Akshay recently got diagnosed with lung cancer. Severe pain, list of medicines and hours of waiting for the doctor were not enough to shatter him down until he got his reports. Health insurance seemed like a silver lining of this dark cloud. But, unfortunately Akshay was taken aback when his health insurance advisor informed him that his policy did not cover any such critical diseases. That is when he realized that all the premiums he paid for being secure against any health issues would go down the drain when he would need that security the most as his health insurance could only cover his hospitalization expenses but not the treatment charges.
Had Akshay purchased a critical illness plan earlier, he would not have to deal with any financial and emotional worries. Like Akshay many of us believe that a comprehensive health insurance plan is enough to deal with all health problems that might occur in our life, but we forget that critical illness and health insurance are two completely different policies that cater to separate purposes.
Let’s try to understanding the specific needs of both the plans and find out why health insurance and critical illness plan are required separately.
Health insurance reimburses your medical and OPD expenses during hospitalization. It might not cover all the diseases and generally have a longer waiting period.
Whereas, critical illness policy covers life-threatening diseases like cancer, multiple sclerosis, kidney failure, bypass surgery etc. The insured gets the cover amount as soon as he/she gets diagnosed with any of the listed critical illnesses. This policy has no association or concern with the hospitalization expenses.
Both health insurance policy and critical illness plan have different scope of coverage. Health insurance policy covers accidents and a gamut of ailments. After a defined period of time it even covers the pre-existing diseases and maternity health. Whereas, critical illness policy covers a specified list of critical illnesses; the number of which might vary from 6 to 12 depending on the insurer. According to the policy documentation, if mentioned, it also covers circumstances like travel and boarding on temporary basis, postoperative care and loss of pay.
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Benefits of mediclaim or health insurance plan include the reimbursement of hospitalization expenses. When getting treated at a network hospital, the insured person can avail cashless facility where the bills are paid directly by the TPA/ insurance company to the hospital. After making a claim, your health insurance policy might continue till the time your entire sum insured is exhausted. Further, it can be renewed every year.
Critical illness plan has its own set of defined advantages. Here the insured receives a tax free lump sum after diagnosis of a pre-specified critical illness. Insured is not required to present the original bills and can manage with photocopies. Since the entire amount is handed at once, the insured can spend it as he/she wishes. Further, the critical illness policy expires once the claim is made.
Although the sum assured value varies from one insurer to the other, there are some limits defined for all. In case of health insurance policy, the cap is set at Rs. 5 lakh (some companies might provide cover up to Rs. 10lakh) and the coverage of critical illness policy ranges from 5 lakhs to Rs. 50 lakh.
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Both mediclaim and critical illness policy follow the concept of waiting period. Apart from accident related loss, health insurance policies have a waiting period for first 30 days and the illness contracted during this duration from the commencement of the policy is excluded. In case of pre-existing ailments, there is generally a waiting period of 1 to 4 years.
Whereas, in case of critical illness policy, there is a 3 months general waiting period and the illness diagnosed in this period is not included in the cover.
While mediclaim policies are bought to defray hospitalization expenses, critical illness policy compensates the financial expenses that arise from serious illness. None of us would ever want to be in Akshay’s position wherein he could not fight with a life threatening illness even after being covered with a comprehensive health insurance policy. Both the policies are designed to serve some particular purpose and supplement each other and hence, both the plans are necessary and should be purchased separately.
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