If you have already purchased health insurance with adequate coverage, the need to buy a critical illness plan may still exist. A health insurance policy popularly known as Mediclaim is different from a critical illness policy in the way both work. In a health insurance policy either in the form of individual policy or a Family Floater plan, the insurance company pays the hospital bill up to the amount of sum insured of the policy. So, if the sum insured is Rs 5 lakh but the hospital bill amounts to Rs 1.5 lakh, the insurer pays Rs 1.5 lakh to the hospital. But, in a critical illness plan, the insurer pays the entire sum insured and, therefore, they are also called ‘defined benefit’ plans.
The other key difference is that the individual policy or a Family Floater plan covers the hospitalizations costs arising out of any illness or medical event. However, the critical illness policy will only cover the specific ailments as defined in the policy document. Some of the major critical illnesses that get coverage are heart attack and other heart-related ailments, Stroke, Cancer, Paralysis, Kidney Failure, Coma, Organ transplant amonsgt others.
Therefore, as the coverage differs and are relevant in different circumstances, either one is not a replacement of each other. One needs to have adequate coverage through individual policy or a Family Floater plan and also have a separate critical illness plan. Once you have both – a Mediclaim and a critical illness policy, your health insurance coverage gets complete. “ A policyholder should complement their health insurance cover with a critical illness plan that offers comprehensive coverage and lump-sum benefits if diagnosed with critical illnesses. With critical illness plans, policyholders are well-positioned to meet the medical expenses incurred during treatment without parting with hard-earned savings,” says Parag Ved, Head- Consumer Lines, Tata AIG General Insurance.
For a major illness, the impact of one’s personal finances could be huge. It has already been observed how lifestyle changes are impacting one’s health causing major ailments. “People today are more susceptible to critical illnesses by leading a sedentary and changing lifestyle. Diagnosis and treatment of critical illnesses like cancer can lead to huge medical bills, substantial hospitalisation costs and ongoing rehabilitation expenses for a considerably longer duration. There can be certain critical illnesses which are debilitating in nature and warrant lifelong treatment and monitoring or may impact earning capability of the individual. Also, there are certain financial liabilities like loan, kids education and when these are clubbed with high treatment expenses it leads to severe financial burden,” adds Ved.
Tips to decide which Critical illness plan to buy
According to Ved, one needs to conduct a thorough research about understanding the product and then comparing plans from various insurers. Some of the basics that must be covered are below:
1. Number of critical illnesses getting covered under the policy – the wider the list the better it is. Also, an individual should assess that certain critical illnesses such as cancer are getting covered comprehensively i.e. coverage for all stages of cancer including early cancer.
2. Survival Period – lesser the survival period the better it is
3. Sum Insured offered under the policy – Higher Sum Insured should be preferred.
4. Whether multiple critical illness events are covered under the plan or not – Conventional critical illness policies cease to exist in case of one claim payment for critical illness under the policy.
5. Whether policy offers waiver of renewal premium in case of suffering of critical illness covered.
6. Brand of the insurer – considering such policies being lifelong renewable, brand of the insurer should also be given weightage while deciding on a critical illness policy