In India, over 60% of healthcare expenses are paid out-of-pocket, which often causes financial strain. With a rising number of lifestyle diseases, critical health insurance plans are gaining attention. However, it differs vastly from a regular health insurance plan.
Let us understand the distinction between critical illness and a regular health insurance plan to help you choose the right type of health insurance coverage for your medical needs.
What is Critical Health Insurance?
Critical illness health insurance pays out a lump sum if you are diagnosed with a serious illness or health condition listed in the policy. The common conditions include:
1.Cancer
2.Heart disease
3.Stroke
4.Brain and Nervous System illnesses
5.Kidney failure
6.Major organ transplant
7.Paralysis
The payout can be used however you choose whether to cover medical treatment or to support your family while you recover.
What is Regular Health Insurance?
Regular health insurance helps to cover the cost of medical treatment. Depending on the specific type of plan that you choose, it can pay for:
1.Doctor consultations
2.Diagnostic tests and scans
3.Surgeries and hospital stay
4.Post-treatment care
A regular health insurance does not pay a lump sum. It pays the hospital or medical provider directly. Regular health insurance policies provide a sum insured for the total costs incurred.
Key Differences Between Critical Illness vs Regular Health Insurance
The critical illness insuranceand regular health insurance plans have their fair share of differences, like:
●Sum Insured: Critical illness policies usually offer a sum insured between ₹5 lakhs to ₹25 lakhs for earning individuals, and ₹5 lakhs to ₹15 lakhs for non-earning people. Regular health insurance, in contrast, ranges from ₹1.5 lakhs to ₹15 lakhs for individual plans, and up to ₹50 lakhs for group health policies.
●Reimbursement: With critical illness insurance, the insured receives a one-time lump sum payout upon diagnosis of a covered illness. Regular health insurance, however, reimburses medical expenses or settles bills directly with network hospitals as cashless treatment.
●Policy Term: Critical illness plans are generally available for 1 to 3 years, while regular health insurance policies may have policy terms of 1 to 5 years.
●Coverage: Critical illness insurance focuses on wide coverage of listed, severe conditions as defined by the insurer. Regular health insurance provides broader medical support, covering room rent, free checkups, treatment for existing illnesses, hospital cash benefits, and daycare procedures.
●Waiting Period: Critical illness plans typically have a waiting period of 90 days from the start of the policy. For regular health insurance, there is an initial waiting period of 30 days for most conditions and up to 36 months for pre-existing diseases.
●Policy Validity: A critical illness policy remains valid until all categories of claims are exhausted. Regular policies continue as long as premiums are paid and the policy is renewed on time.
●Usage of Funds: The lump sum from critical illness insurance can be used with complete flexibility for treatment or lifestyle adjustments. In contrast, funds from regular health insurance are restricted for use towards medical bills and hospitalisation.
●Members Covered: Critical illness insurance usually covers individuals only, while regular health insurance can be purchased for individuals, families, senior citizens, or groups, based on policy type.
Note: The features mentioned in the table above are subject to variation according to the health insurance provider you choose.
Critical Illness vs Regular Health Insurance: How to Choose?
The best health insurance actually depends on your needs. Here are a few ways to decide:
1.Choose a Critical Illness Cover If:
●You want financial protection against serious, life-threatening illnesses.
●You are the main earner in your house and need income support if you do not work.
●Having dependents who rely on you for income also necessitates getting critical illness cover.
●You want flexibility in spending the payout in your own way.
2.Choose a Regular Health Insurance If:
●You want the benefit of fast access to cashless hospitalisation.
●You want a broader range of medical support (not just for critical illnesses).
●Want a more comprehensive coverage for many members apart from you.
Real Life Scenario Where the Right Health Insurance Makes a Difference
For example, Arjun is a 40-year-old professional who suffers a heart attack. Having regular health insurance, in this instance, can cover hospital stay, treatment and surgery.
However, the recovery period requires an extended time off work and additional support at home. Here, having a critical illness plan can be invaluable. It will allow him to focus on recovery without worrying about his daily expenses, lifestyle adjustments, and financial support for his family.
This scenario highlights how a regular health insurance handles treatment, but a critical illness cover supports life beyond the hospital. It ensures peace of mind during any unexpected healthcare challenges.
Final Words
Critical illnesses are increasingly common in India, especially among the younger adults. Hence, it is ideal to choose a smart combination of both critical illness plans and regular health insurance policies to better prepare for health uncertainties in the future.
When you buy health insurance, just make sure to go through the policy terms and conditions carefully for the sum insured claim.
