Health insurance pays your hospital bills. Critical illness cover pays a fixed lump sum when a listed illness is diagnosed. They solve different problems.
Critical illness cover vs health insurance
They sound similar but pay in different ways. Health insurance repays hospital bills. Critical illness cover pays a fixed amount when you are diagnosed with an illness on its list, whatever your bills are.
One example
Say you have a ₹10 lakh health policy and a ₹10 lakh critical illness cover, and you have a heart attack that meets the policy definition. The hospital bill is ₹4 lakh.
- The health policy pays the admissible part of the ₹4 lakh bill.
- The critical illness cover pays ₹10 lakh to you, as one lump sum, once the claim is accepted.
What the lump sum is for
Costs a health policy does not pay: lost income while you recover, travel to a bigger city for treatment, home nursing, loan instalments. You can spend it however you want.
Survival period and the named list
Critical illness covers pay only for illnesses on their list, and only if you live a set number of days after diagnosis. This survival period differs widely: HDFC ERGO's my:health Critical Illness add-on asks for at least 7 days, ABHI Activ One's critical illness cover 15 days, and New India Criti Protect has none ("NIL").
Why critical illness claims get denied
- The definition is not met. Each illness has a strict definition. Early stages are often left out; for example, wordings exclude chronic lymphocytic leukaemia below RAI stage 3 from the cancer definition.
- Timing. Some definitions need the effect to last, such as a stroke deficit assessed at least 30 days after it starts.
- Survival period. Death within the survival period means no payout.
- Waiting period. Critical illness covers have their own initial wait, often longer than 30 days (Activ One's is 60 days).
- Non-disclosure of a past condition.
Add-on or separate policy
An add-on on your health policy is simple and often cheaper, but ends if you drop or change that policy. A separate policy stays with you whatever happens to your health cover.
Who might need both
- The only earner, or someone with large loans.
- People with a family history of heart disease or cancer.
- Self-employed people with no paid sick leave.
Critical illness cover does not replace health insurance. Buy enough health cover first, then add a lump sum if losing your income would hurt.
Frequently asked questions
What is the difference between health insurance and critical illness cover?
Health insurance repays hospital bills. Critical illness cover pays a fixed lump sum when a listed illness is diagnosed and the definition is met, whatever the bills are.
Do I need both?
Health insurance comes first. Add critical illness cover if losing income during a long illness would hurt your family, for example if you are the only earner.
What is the survival period?
The number of days you must live after diagnosis for the claim to pay. It varies: 7 days in HDFC ERGO's my:health Critical Illness add-on, 15 days in ABHI Activ One, none in New India Criti Protect.
Why are critical illness claims rejected?
Most often the illness does not meet the policy's strict definition, for example an early-stage cancer. Waiting periods, survival periods and non-disclosure are other reasons.