when a claim is submitted.
Although the sum assured amount varies from insurer to insurer, specific limits are set for everyone. The maximum amount for a health insurance policy is Rs. 5 lakh (but some insurers may offer coverage up to Rs. 10 lakh), and the range of the critical illness policy’s coverage is Rs. 5 lakh to Rs. 50 lakh.
Both critical illness insurance and health insurance adhere to the waiting time concept.
Health insurance policies have a waiting period for the first 30 days, and illnesses contracted during this time from the start of the policy are excluded, aside from accident-related losses. Pre-existing conditions typically require a waiting period of one to four years.*
While there is a 3-month general waiting period for critical illness policies, and the policy does not cover any illnesses discovered during this time.
A critical illness policy pays for the financial costs associated with a major sickness, whereas health insurance is purchased to cover hospitalisation costs.
A health insurance premium calculator can guide you with which policies suit your needs by considering various factors. Use it to help you buy health insurance and critical illness insurance separately because they are both important and should serve a specific function and complement one another.
* Standard T&C Apply
‘Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.‘
*Tax benefit is subject to change in prevalent tax laws.