Individual health insurance v/s critical insurance: Which one should you buy?

With recent pandemics and the rise of lifestyle diseases, it is no longer a question of whether one needs to buy a health insurance policy, but which kind of policy one needs to purchase. You might be confused between choosing between individual and critical illness plans. This article sheds light on both.

An individual health insurance plan…

As the name suggests, an individual health policy offers health coverage to only the insured person. Thus, if you buy the plan in your own name, only you can avail of its coverage in case of a health issue. Your family members cannot avail of the coverage.

Most individual health plans cover minimum 24-hour hospitalisation, specific day care treatments, ambulance costs and in some cases, daily hospital cash. The coverage should be decided based on these factors:

• Your age
• Your current health profile
• The city of your residence
• The number and kind of private hospitals in your city

The coverage for the individual health plan can range between Rs 5 lakh and Rs 10 lakh, depending on your specific needs. You may increase the coverage amount while renewing the plan if required. The premium payable depends on the coverage amount, the riders chosen, your age, health profile, etc.

A critical illness health insurance policy

With rising incidents of serious illnesses marking even the young, it is time to look at critical illness insurance seriously. Most people believe that it is useful only for those with a genetic predisposition to certain critical illnesses like cancer and heart disease. However, there is no denying the fact that even those with no family history of certain serious illnesses may contract them later in life. The cost of treating the critical illness has a huge financial impact, what with treatment procedures and medicines being highly expensive. Post-operative therapy and rehabilitation are also long drawn and costly.

Unlike individual health coverage which works in terms of reimbursement, critical illness insurance works as a defined benefit plan. Thus, the sum insured is released immediately upon diagnosis of the serious illness (if it is under the list of covered critical illnesses). This means that the premium paid against the plan is returned in its entirety to the insured person.

Since the benefit is immediately paid upon diagnosis, it helps the insured start treatment at a facility of their choice on an immediate basis.

Should you buy a separate critical illness plan if you have an individual health cover?

Examine your individual health insurance plan first. The best plans offer a critical illness insurance component in the same plan, in which case you obviously don’t need a separate policy. It is better to club them in one plan for better financial management.

But you may certainly buy a separate critical illness insurance plan if you fear contracting a disease that runs in the family, whether it is advanced heart disease, renal issues or even certain kinds of cancer. It is the best plan to have on hand to treat serious illnesses that require a lot of money and time to treat. Buying the plan when you are young and healthy will result in lower premiums, too.

An important point to note when buying critical illness plan is to choose plans that do not exclude pre-existing conditions. Suppose one has hypertension which is not a critical illness by itself, but which has the potential to result in critical complications like stroke or heart failure. If hypertension is excluded as a pre-existing condition, then your claim for the issue causing critical illnesses later will be denied.

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