The ongoing pandemic has tremendously increased the awareness of insurance in India. People have started buying life insurance to protect their life and medical insurance to cover their health. However, even now many policyholders are puzzled to understand the difference between health insurance and critical illness cover.
Large number of people in India believe that buying a comprehensive cover is enough to cover their health. On the other hand, policyholders who have bought critical illness riders with their life insurance plans feel that any crises can be covered through such policies.
But there is a stark difference between traditional health insurance and critical illness insurance. Choosing a right health insurance is very important as it ensures that medical expenses do not disrupt any of the life goals.
In a very simple term, health insurance is a policy that offers monetary aid in the time of a medical emergency. A health insurance policy refers to a contract where the coverage, features, and terms and conditions of the insurance company and the policy are mentioned.
Health insurance plans are typically for a specific period of around one year. At the end of the policy the insurance contract expires, and policyholders need to pay new premiums to get it renewed. So, the health insurer reimburses the actual costs and expenses incurred during hospitalization.
On the other hand, under the critical illness cover the insurer (life and non-life) pays a lump sum when diagnosed with a critical illness – as defined in the policy. Typically, the medical cost for treating such an illness is usually very high and it’s better to buy a critical illness policy.
So, the health insurance offers basic coverages, but a critical illness policy is more extensive in nature. While there are several differences between both the insurance covers, the key being the coverage of the policy.
Under health insurance plans several illnesses are taken into consideration. While critical illness plans cover only big illnesses and surgical procedures like cancer, kidney failure, stroke among others.
So it’s beneficial to buy health insurance plans for financial security against primary illnesses and not critical ailments. While critical illness covers are best suited to those who are likely at risk of being diagnosed with a critical illness. Critical illness with a basic health insurance plan is suggested for additional cover.
With regards to the premiums, traditional health insurance will see an increase in premiums very frequently, while in critical illness the cover premium remains the same throughout one’s lifetime. Even the sum insured for health insurance is anywhere between Rs 10-20 lakh, while for critical illness covers it can go upto Rs 50 lakh.
Having said that, there is an option to increase the premiums rates after taking approval from the insurance regulator. Finally, the waiting period for critical illness plans is usually 90-180 days while in health insurance plans is typically 30 days.
Given the situation we are in today one needs to have comprehensive health insurance and also have enough coverage for critical illness.
Views expressed in this article are the personal opinion of Rakesh Goyal, Director, Probus Insurance.