Varun is a businessman who knows everything about his business but very little about insurance. He was planning to buy an insurance cover for his health requirements. So, like most people, he searched on the internet and left his details on a few websites. Suddenly, his phone was flooded with calls with all kinds of offers. Lots of agents offered numerous different plans.
Some called it a Health Insurance plan and others referred to it as Mediclaim. And like most laymen, Varun didn’t know the difference between the two. So he decided to research and find out what the difference was.
Mediclaim and Health Insurance look like two sides of the same coin, but a thorough analysis will tell you that these are two different coins altogether – as different as a Dollar and a Dinar. It’s important to pick the right coin. Most times, people buy a Mediclaim policy thinking it is a Health Insurance plan. However, they are two different things.
Listed below are a few critical differences:
Sold By: Mediclaim is generally sold by general insurers whereas a Health Insurance policy is offered by general as well as Life Insurance companies.
Scope: Mediclaim limits itself within the ambit of hospital related expenses up to a specified limit. Hospital-related expenses are incurred only on hospitalisation. So hospitalisation is a must for claiming reimbursement, whereas Health Insurance is more ‘comprehensive’ and it not only covers hospitalisation charges but also pre- and post-hospitalisation expenses. Health Insurance also allows one to claim lost income due to illness.
Maximum Cap: Maximum cap limit of the sum insured for Mediclaim is limited, whereas you can get an extended cover of up to Rs. 60 lakh with a Health Insurance policy.
Working: A Mediclaim policy can be called an ‘indemnity policy’, as the policy holder is ‘indemnified’ against hospital expenses. Mediclaim provides you with either cashless hospitalisation or reimbursement of your hospitalisation bills. Under Health Insurance, there are some definite benefits which cover one time lump sum payment. For example, on an eventuality (such as diagnosis with a pre-specified critical illness or an accidental disability), a lump sum payment is made to you by the insurance company. Now it’s up to you whether you spend that lump sum amount for treating your illness or for something else.
Let’s understand this by using a hypothetical situation. You take two different policies: a Mediclaim policy – providing a cover of Rs. 2.5 lakh and a Health Insurance policy – providing a cover of Rs. 5 lakh on pre specified critical illnesses. Unfortunately, you are diagnosed with a critical illness and are hospitalised for a few days. Now let’s see how the two policies will work in the same situation.
|Mediclaim||Health Insurance policy|
|Mediclaim will provide you with either a cashless treatment for your illness, or will reimburse your hospitalisation expenses up to Rs. 2.5 lakh.||As soon as you are diagnosed with a pre- specified critical illness, the insurance company will provide you with the assured amount of Rs. 5 lakh.|
Premium: Mediclaim involves a lesser premium as compared to a Health Insurance policy which offers a wider coverage.
Conclusion: Like most things in life, different strokes for different folks. However, on most parameters, a Health Insurance policy looks like a better option because of its wider scope. But everything comes with a price. The extra benefits of Health Insurance will put an extra burden on your pocket. So it is a must to do a ‘cost-benefit analysis’.
Recommendation: The smartest thing to do will be to opt for an optimum combination of ‘both’. Let the mediclaim pay for your hospitalisation expenses and use the Health Insurance amount for supporting yourself and your family during and post that period. Make sure you read all the terms and conditions carefully before signing the dotted line. Compare the different plans offered by different providers of both Mediclaim and Health Insurance and then make your final decision.
Sum Insured: For Mediclaim, a metro city resident should consider at least a cover of Rs. 4-5 lakh whereas a cover of Rs. 2-3 lakh will do for someone residing in a small city. For Health Insurance, the general rule is ‘the more the merrier’.
Additional Reading: 7 Helpful Tips To Choose The Best Health Insurance Plan