What is the difference between a Critical Illness & Health Insurance Policy?
There are different kinds of insurance plans available in the market. The basic types are Mediclaim/ health insurance, critical illness, personal accident policy, hospital cash benefit, senior citizen health insurance, etc. A lot of people often get confused between a health insurance plan & critical illness policy.
Let us understand the basic difference between a critical illness policy and a health insurance policy:
| Parameter | Critical illness | Health insurance |
| Definition | Critical illness policy is a defined benefit plan i.e. It pays a lump sum on diagnosis of any pre-specified life-threatening diseases like cancer, first heart attack, multiple sclerosis, etc. | Health insurance policy is an indemnity policy that covers hospitalization expenses in case the insured suffers from illness/ diseases or accident. It reimburses your actual medical expenses. |
| Purpose | The purpose of buying a critical illness plan is not only to foot the high medical bills but also to compensate any financial loss that arisesdue to serious or life-threatening illness. | Health insurance policies are required to defray the hospitalization expenses incurred by the insured on the medical treatment. |
| Coverage/ scope | Cover for specific listed critical illnesses only - such as cancer, first heart attack, kidney failure, stroke, etc. (Max up to 37 critical illness - please refer the list) | Covers the hospitalization & day caretreatment for diseases/ illnesses/ injuries; as long as within the purview of the policy. It covers the entire gamut of diseases/ailments except pre-existing diseases & certain ailments which have a waiting period. |
| Waiting period | There is a waiting period of 30/60/90 days before the insured can claim for the listed critical illness. | There is a waiting period of 30 days for illness/ diseases except in the event of an accident, it is covered from day one. |
| Survival period | The insured needs to survive for a period of 30 days from the date of diagnosis of first illness for the claim to be paid. | There is no survival period for the benefits to be paid. |
| Sum insured | A critical illness policy offers a higher coverage between 5 lacs to 1cr | Under a health insurance plan the insured get the option to choose the sum insured between 2 lacs to 60 lacs. |
| Policy status | Normally, most of the critical illness policy will expire once the claim is paid. However, there are certain policies which continue with the other listed critical illnesses | A health insurance policy still continues even after a claim is paid. It will remain in force untilthe time, either the sum insured is exhausted or the policy completes a year. |
Though both the policies supplement each other, we should also remember thatthey serve a different purpose and, therefore, every individual requires both these policies. Let's understand with an example:
Mr. Sharma has been diagnosed with cancer. He has a health insurance policy of 5lacs. His basic health insurance policy will take care of hospitalization expenses & medical bills, but what if mr. Sharma needs to stay at home for post-recovery treatment? Here, acritical illness plan would be the answer. It will take care of Mr. Sharma's post-operation treatment, handle his personal expenses (like - maid expenses, children school fees, household expenses, etc.) at the time of recovery.
A critical illness policy will pay a lump sum benefit irrespective whether you're hospitalized or not and whether you incur any expenses for the medical treatment.
We hope that all your concerns are clarified. There are a lot of different critical illness plan available. If you would like to compare and understand which plans suits your needs please click - Critical illness plan.
