Difference between critical illness insurance and normal Health Insurance

With the cost of healthcare constantly on the rise, having a health insurance cover has become a very important prerequisite. The insurance sector, having experienced revolutionary changes over the years, now has a lot of health insurance options to offer to the buyers. Most of the insurance providers have come up with medical insurances tailored to benefit specific type of customers. And with every policy bearing exceptional features, being confused is quite natural.

Therefore, to help you better in making choices, mentioned below are significant differences between health insurance policies and critical illness plans, two of the most popular health insurance products these days.

The standard health insurance policy is more or less a comprehensive plan that covers you against general medical and surgical expenses including those that call for hospitalization. These plans can either help pay for your expenses, directly to your healthcare provider or reimburse the expenses you have borne.

Alternatively, critical illness plans, as is suggestive by the name, is a health insurance product meant specifically for chronic medical conditions or life-threatening diseases, as listed down by the health insurance provider.

As mentioned earlier, the market today has various types of plans on offer. However, to be more concise, health insurance products can be broadly classified into two basic categories, namely indemnity plans and benefit plans.

Indemnity plans are a type of health insurance plans meant to secure the buyer against a financial burden or loss, and restore their previous financial state. These plans provide a lump sum amount to the insured to meet their actual expense or loss.

A benefit plan is an insurance product which offers a pre-specified sum of money to the insured, for financial damage due to a health issue when a claim is made. The sum assured may vary from the actual expenses.

Critical illness insurance falls in the first category while a normal health insurance policy falls in the latter.

Health insurance and critical illness plans also differ in terms of the benefits they provide.

A general health insurance plan provides a reimbursement to the insured for the expenses incurred due to hospitalization, given the relevant medical bills are produced. The insured can also select cashless hospitalization at one of the network hospitals of the insurance company and get their treatment done without having to pay for it.

The expenses are directly settled by the TPA or the insurance company. Another important point to note here is that you are still entitled to the benefits of a health insurance, even after you have made a claim.

In case of a critical illness policy, your insurance provider will pay you a tax free lump sum amount of money, if you are diagnosed with a pre-specified ailment. However, unlike standard health insurance, you do not need to get hospitalized or produce medical bills to benefit of a critical illness plan. You can avail of the sum assured just after being diagnosed with the disease. Although you are free to use the money as you see fit, this is a one-time payment. Your critical illness cover terminates when a claim is made.

Another major difference between these two health insurance products is with respect to their scope of coverage. Health insurance policies have a wide scope of coverage, and provide security against hospitalization due to various medical issues and even accidents. This coverage may include daycareprocedures, domiciliary treatments, pre and post hospitalization expenses, ambulatory care etc.

Critical illness insurance, on the other hand, has a limited scope of coverage. Generally, there are about 6-12 ailments listed down under such insurance policies. These include chronic health issues such as cancer, heart attacks, kidney failure, and major organ transplantation and so on, after you purchase the plan. A few other covers under a critical illness plan include – temporary loss of pay, postoperative care etc.

Waiting period refers to the time period before which some select ailments begin getting covered under a health insurance policy. Normal health insurances generally have a waiting period of 30 days from the date of inception of the policy, with an exception to the accident related cases. However, for pre-existing diseases the waiting period could be between 1-4 years after inception, given you continue your policy with the company for that long.

In comparison, critical illness plans have a waiting period of 3 months before they start covering a critical ailment. However, if the buyer dies within 30 days of being diagnosed with the ailment, the plan stands void.

As an insurance buyer, it is important that you don’t just know but also understand these differences, as that will greatly assist you in deciding whether you need either of the plans, or both in conjunction to keep you well-covered on the healthcare cost front.