Critical illness insurance provides additional coverage for medical emergencies like heart attacks, strokes, or cancer. Since these serious illnesses often incur greater-than-average medical expenses, critical illness policies pay out a lump-sum amount to help cover those overruns when traditional health insurance may fall short.
Moreover, a big draw of critical illness insurance is that the money can be spent on nonmedical costs related to the illness, including transportation, child care, and so on. Let us go through the key differences between critical illness and health insurance and go into detail about why these two are required separately.
Health insurance is an insurance policy that offers financial aid in the time of a medical emergency. A health insurance plan covers actual expenses, including room and board, doctor’s fee, ambulance charges and medications administered during hospitalization.
The reimbursed amount will be only to the extent of the actual costs incurred. Therefore, a basic health insurance policy may prove to be insufficient for covering costs related to repeated hospitalization, multiple doctor visits, or continuous screening for treating critical illnesses.
A critical illness policy covers serious illnesses, surgical procedures or life-threatening ailments. A critical illness, such as cancer or heart attack, is not only a devastating physical blow, but can be a severe financial one as well.
The specific set of illnesses covered is listed in the health insurance policy. You do not need to be hospitalized to make a claim. Once you are diagnosed, and the circumstances conform with the policy’s terms and conditions, you will be paid a lump sum. This money can go towards meeting future expenses, replacing income, home nursing, getting a second doctor’s opinion, etc.
There are a few major differences between health insurance and critical illness insurance policies. 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 these plans differ from each other:
| Health Insurance | Critical Illness | |
| Purpose | Reimburses the actual costs and expenses incurred during hospitalization. | Pays a lump sum when diagnosed with a critical illness—as defined in the policy. |
| 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. |
| Premium | The premium depends on the insurance company, coverage offered, members covered, and amount of sum insured of the policy. | The premium depends on the insurance company, the number of diseases covered, and sum insured of the policy. |
| Claim method | 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, whereas a reimbursement claim can be made after making the payment of hospital bills. | Once you are diagnosed with any of the covered critical conditions and your insurer approves your claim, you will receive the lump-sum payout without having to prove any expenses or present any bills. |
| Suitable for | Anyone; it offers financial security against primary illnesses and not critical ailments. | Those who are likely at risk of being diagnosed with a critical illness. |
Both medical insurance and critical illness insurance are essential to avoid paying hefty out-of-pocket fees, but they have very different benefits, inclusions, and exclusions. Standard medical insurance plans typically do not have a large sum insured and are indemnity-based, meaning that they only cover expenses related to hospitalization. On the other hand, critical illness insurance has a higher sum insured since critical conditions tend to require higher payouts. Therefore, standard health insurance plans may not offer adequate coverage for critical illness in comparison to critical illness insurance, especially in the long run.
Regular medical insurance policies usually cost more since they cover a wide range of possible events, whereas critical illness insurance only covers a handful of predetermined medical conditions, and you can only make one claim during the duration of your critical illness insurance policy.
The premium of a health insurance policy increases with age, and it depends upon the insurance company, coverage offered, members covered, and amount of sum insured of the policy. On the other hand, the premium of a critical illness insurance policy remains the same throughout one’s lifetime, and it depends on the insurance company, the number of diseases covered, and sum insured of the policy.
Health insurance and critical illness policies have different claims processes. While standard health insurance plans make multiple claim payments, critical illness insurance policies do not. A health insurance policy can be claimed either by filing 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 a claim form along with the bills and receipts to the insurance company for approval. If the claim is approved, the policyholder will be paid the claim amount. After making a claim, your health insurance policy might continue till the time your entire sum insured is exhausted. Further, it can be renewed every year.
To raise a claim against a critical Illness cover, if you’re diagnosed with any of the listed illnesses, you can first fill the claim form and attach it with the other required documents. You do not have to prove any expenses or show any bills. The insurance company will then verify the documents, and if the claim is approved, you will receive a lump-sum payment, which can be used however you choose. In most cases, your critical illness policy will expire once the claim is made.
Both health insurance and critical illness cover provide sufficient coverage as per the situation. While health insurance policies are taken out to defray hospitalization expenses of minor surgery and accidents, critical illness policy compensates the financial expenses that arise from unexpected serious illnesses such as cancer and heart attack.
Often, general medical insurance and critical illness insurance can complement each other, to give you the comprehensive protection that saves you the financial hassle.The breadwinner of a family must always consider buying an individual health insurance plan, a critical illness cover, as well as a health insurance plan for the family.
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