Do I need regular health policy if I have a critical illness cover?
2 min read 12 Jan 2023, 09:47 PM ISTA critical illness plan is not a substitute for a regular health plan. It is only a supplementary plan.
PremiumI don’t want to buy health insurance but want a critical illness plan where I can get the full sum insured irrespective of the actual cost for several diseases. I got this information from an insurance agent. Please let me know how does critical illness insurance work. Also, why should one have regular health insurance if there is a critical health policy?
—Name withheld on request
A critical illness plan is a fixed benefit plan. Under this plan, you are eligible for the prefixed sum assured once the diagnosis of the specified illness is confirmed. Since it is not an indemnity plan, the actual expenses incurred by the policyholder are irrelevant. However, a critical illness plan is not a substitute for a regular health plan. It is only a supplementary plan. There are three principal reasons for this.
First, critical illness plan coverage is limited to the list of specified illnesses. This list could vary between 10 and 50. A few plans offer a higher list. Generally, the list is of rare illnesses. For instance, some plans cover diseases such as cancer, heart attack, kidney failure, renal failure, stroke, live disorders, and paralysis, etc. These illnesses do not cover regular surgeries or treatment. For example, viral fevers or relatively minor surgeries would not be covered. The plan will not provide you coverage for diseases due to lifestyle habits such as smoking, drinking, drugs and substance abuse. Other exclusions are HIV, pregnancy, childbirth issues or congenital disease death within 30 days of diagnosis. Sometimes, hospitalization costs could skyrocket even for non-critical illnesses. A regular plan provides adequate coverage in such cases.
Second, in the case of a critical illness plan, the benefit expires after the payout. Often, such illnesses have relapses. In the case of a regular plan, the sum assured would get reinstated at policy renewal. This does not happen for critical illness plans. Also, in case you contract more than one of the critical illnesses, the payout is only made once, whereas the regular plan provides coverage for multiple illnesses.
The third drawback is the nuance of coverage in a critical illness plan. For example, while cancer is covered in a critical illness plan, certain kinds of cancer and all early-stage cancers are excluded. Such illnesses can cost substantial money, and are covered under regular plans.
A critical illness plan helps cover several out-of-pocket expenditures that are not covered in a regular health plan. It is also very useful for diseases where hospitalization may be minimal but the expenses are still high, for example strokes, Alzheimer’s or Parkinson’s. Also, critical illness plans provide support for reduction in income potential if a person is afflicted by critical illness. However, it is not a substitute for a regular health plan.
Abhishek Bondia is principal officer and managing director at SecureNow.in.
