If you have already purchased health insurance with adequate coverage, the need to purchase a critical illness plan may still exist. A health insurance policy popularly known as Mediclaim is different from a critical illness insurance policy in the way the two work. In a health insurance policy in the form of an individual policy or a floating family plan, the insurance company pays the hospital bill up to the insured amount of the policy. So, if the sum insured is Rs 5 lakh but the hospital bill is Rs 1.5 lakh, the insurer pays Rs 1.5 lakh to the hospital. But, in a critical illness insurance plan, the insurer pays the entire face amount and hence they are also called “defined benefit” plans.
The other key difference is that the individual policy or a floating family plan covers hospitalization costs arising from any illness or medical event. However, the critical illness policy will only cover specific conditions as defined in the policy document. Some of the major critical illnesses covered are heart attacks and other heart conditions, stroke, cancer, paralysis, kidney failure, coma, organ transplant, among others.
Therefore, as coverage differs and is relevant in different circumstances, one or the other is not a substitute for the other. One must have adequate coverage through an individual policy or a floating family plan and also have a separate critical illness plan. Once you have both – a Medicclaim policy and a Critical Illness policy, your health insurance coverage is complete. “An insured must supplement their health insurance coverage with a critical illness plan that provides full coverage and lump sum benefits in the event of a critical illness diagnosis. With critical illness insurance schemes, policyholders are well placed to meet medical costs incurred during treatment without parting with hard-earned savings,” says Parag Ved, Head of Consumer Lines, Tata AIG General Insurance.
In the event of a serious illness, the impact on personal finances can be enormous. It has already been observed how lifestyle changes impact health and cause major ailments. “People today are more susceptible to serious diseases by leading a sedentary and changing lifestyle. The diagnosis and treatment of serious diseases like cancer can lead to huge medical costs, substantial hospitalization costs and ongoing rehabilitation costs for a significantly longer duration.Some critical illnesses may be debilitating in nature and warrant lifelong treatment and monitoring or impact the individual’s earning capacity.In addition, there are certain liabilities financial resources such as loans, children’s education and, when combined with high treatment expenses, this leads to a heavy financial burden,” adds Ved.
Tips for Deciding Which Critical Illness Insurance Plan to Buy
According to Ved, one should conduct thorough research to understand the product and then compare plans from various insurers. Some of the basics that need to be covered are below:
1. Number of critical illnesses covered by the policy – the longer the list, the better. In addition, a person should assess whether certain critical illnesses such as cancer are comprehensively covered, i.e. cover for all stages of cancer, including early cancer.
2. Survival period – the shorter the survival period, the better
3. Sum Insured Offered Under The Policy – A higher sum insured should be preferred.
4. Whether multiple critical illness events are covered by the plan or not – Conventional critical illness policies cease to exist upon the payment of a single critical illness claim under the policy.
5. If the policy offers waiver of renewal premium in the event of suffering from a covered critical illness.
6. Insurer brand – since these policies are renewable for life, the brand of the insurer should also be considered when choosing a critical illness insurance policy