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Difference Between Health Insurance & Critical Illness Cover

Team AckoNov 7, 2024

Health insurance and Critical illness insurance are types of health insurance policies. They have their own set of benefits when bought keeping in mind the coverage they provide. There are many differences between parameters related to Health Insurance & Critical Illness Cover.

This article discusses the exact meanings of Health Insurance & Critical Illness Covers and how different these policies are from each other. You can go through frequently asked questions at the end and get some answers for questions you may have.

Contents

What is a Health Insurance Policy?
Difference Between Health Insurance & Critical Illness Insurance Policy:
How to File a Claim?
- Health Insurance Claim Process
- Critical Illness Claim Process
Which Insurance Is Better Critical Illness Cover Or Health Insurance?
Frequently Asked Questions:

What is a Health Insurance Policy?

Health insurance, is an insurance 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. A health insurance plan is valid only for a certain time; in most cases, this timeframe is limited to one year. After the completion of this time period, the contract between the policyholder and the insurance company expires and needs to be renewed.

There are various types of health insurance plans available in the market. One can create a strong backup with the help of a comprehensive portfolio by choosing from Individual health insurance plans, family health insurance, Critical Illness Covers, Group health insurance plans, etc.

Example:

Mr A is a family man with a spouse, 1 child, and ageing parents.
Since there could be various health issues or medical emergencies, Mr A has decided to build a strong health insurance portfolio by opting for a Family-floater plan, an Individual health plan for himself as he is the primary breadwinner of the family and Critical Illness Plans for his parents.
The base plan, i.e. the Family-floater plan provides maternity benefits as well.
These coverages provide a financial safety net for Mr A and his entire family against the cost of medical emergencies.

What is Critical Illness Policy?

Critical illness, is any disease or a health condition that poses a threat to one’s health, i.e. it is a life-threatening condition. The medical cost for treating such an illness is usually very high and can put a heavy financial strain on an individual and the loved ones. A basic health insurance policy may prove to be insufficient for covering costs related to repeated hospitalisation, multiple doctor visits, or continuous screening for treating critical illnesses. In such situations, having a lump sum amount of money can prove to be helpful. This lump sum can be provided by the Critical Illness Health insurance plan upon the diagnosis of a listed illness under its terms and conditions.

Example

Mr B is diagnosed with cancer.
He had to undergo treatments like radiation therapy, surgery, and medications. The cost of these treatments amounted to Rs. 6.5 Lakh.
Mr B had previously bought a Critical Illness Cover of himself.
It had a sum assured of Rs. 6 Lakh.
Thus, most of the expenses for his cancer treatment were covered by the Critical illness health insurance cover.
He had to pay Rs. 50 Thousand from his pocket.
If he had bought a policy with a higher sum assured, then the entire cost of treatment could get covered under the critical illness health insurance policy.

Difference Between Health Insurance & Critical Illness Insurance Policy:

There are a few major differences between Health Insurance and Critical Illness insurance policies. Both policies are meant to offer financial coverage as per the situation of the policyholder. While health insurance offers basic coverages, a Critical illness policy is more extensive in nature. Let’s take a look at the following table to understand how different these health insurance plans are from each other based on each parameter:

Parameters	Health Insurance Plan	Critical Illness Cover
Coverage	Offers coverage for a variety of situations like accidents, diseases, pre-existing diseases, etc. Some policies also cover maternity-related costs.	Offers coverage for a limited number of serious diseases. The number of such illnesses covered depend upon the insurance company.
Benefits	Multiple benefits like cashless treatments, additional coverage options, coverage for multiple family members, etc. are offered.	The policyholder is paid once he/she is diagnosed with a specified critical illness. The policyholder can use the claim amount as deemed fit.
Premium	The premium depends upon the insurance company, coverage offered, members covered, and amount of sum insured of the policy.	The premium depends upon the insurance company, the number of diseases covered, and sum assured of the policy.
Sum insured	Can range from Rs 5 to 10 Lakh	Can range from Rs 5 to 50 Lakh
Waiting period	The waiting period for pre-existing diseases and/or maternity benefit can range from 1 to 3 years from the start date.	The waiting period for a critical illness policy is usually 90 days from the start date of the policy.
Survival period	NA	This is the time period for which the policyholder must survive after the date of diagnosis. It ranges from 14 to 30 as per the policy.
Policy status	Valid till either the sum insured gets exhausted or until the date of expiry.	Valid until a claim is made or until the date of expiry..

Also, read: Critical Illness Insurance Cover for the Self Employed

How to File a Claim?

A claim needs to be filed against a health insurance policy to avail the monetary benefit in case of a medical emergency. Following are the claim processes of both Health insurance and Critical Insurance policies:

Health Insurance Claim Process

A health insurance policy can be claimed in two ways. The policyholder can either file a cashless claim or a reimbursement claim.
Cashless claims can be made if the treatment is availed from a network hospital i.e. the insurance company is affiliated with a particular medical facility.
On the other hand, a reimbursement claim can be made after making the payment of hospital bills.
The policyholder needs to submit the bills and receipts to the insurance company for approval along with a duly filled claim form.
If the claim is approved, the policyholder will be paid the claim amount. The list of required documents can be taken from the insurance company.

Critical Illness Claim Process

The policyholder can raise a claim against a Critical Illness cover if he/she is diagnosed with any of the listed illnesses. After the end of the survival period, get in touch with the insurer.
Duly fill the claim form and attach it with the other required documents.
The insurance company will verify these documents and if the claim is approved, you will receive a lump sum amount.
One can use the claim amount to avail treatment for a critical illness.

Which Insurance Is Better Critical Illness Cover Or Health Insurance?

Buying health insurance or critical illness insurance depends upon the medical state of the policyholder. Since a medical emergency is unpredictable, one must also consider having a strong health insurance portfolio. This will allow a complete financial backup if a medical emergency strikes.

There is no best plan when health insurance and Critical illness cover are considered. Both provide sufficient coverage as per the situation. The breadwinner of a family must always consider buying an Individual Health insurance plan, a Critical Illness cover and a Family Floater health insurance plan for the family.

Nowadays, it has become easy to compare and buy online health insurance. These policies are cheaper as compared to their offline counterparts. The insurance company offers quick services and an option to compare plans as well.

Frequently Asked Questions:

Can I avail a tax benefit if I buy a Critical Illness policy?

Yes, usually tax benefits are allowed on Critical Illness policies under Section 80D deduction of the Income Tax Act, 1961. However, it is always a good idea to get in touch with the insurance company and verify the same.

Which illnesses are covered by a Critical Illness Insurance policy?

Usually, the following conditions are covered by insurance companies under their Critical Illness Plans:

>Cancer

>Multiple Sclerosis

>Primary Pulmonary Arterial Hypertension

>Kidney failure

>Coma

>First heart attack

>Open Chest Bag

>Major organ/bone marrow transplant surgery

>Aorta Graft surgery

>Complete blindness

>Stroke

>Open heart replacement

>Repair of heart valves

>Paralysis

Am I supposed to undergo a medical examination before receiving my critical illness policy?

This depends upon your age and health status. If you are under the age of 45 with no serious medical history, you may not have to undergo a medical test. Otherwise, the insurance company may ask you to get a full-body check-up before issuing a Critical Illness policy.

What is meant by entry and exit age in Health Insurance?

The entry age is the minimum age and exit age is the maximum age of a nominee under a health insurance plan. The entry age for a family-floater plan is 90 days, i.e. a new baby can be covered under health insurance and exit age can be around 65 years depending upon the insurance company.

I am suffering from diabetes, can I still buy a health insurance policy?

Yes, people who are suffering from pre-existing diseases like diabetes can buy a health insurance policy. It is indeed a good idea to do so. Moreover strengthening the health insurance portfolio with suitable types of health insurance policies can provide solid financial backing in the time of a medical emergency. Note that some amount of waiting period might be applicable for making a claim against pre-existing diseases.

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Disclaimer: *Except for exclusions like maternity benefits, undisclosed diseases, etc. Please check policy wordings for more details.

**The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet; and is subject to changes. Please go through the applicable policy wordings for updated ACKO-centric content and before making any insurance-related decisions.