People buy health insurance to get covered against the medical contingencies. But it is important to know where critical illness features in your scheme of getting insured.
Mr Sharma was hospitalized after he had a paralytic attack. Luckily, he had sufficient health insurance to cover his hospitalization cost. Even after getting discharged from the hospital, it was not possible for Mr Sharma to go to work. Thus, the health insurance provided for his medical costs even after the hospitalization. Yet, the family suffered a major financial setback as Mr Sharma’s inability to resume work left the domestic finances unattended.
Had Mr Sharma purchased a critical illness policy, he would have not faced this situation. Critical illness policies pay a lump sum amount for all critical illness listed in the policy. This lump sum amount can then be used for meeting the day-to-day expenditures till the patient can resume work.
It is important to note that some health plans also include certain specified critical illness cover if you are willing to pay an additional amount of premium. Such a cover provides for a lump sum expense in case you suffer from any of the covered illness during the tenure of your health plan. However, the scope of such an add-on cover is limited and perhaps that is why insurers have also launched specifically developed critical illness plans.
The following table explains the critical illness plans offered by various health insurance companies:
Now, the question arises: what makes critical illness plans different from the health insurance plans?
Critical Illness plans are health insurance plans that specialize to provide for certain critical illnesses. The plans provide a lump sum payment to meet the medical expenses accrued for treating your illness. These plans however are a bit different from your conventional health insurance plans with respect to certain important features:
Critical illness plans cover only pre-specified critical illnesses mentioned in the policy document and are applicable only if you are diagnosed with such a critical illness. Whereas, health insurance plans have a wider scope of coverage providing for hospitalization expenses, organ donor expenses, ambulance charges, etc.
Benefits paid: A health insurance plan pays for the hospitalization expenses and other associated costs. Critical Illness plans, on the other hand, pay a lump sum amount on diagnosis of the covered illness, irrespective of the actual amount required or incurred on treatment of the illness. The amount is paid on the diagnosis of the illness and the insured might use the amount as per his/her choice.
Except in case of accidents, normal health plans have 15-30 days of waiting period after which the coverage gets activated. Contrary to this, some critical illness plans have a waiting period of 90 days. Moreover, some plans may also have a clause that the policyholder should survive for at least 30 days after getting diagnosed with a critical illness.
The premium for a health plan will be higher than that for a critical illness plan. The reason is simple. A health plan offers a wider scope of coverage and the probability of normal hospitalizations is higher. Critical Illness plans provide only for specified illnesses, whose probability of occurrence is lower.
Health insurance policies continue till the end of the term even after a claim is made anytime during the plan tenure. In critical illness plans, the policy terminates immediately after the claim has been paid.
Although a critical illness plan differs from a conventional health plan in many ways, the basic underlying principle of both the plans is the same, i.e. to provide financial aid in case of medical contingencies. It is prudent to have a critical illness plan, but a insurance plan should take priority over a critical illness plan, particularly when the choice is to be made under budget constraints. Having a health plan is a must. If your pocket permits, buy a critical illness plan to supplement your cover.