There are essentially two types of health insurance policies – indemnity insurance and defined-benefit insurance plans. The major difference between the two is the type of insurance coverage they provide. A regular health insurance policy is a form of indemnity insurance plan while a critical illness insurance policy is a type of defined-benefit insurance plan.
To understand the differences between these two forms of coverage, let us take a closer look at them.
What exactly are the regular health insurance policies?
A regular health insurance policy covers your hospitalization charges along with pre- and post-hospitalization expenses, laboratory test charges, hospital room rent and even physician fees within policy limits. The money disbursed cannot be used for any other purposes as the amount disbursed goes directly to the partnered hospital in a cashless claim. On the other hand, not making a cashless claim would require you to pay the hospital charges from your own pocket and then send the bill to the insurance company to compensate you for the expenses incurred.
What exactly are critical illness insurance policies?
Critical illness insurance policies cover you against a number of diseases that are a severe threat to life. The list of diseases covered differs from insurer to insurer and one must check whether the illness they are looking to get insured against is actually covered by the insurance company or not. A few of the commonly covered critical illnesses are – major organ transplants, cancer, stroke, kidney failure, first heart attack, primary pulmonary arterial hypertension, heart valve surgery. In a critical illness insurance plan, you get paid a lump sum amount of the sum insured. You can use this amount for any expense you face during your illness from paying for medical treatments that fall outside the sub-limits of your health insurance to your own household expenses.
Equipped with the basic knowledge, you can now understand the differences rather clearly.
What are the differences between a regular health insurance policy and a critical illness policy?
| Basis of differentiation | Critical Illness insurance | Regular health insurance |
| Premium charged | Generally lower but increases with age. | Generally higher and increases with age. |
| Validity | Usually taken for 5 to 20 years after which it needs to be renewed. | Mostly valid for a year after which policy renewal is required. |
| Survival period | Has a survival period of around 30 days after diagnosis | Does not have a survival period but has different waiting periods for initial coverage to commence and for pre-existing diseases |
| Net insured amount | Generally ranges between Rs 5 to 50 lakhs | Typically ranges between Rs 1 to 10 lakhs |
Which is a better policy out of the two?
Both the policies are unique and complementary to each other. A regular health insurance policy will cover you against the various hospitalization charges, however, it will not be helpful if you lose a source income due to the illness and do not have the money to keep your house running. This is where a critical illness cover can help you by giving you a lump sum amount that can be used anyway you deem fit. Therefore, getting a health insurance policy along with a critical illness insurance standalone policy or critical illness add-on cover is the best way to ensure all-around protection.
We hope this blog helps you understand the basic differences between a regular health insurance policy and a critical illness insurance policy. Do look into family health insurance plans as well to secure your loved ones too.
