Health Insurance Policy vs. Critical Illness Cover: Find Differences in this 2-Minute Read

Are you confused between a normal health insurance plan and a critical illness cover?

Don’t worry.

Many of us get confused too.

Many people assume health insurance and critical illness insurance the same. But, the reality is otherwise. They’re different! Each one has its own importance and benefits.

Let’s discuss the differences between health insurance and critical illness cover.

Nature of Plans

Health Insurance Plans are a type of indemnity insurance policies, which is designed to only pay the actual medical costs incurred up to the maximum sum insured limit. Say for instance, you buy health insurance with a sum insured of Rs.5 Lakh. If your medical bills come up to Rs. 3 Lakh, a claim worth Rs. 3 Lakh would be paid by your insurance company.

On the other hand, critical illness cover is a fixed plan. Say for example, in a critical insurance policy of Rs. 5 Lakh, the entire Rs. 5 Lakh would be payable by the insurer in case you’re diagnosed with a critical illness.

Nature of Coverage

A traditional health insurance policy primarily covers expenditures around hospitalization, a range of illness, AYUSH treatment, daycare treatment, domiciliary hospitalization, ambulance service, maternity expense, pre and post-hospitalisation, restoration of the sum insured, etc.

When it comes to a critical insurance policy, you can get coverage for critical illnesses, such as cancer, stroke, heart attack, etc. The number of diseases depends on the policy chosen.

Nature of Policy Period

Regular health insurance and critical illness plan differ in terms of the policy tenure. The former can be availed for 1,2 or 3 years and then renewed. On the flip side, critical illness insurance is purchased for a longer period - say for instance, 15 to 20 years.

Nature of Benefits

• Regular health insurance: Traditional health insurance plans are indemnity plans. They cover the actual hospitalisation expenses. To file a claim, you have to submit all the relevant documents, such as medical bills, treatment expenses, etc. post which the insurance provider pays the amount up to the maximum of the sum insured. The sum insured that you receive post can be used only for covering the medical expenses.

• Critical illness insurance: These are fixed benefit plans in which the insurer pays a lump sum amount to the policyholder in case of a diagnosis of a critical illness specified in the policy document. You’re free to use the amount to pay off the liabilities, debts or take the best of the treatment.

Nature of Waiting Period:

Health insurance policies often come with the waiting period of 30 to 90 days, depending on the policy. However, the waiting period does not apply to accidental injuries. For critical illness cover, the waiting period differs from one insurer to another. Only after the specified waiting period, you are able to file a claim against the sum insured amount post the diagnosis of the illness.

Survival Period:

An ordinary health insurance product has no term like ‘survival period’ whereas in a critical illness policy, you need to survive for a minimum of 30 days after the diagnosis of the ailment in order to take the benefits of the critical illness cover.

Premium Amount

The premiums paid against a normal health insurance policy are higher because of its comprehensive coverage or we can say it offers a wider scope of coverage. On the other hand, the premiums for the Critical Illness policy are affordable. It’s advisable to choose a plan that won’t let you feel burdened while paying the premiums.

Cashless & Reimbursement Claim

For cashless treatment under traditional health insurance, you need to choose a network hospital. The settlement is done directly between the hospital and the insurer after discharge. In case of a reimbursement claim, you can get admitted to any hospital by paying the bills from your pocket. To get the expenses reimbursed, you need to submit all the documents required by the insurer. Based on the documents furnished by you, the payment is reimbursed.  

When it comes to a critical illness policy, you have to serve the survival period of 30 days after the diagnosis of the disease. Then, the sum assured in full is paid.

Members Covered

A health insurance policy can cover an individual, family, dependent children and parents. If it’s an individual health policy, every insured member is covered in the separate sum insured. While in case of a floater plan, all members are covered under a single sum insured. In contrast, critical insurance cover is availed on an individual sum insured basis only.

Also, Read

Critical Illness Insurance - Myths and Facts

IRDAI Asks Health Insurance Companies to Cover Coronavirus Illness

Thus, given the above information, we can’t substitute health insurance policies with critical illness cover, and vice-versa.