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Why is it good to Buy Critical Illness Insurance and Health Insurance Separately?

​​​The expense of medical treatment is touching the sky, and given the growing possibility of illnesses, a financial crisis is evident. To save ourselves from the wrath of sky-rocketing medical inflation, buying a health insurance policy is imperative for every individual. A health insurance policy plays as a shield and combats the financial crisis, in case you get hospitalized. Unlike health insurance, a critical illness insurance policy offers a lump sum payout in case you are diagnosed with a life-threatening, critical illness. A health insurance policy and a critical illness insurance policy are not interchangeable, which means they are different from each other and they solve distinct purposes. Hence, it is advisable to buy these policies separately in order to get the maximum benefit out of them.

Here's a brief understanding of a health insurance policy and a critical illness policy along with the differences between the two-

Basic features-

A health insurance policy is an insurance policy that covers hospitalization expenses in case the insured suffers from diseases or accident. It reimburses your actual medical costs incurred due to daycare procedure, OPD charges, consultations, tests, and other such expenses. On the other hand, a critical illness policy pays a lump sum benefit if the insured is diagnosed with the illnesses listed in the insurance policy. Some of those pre-specified life-threatening diseases are- heart attack, multiple sclerosis, cancer, etc. However, a critical illness policy has no association or concern with hospitalization expenses.

Coverage-

Both health insurance and critical illness policy have a different scope of coverage. A health insurance policy covers all your medical expenses right from ambulance charges to being treated at the hospital and recovering at home after being discharged. It also covers pre-existing diseases after a defined period. However, a critical illness policy covers only a particular list of critical illnesses. There is a waiting period of 30/60/90 days before the insured can claim for the listed critical illness. The number of life-threatening diseases varies from 10 to 37 depending on the insurer.

Benefits-

A health insurance policy is needed for the settlement of hospitalization expenses incurred by the insured on the medical treatment. If the insured gets treated at a network hospital, he/she can avail the cashless facility where the bills are reimbursed directly by the insurance company. Even after making a claim, your health insurance policy continues until you exhaust the entire sum insured. You can renew the policy yearly.

When insured under a critical illness plan, the insured receives a tax-free lump sum payout after he/she has been diagnosed with a pre-specified critical illness. Thanks to the lump sum payout method, the insured can spend it as he/she wishes. Additionally, a critical illness policy expires once the claim is made.

Sum Insured-

An insurer can get a cover of maximum Rs.1 crore under a health insurance plan. On the other hand, a critical illness policy offers a maximum sum insured of Rs.50 lakhs.

Premium-

Due to its extensive coverage, health insurance policy charges a higher premium. Whereas, a critical illness policy is cheaper than a health insurance policy as it covers only a set of pre-declared critical diseases.

Even though both these policies balance each other, we should keep in mind that they serve a different purpose and hence, everyone needs to have both these policies to have complete protection against unforeseen medical emergencies.