Critical illness plan & Mediclaim Plan

POSTED BY Prakash ON December 18, 2010 1:31 pm COMMENTS (4)

Some say go for Mediclaim Policy / health policy & some suggest to have Critical Illness plan .What i understand that both plans are different &  should be used as combo in your financial plan .

Can some one clear this confusion & differentiate both these policies .

4 replies on this article “Critical illness plan & Mediclaim Plan”

  1. The other thing to be noted is that Critical Plan would hand over a lumpsum money even if the actual expenses are lesser , however a mediclaim plan would reimburse only the actual amount of expenses with an upper limit .


  2. Critial illness rider covers ONLY those diseases which are mentioned in your policy bond. Generally, they are about 10-13 diseases like Cancer, Heart attack, kidney failure etc. But here is catch also. They define “heart attack” in medical language in policy documents. So, if the customer has suffered “that” type of heart attack which they have defined in policy bond, only then, the customer is eligible for any kind of claim.

    Secondly, they charge very HIGH premium as compared to mediclaim.

    On the other hand, health insurance policy covers ALL diseases at low premium. Just mention any pre-existing disease you have, in your application form. This is better than insurance riders.

    Hope it will help you.

  3. shashank kashettiwar says:

    iNSURANCE PLANS can be broadly devided into 1)benefit plans and 2) indemnity plans.
    Life insurance, accident policies,critical illness plans are typical examples of benefit plans whereas motor insurance, health insurance-mediclaim type, property insurances are the indemnity type plans.
    The major difference between the two is that the benefit plans would pay the whole sum insured in case of the insured event happening and the plan would close. It may or may not be renewable. You can make a ‘profit’ out of a benefit plan. That is the claim payment may be even more than the loss suffered e.g. you have a critical illness insurance say for 5 lakhs. Then suppose there is heart attack and you are spending say 2 lakhs on the treatment but you would get the full 5 lakhs on happening of the event. So in a way you have made a profit out of it. On the other hand the indemnity type of plans the claim would never be more than the loss suffered. e.g. you are having a car insurance for 5 lakhs and there is an accident and you suffer a 2.5 lakhs loss. The claim amount would never be more than 2.5 lakhs even if you are having a cover of 5 lakhs. So no profit can be made out of the situation. The plan woulkd only ‘indemnify’ your loss.
    So thats why even if you are having multiple mediclaim covers from multiple insurers still the claim amount will not exceed the loss suffered. The insurers would share the loss on a pro rata basis. This is how the ‘indemnity’ principle works.
    But if you have multiple critical ilness covers from many insurers still all of them would pay the full cover amount individually. That’s why they are called benefit plans.
    As a general rule the premiums of the benefit plans would be much higher than the indemnity plans for the same sum insured. The reason of the difference must have become obvious now.
    In practice we require both these type of plans to create sensible risk protection. They are not replacement for each other but complement each other.
    In a typical mediclaim type plan a claim amount doesn’t cover more than 60-65% of the expenses we may incur on the happening of the event. It will not cover the incidental loss of income(salary) and will not compensate other incidental expenses which one has to make apart from the hospitalisation and treatment related expenditure. Also there are internal caps set on different heads under the policy. The hospital room rents, surgical fees and things like that would carry a particular limit. So in practice a cover of say 5 lakhs in a mediclaim is never going to pay the full 5 laks even if all the heads of expenses are accounted for because of the internal caps. So it makes sense to buy benefit plans along with the indemnity plans to take care of all these issues.

    The poser: How come you can make a profit under the benefit plan-Life Insurance?


  4. You are very true Prakash, Both are different. where Mediclaim takes care of your hospitalisation expenses, Critical Care policies takes care of your expenses related to your critical illnesses like cancer, cardiocascular, Kidney, Brain etc. Like after diagonising with cancer you might not be hospitalised immidiately but you have to start your treatment like chemotherapy,etc.and in Critical illness policy once you diagnosed with specified illness and you survive for next 30 days after getting diagnosed, Insurance company will pay the Sum Assured in Lumpsum which you can use for your expenses related to treatment.
    Thus for this kind of situations Mediclaim policies will be of no should buy Medicalim and CI policy in Combo

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