Got mediclaim? You still need critical illness cover

People often get confused between critical illness cover with indemnity health plan (mediclaim). These are two different policies serving different purposes.

The main objective of a critical illness plan is to protect against financial liability arising out of a serious illness specified under the policy.

The cover also takes care of other situations like loss of income or permanent disability due to the ailment. An indemnity health plan, on the other hand, reimburses hospitalisation expenses.

“In critical illness there is a danger of loss of pay and job. A critical illness cover not only provides for medical expenses, but can also shield one from loss of income,” says Shefali Chhachhi, director-marketing, Max Bupa Health Insurance. “Income generation of a person can be affected when he or she suffers from a deadly disease. Besides, the cost incurred for the treatment can be a burden. Critical illness policy can be considered as a living benefit in these situations,” says Shreeraj Deshpande, head-health insurance, Future Generali India Insurance Co.

A critical illness policy provides insurance against the specified illnesses, where on detection the policyholder gets a one-time benefit. Ailments such as cancer, stroke, kidney failure, major organ transplants, multiple sclerosis and paralysis are covered under it.

“A critical illness policy is not a substitute to an indemnity health plan, but as a rider it brings in a higher level of cover,” says Antony Jacob, CEO, Apollo Munich Health Insurance.

Economically, it is viable for the policyholders to have a critical illness cover as a rider with an indemnity health insurance to hedge against high medical costs.

Another key differentiator is that critical illness is a benefit plan wherein a lumpsum amount is paid when you are diagnosed with any of the specified illness, while an indemnity health cover is a reimbursement plan. Hospitalisation is not relevant for a critical illness policy, but diagnosis matters.

A mediclaim policy has a wide scope by covering many ailments other than pre-existing diseases, maternity and dental treatment.
The scope of a critical illness is much narrow as a standalone policy. The maximum cover available for a mediclaim may be `5 lakh, but a critical illness policy can have a sum assured of `5-50 lakh.

Waiting period for a health insurance policy is generally 30 days.  Under a critical illness plan the policyholder will get the benefit only after 90 days from the commencement of policy.
A critical illness policy can get rejected if the policyholder dies within 30 days of the diagnosis.

“With the rising trend of critical illnesses such as cancer, stroke and heart attacks we have seen an upward trend in the number of critical illness riders being added in standard insurance products,” said Antony of Apollo Munich.