Why should you have both – Health Insurance and Critical Illness?

Health Insurance or Critical Illness policy, not sure which policy to buy – check here which one is best for you.

What is Health Insurance?

Health insurance is a form of reimbursement insurance that pays you the cost of hospital expenses for any covered illness, disease, or injury. Health Insurance policy takes care of medical expenses following Hospitalisation/Domiciliary Hospitalisation of the insured in respect of the following situations –
1. In case of sudden illness
2. In case of an accident
3. In case of any surgery which is required in respect of any disease which has arisen during the policy period.

Limitations of Health Insurance Policy

Sum Assured limit – Maximum 5 lakhs
Waiting period – 30 days
Other Limitations – Health Insurance continues to be in-force even after a claim has been made.

What is Critical Illness?

Critical illness cover only pays an insured for the diseases or injuries outlined in the policy. However, rather than a reimbursement insurance that covers expenses, critical illness provides a lump-sum cash benefit to the insured if they meet the qualifications. The funds from critical illness can be utilized in any fashion the insured deems appropriate.
The Critical Care Insurance shall cover the following Major Medical Illnesses & Procedures –
1. Cancer
2. Coronary Artery Bypass Graft Surgery
3. Myocardial Infarction (Heart Attack)
4. End Stage Renal Failure
5. Major Organ Transplant
6. Stroke
7. Paralysis
8. Heart Valve Replacement Surgery
9. Multiple Sclerosis
On first diagnosis of any of the above illnesses / procedures, the insured is entitled to the lump-sum benefit of the entire Sum Insured opted for.

Limitation of Critical Illness Policy

Sum Assured limit – Maximum 50 lakhs
Waiting period – 90 days
Other Limitations –
1- Critical illness cover terminates once a full benefit has been paid.
2- The insured person needs to survive for 30 successive days after the diagnosis of the critical illness in Order to make his claim.

Why should you have both types of Insurance?

1. Health Insurance is more likely to make a payout due to hospitalisation from a critical illness. In contrast, critical illness covers have many restrictions which may prevent a claim benefit. For instance, if you suffer a minor heart attack (or angina pain) and are hospitalised for care and recovery, your health insurance will pay for your hospital stay. However, critical illness cover will not likely provide a benefit because the heart attack was a minor one, and you will likely make a full recovery.
2. If you have diagnosed with a serious illness such as cancer and not be hospitalised, your health insurance will not pay anything, while critical illness cover will pay the full lump-sum benefit amount whether you were in the hospital or not.
3. Critical illness is a good form of insurance protection for those who may have a history of certain illnesses e.g.. Heart disease and cancer etc. If other members of your family have already suffered heart disease, you are at a greater risk for heart disease as well. Critical illness cover can be a good income protection should you actually develop heart disease later on.
4. In Critical Illness, though the premium is payable in Indian Rupees, the coverage offered is worldwide.
5. In Critical Illness benefit paid immediately on first diagnosis of the covered Major Medical Illnesses.

Example –
Ravi has a health insurance policy with a sum insured of Rs. 2,00,000/- and his friend Mohan has critical illness cover with a sum insured of Rs. 2,00,000/-. Both of them hospitalised due to treatment of cancer and have medical bills of Rs. 1,25,000/- each. Ravi will be eligible for only the 1,25,000/- reimbursement, while Mohan is eligible for the full benefit of Rs. 2,00,000/-.