Often people confuse critical illness as a type of health insurance. But it is essential to know that critical illness insurance is not a type of health insurance. Especially when you are buying an insurance plan, you need to know the difference between critical illness insurance and health insurance.
And when you understand both of these, you will find that they complement each other. Many times insurance advisors advise buying both together to cover the gaps each of them has. So, let’s see the difference between critical illness insurance and health insurance and understand them a bit better.
What Is Health Insurance?
Health insurance, as you may imagine, covers you whenever you fall sick. It offers preventative care, treatments, and habilitative and rehabilitative care, etc. Let’s answer a few questions to understand health insurance better.
Q1: How Does Health Insurance pay?
Health insurance does not pay you upfront. Instead, they pay either the hospital or reimburse you once you have paid the hospital bills. However, they will not pay you a lump sum amount to use as you want to.
Also, some insurance companies do not pay the doctors who are out of their network. But some companies do cover out-of-network doctors too. So, this is again an aspect you should enquire about while buying health insurance.
Q2: Does health insurance covers all medical treatments or some chosen few?
So, the answer to this is, health insurance does not cover all medical treatments. It only covers the treatments and preventive care listed in the policy documents. All health insurance abiding by the law needs to include ten essential services. The vital services include ambulatory services, laboratory services, prescription drugs, rehabilitative and habilitative services, etc.
Q3: Does health insurance payout has a limit?
No, in almost all cases, a health insurance company will pay for whatever bills you have till whatever limit. They have no bar on the expenditure they will incur for their customers.
Although even health insurance expires after a particular time, you can easily renew it.
Q4: Can you be denied health insurance coverage?
No, nobody can. Whether you have a pre-existing illness or not, no insurance company can deny you a policy.
So, now let’s understand the critical insurance story.
What Is Critical Illness Insurance?
The first thing to know about critical illness insurance is that it is not a replacement for health insurance, though it can complement it. Critical illness is majorly used to cover any potentially dangerous and expensive problems that your health insurance policy does not covers. These diseases could be anything from cancer to heart attack to organ transplants, etc.
Q1. How does the critical illness insurance pay off?
The payout in critical illness insurance is different from health insurance. If you are diagnosed with a covered problem, the company will pay you a lump sum amount. Yes, they will not pay the hospital or reimburse you but pay you a pre-agreed lump sum amount.
Say, your policy is worth $50,000 and covers cancer. So, if, god forbid, you are ever diagnosed with cancer, the company will send you a check of $50,000. Now it is up to you how to use this money.
Q2: Does critical illness insurance covers all medical treatments or a chosen few?
No, critical illness insurance also covers only a few chosen medical treatments.
Q3: Is critical illness insurance payout fixed?
Yes. Critical illness insurance payout is fixed. You will get whatever is your policy amount once you are diagnosed with a covered problem.
Q4: Typically, how long does the coverage lasts?
The coverage usually lasts for a long time, like 20 years or as long as a whole lifetime. Also, the premiums remain the same during the entire tenure of the policy.
Q5. Can you be denied critical illness insurance coverage?
Yes, you can be. While health insurance is undeniable, critical illness covers can be denied. If you have a pre-existing medical condition or family history, or any other reason, insurance guys can deny you coverage. Thus buying coverage when you are healthy and young can be beneficial. Also, you will get lower premiums then.
|Health Insurance||Critical Illness Insurance|
|Payout method||The company pays the hospital directly or reimburses you later.||The company gives you a lumpsum amount.|
|Limit on financial help||No limit||The company only pays a pre-decided lump sum amount.|
|How long does the coverage last?||Long time||Long time|
|Can you be denied coverage?||No, no one can deny you the coverage||Yes, the insurance company can deny you coverage.|
2 Reasons You Should Buy Both Of Them Together?
Critical Illness insurance is in no way a substitute for health insurance. But it has a couple of advantages when paired with health insurance. So, if you can afford both the premiums, consider buying both.
- The first advantage is that your health insurance might not cover an out-of-network doctor. In such a scenario, you can use critical illness insurance when you need outside of network doctor. Your health insurance can then be used for any other covered illness.
- Another significant advantage of buying the duo is that you can lower your health insurance premiums. How? Higher deductibles mean lower premiums. And when purchasing health insurance, you have the option of opting for higher deductibles. When you fall ill, you will get a lump sum amount from the critical illness insurance policy. You can use some of this money to pay for the deductible. In the end, you will end up saving a lot.
Thus, we can say that health insurance goes a long way in helping you in need. When you fall sick, it can save you from going bankrupt. Critical illness insurance also gives you financial help when you fall ill, but both achieve this in different methods.
So, this was all in our guide about the difference between critical illness insurance and health insurance. We hope you liked it. If you have any doubts about the text, please drop them in the comments section below.