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Here’s How Critical Illness Plan Differs from Health Insurance Plan

It seems that more and more people are becoming victim to different non-communicable diseases. Lifestyle diseases such as hypertension or diabetes take its toll on human lives. These are becoming alarmingly common these days. With the rising burden of diseases on the population, another thing that goes simultaneously is- medical inflation. With the rising probability of illness and healthcare costs touching the roof, a financial crisis is evident. And to combat this, an adequate health cover, for instance, National Health Insurance is essential.

But do you think, a regular health insurance plan is sufficient to cover the expenses of some non-communicable ailment such as cancer? No! Comprehensive health insurance seems like a silver lining in covering medical emergencies, but it doesn’t cover a specific critical illness. Here comes the Critical Illness Plan to your rescue.

Many of us even assume that critical illness plan and health insurances are one and the same. Reality is they’re not. Let’s see how different they are from each other!

Health insurance vs. Critical Illness Plans

No doubt Critical Illness Plan is a part of health insurance but there are major differences when it comes to coverage and structure. Let’s understand in detail:

Difference of Coverage Offered

The coverage offered by both plans differs in terms of their nature. The coverage of a health insurance plan is extensive in nature which includes expenses starting right from transportation to being treated or recovering at home even after being discharged. Some insurers also cover AYUSH treatment, domiciliary hospitalisation, maternity expense cover, restoration sum insured etc. are some of the other features of health insurance. These features are not found in a critical illness policy. The policy features turn around a specific illness which pays a lump sum amount at the time of diagnosis.

Sum Insured

In case of health insurance, the insured is authorised to opt for a higher sum insured, even in crores. However, critical illness plans don’t come with such a higher sum insured. The maximum sum insured one can opt for under a critical illness range between Rs. 10-25 lakhs.

Structure of Benefits

Health insurance plans work around the principle of indemnity where the actual cost of hospitalisation is paid. When a claim arises, you are required to submit the bills supporting your claim and the insurance provider pays up to an admissible amount. On the other hand, critical illness plans are fixed benefit plans where it pays the sum insured in case you’re diagnosed with any of the listed critical illness. The benefit paid doesn’t depend on the actual treatment cost. The received money can be used to pay off the liabilities or receive better treatment. However, in case of health insurance, the received claim is solely for the incurred medical cost and can’t be used for other purposes, unlike a critical illness plan.

Policy Premiums

Since health insurance plans are extensive in nature and cover the insured extensively, the premiums are considerably higher than a critical illness plan. You can avail a critical illness plan at a cheaper rate than a health insurance plan.

Policy Period

Both plans differ from each other in terms of their policy tenure. When a regular health insurance policy has tenure of 1 year and then require renewing every year-on-year, critical illness plan, on the contrary, come with a longer tenure. You can opt for a plan for  15 to 20 years.

Waiting Period

Health insurance policies come with a waiting period of 30 to 90 days depending on the insurers, within which you can’t claim the policy, except for accidental claims. On the other hand, usually, to claim critical illness policy, you have to wait for 9 days and 30 days of survival period after being diagnosed with an illness. However, the waiting period may differ from one insurer to another.

Reimbursement of Claim

To be covered under health insurance, the insured is required to be hospitalised at least for 24 hours. The medical bills and treatment costs are reimbursed based on the documents furnished by the insured. In case of cashless treatment, the settlement is done directly after discharge. In case of a reimbursement claim, the insured has to pay the bills initially and register a claim later, along with the original medical bills and discharge summary. The insurer after verifying the claim request and documents pays the amount. In case of a critical illness plan, to claim the full sum insured, the insured has to serve the survival period of 30 days after being diagnosed with an illness.

Members Covered

A health insurance coverage can be extended to individual, family and senior citizen parents. Dependent children can also be covered. In case of an individual plan, the sum insured is given separately to every insured member. While in case of a floater plan, the sum insured is equally divided among the members. But critical illness insurance can be availed as an individual sum insured basis only.

In a Nutshell!

While health insurance or indemnity plans are bought to defray the emergency or planned hospitalisation expenses, a critical insurance plan come in handy in mitigating the financial burden arising from a serious illness. None of us would ever want to be a situation where we could not fight with a life-threatening health condition despite being covered with a comprehensive health cover. Both critical illness and mediclaim policy are designed to cater to a certain purpose and supplement each other in some manner. Hence, both plans are equally important. The only thing to keep in mind is to analyse your needs first, then buy. As a critical illness plan can be purchased separately, it will cost you a little extra premium, apart from the one you’re paying for your health insurance.

Now that you’re aware of the differences between health insurance and critical illness plan, which one is your preference? As both the plans are unique in nature, it will be quite difficult to decide whether you should go either of the plans; let’s leave it on you. Consider your needs and budget, compare the plans and then buy.

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