Difference Between Health Insurance and Critical Illness Cover
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The basic difference between health insurance and critical illness cover lies in the way they provide financial support. Health insurance is a long-term policy covering the costs of treatments, hospital stays, medicines, and doctor visits in return for a regular premium.
On the other hand, a critical illness is an add-on or a separate policy providing a one-time sum upon diagnosis of severe diseases, such as cancer.
Critical Illness vs. Health Insurance: What are the Key Differences?
The table below showcases the key differences between health insurance and a critical illness cover.
Feature | Critical Illness | Health Insurance |
Primary Coverage | Coverage for Life-threatening diseases like cancer, heart attack, kidney failure, etc. | Covers pre- and post-hospitalisation expenses for injuries, illnesses, and medical treatments. |
Coverage Scope | Only limited to chronic diseases. | Broad scope as it covers surgeries, accidents, and day-care procedures. |
Payout Basis | Pays a lump sum amount upon diagnosis of a covered critical illness. | Reimburses the cost of medical expenses or provides cashless treatment. |
Purpose | Offers support for income loss or loan payments that are beyond medical bills with a lump-sum amount. | Only limited to medical expenses. |
Usage of Payout | Used for both personal and medical purposes. | Used for medical purposes only. |
Policy Timeline | Ends after the lump-sum payout. | Can be renewed for a lifetime. |
Waiting Period | 90 days | 30 days to 3 years |
Survival Period | 15 days | 14 to 60 days |
Cost of Premium | Low compared to a standard health insurance policy. | Determined based on coverage type, medical history and age. |
When Should You Buy Health Insurance?
Although there isn’t a specific time to purchase health insurance, you should ideally get it in your 20s or 30s due to the following reasons:
- Lower Premiums
Young individuals generally have low healthcare risks. Thus, their premiums become significantly less than older policyholders.
- Financial Security
Protects from unexpected financial burden due to medical emergencies. Moreover, it helps to add riders like maternity cover based on future healthcare needs.
- No-Claim Bonus
Their low health risks can result in more claim-free years, eventually adding a no-claim bonus discount on their premium amount. In fact, according to the guidelines of Insurance Regulatory and Development Authority of India (IRDAI), this discount can go up to 50%.
- Less Waiting Period
Old policyholders generally have longer waiting periods due to pre-existing conditions. This is why buying the health insurance policy early means you get the coverage benefits without waiting longer.
When Should You Buy a Critical Illness Cover?
Along with health insurance, you should get a critical illness cover if:
- You are above the age of 40, becoming more vulnerable to chronic illnesses.
- Your family has a medical history of critical illness.
- You are the only earning member of your family.
Final Words
Critical illness cover and health insurance basically have different but complementary features. Although health insurance covers medical expenses, adding a critical illness plan enhances the benefits by providing financial stability during prolonged treatment.
This is why it is ideal to purchase health insurance early and further strengthen your coverage benefits with a critical illness plan.