Opting for medical insurance? Here’s how it works

While mediclaim or health insurance policy is an indemnity policy i.e., it reimburses your actual medical expenses, critical illness policy is a defined benefit plan i.e., it gives you a lump sum on diagnosis of any of the pre-specified critical illnesses irrespective of your medical expenses.

Sam, a businessman, had been a healthy person all his life. However, after suffering some business losses, he started suffering from stress-related ailments. One day, he started complaining of chest pain and was admitted to the hospital in critical condition. After spending a week in hospital, when he was about to get discharged, Sam was presented with a large medical bill. Running short of money, Sam had to spend another harrowing day arranging for money since his family was not in a position to make the complete payment.

Sam had to go through such an unwanted experience because he had not got himself any kind of medical insurance or mediclaim policy. In today’s highly stressful lifestyle that people lead, being prepared to handle any sudden medical expenses is extremely important. This is where Mediclaim policies and Critical Illness come into the picture. It is also important to know about their features and benefits before going in for a policy.

Mediclaim Policy

A Brief Outline

Mediclaim policies allow the insured to get reimbursements for any medical expenses which occur due to hospitalization because of certain injuries or illnesses. It covers the expenses occurred pre and post hospitalization and because of the added feature of a cashless settlement, the insured can get treated at the hospital without paying a large sum of money.

What does it cover?

Mediclaim covers hospitalization expenses because of any injury or illness for which a medical practitioner has advised hospitalization. It covers:

• Doctor’s/Consultant’s and Anaesthetist’s Fees
• Expenses occurred from medical tests, medicines etc. and other such similar things which might be needed during the hospitalization period

Mediclaim also provides cashless facilities at hospitals which are a part of the insurer’s network of hospitals. In such places, the medical expenses are handled by a designated Third Party Administrator (TPA) from the insurer. Some diseases are not covered under the mediclaim policy in the first year. In the subsequent years however, these diseases may be covered.

Critical Illness Policy

A Brief Outline

Critical illness policies allow the insured to get benefits for critical illnesses like cancer, congenital internal diseases etc. Mediclaim policies do not cover these illnesses in the first one year of the policy. In such a situation, a critical illness policy would be greatly useful. While mediclaim or health insurance policy is an indemnity policy i.e., it reimburses your actual medical expenses, critical illness policy is a defined benefit plan i.e., it gives you a lump sum on diagnosis of any of the pre-specified critical illnesses irrespective of your medical expenses. The main benefit of a critical illness policy is that it does not need to see whether you are hospitalized, only that the covered illness is diagnosed.

What does it cover?

Critical illness policies cover:

• Cancer
• Multiple sclerosis
• Paralysis
• Coronary artery bypass surgery
• Major organ transplant
• Primary pulmonary arterial hypertension
• First heart attack
• Stroke
• Kidney failure
• Arota graft surgery

It may cover other illnesses. The list of diseases covered depends upon the policy as well as the age of the insured.

Exclusions under Mediclaim and Critical Illness Policies

Additional Reading: Health Insurance Premium Calculator