Opting for medical insurance? Here’s how it works

By | May 13, 2010

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

Mediclaim Policies Critical Illness Policies
  • Any disease/injury within the first 30 days of commencing a policy, except accidental injury
  • Any treatment relating to any illness/disease already in existence at the time of the insurance proposal
  • Expenses incurred on cost of Spectacles, Contact Lenses, Hearing Aids, Dental Treatment unless requiring Hospitalization, Sterility, Intentional self injury and other exclusion clauses mentioned in the policy. Expenses incurred at Hospitals/Nursing Homes primarily for Diagnostic, X-Rays or Laboratory examination, which are not consistent with or incidental to the diagnosis and treatment of the positive existence of any ailment.
  • Ambulance charges, registration / admission / file charges, extra food charges, attendant charges etc.
  • Any critical illness for which care, treatment, or advice was recommended or which was first manifested or contracted before
  • Any critical illness diagnosed within the first 90 days
  • Death with in 30 days following the diagnosis of the critical illness
  • Presence of HIV/AIDS infection
  • Treatment arising from or traceable to pregnancy or childbirth, including caesarean section, birth defects
  • War, invasion, act of foreign enemy, terrorism, hostilities (whether war be declared or not), civil war, rebellion, revolution
  • Naval or military operations of the armed forces or air force and participation in operations requiring the use of arms or which are ordered by military authorities for combating terrorists, rebels and the like, any natural peril
  • Consequential losses of any kind, be they by way of loss of profit, loss of opportunity, loss of gain, business interruption etc.

Additional Reading: Health Insurance Premium Calculator

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4 thoughts on “Opting for medical insurance? Here’s how it works

  1. Ramesh Lad

    I have Medicalaim policy with United India. I underwent bilateral Hernia Surgery. Hospitalisation, Pathological and other test cost me over Rs. one lac. Insurance co. reimbursed only Rs. 45,000/-.
    The real test of the Insurance co. is when it comes to settle the claim. We realy can neither understand the terms written in policy nor get correct explanation from representative of the co.
    We get some consolation amount.
    There is some revision in policy but the same is not applicable to Old Insured persons.
    So do not walk in with a secured feeling with Mediclaim policies.

    1. salim

      I agree with you.Paying your premiums is the easiest part of the whole thing and getting the insurance companies to pay out is very often a game of wits that you are forced to play.
      They try to gyp you by paying a fraction of the claim citing,often,flimsy grounds that wilt when you force the issue either through the insurance ombudsman or the consumer courts.If they find that a couple of claims have been made,often by aging people,they try to discontinue the policy through various ploys like hiking the premium many times over(I've known instances where premium has been hiked an astonishing 5 times)and forcing you to fall behind on your premium while you dispute the hike,etc.
      And the best way to make a mediclaim is by paying up-front and then claiming after the discharge as we are not hustled into accepting whatever they offer.


  2. Muzaffar Butt

    1. How does one Insure through this Mediclaim Policy.
    2. In case a person is out of India say in USA, can this Mediclaim policy cover his/her medical treatment there in case of any eventuality.

    1. madhav

      1. Your ultimate object is to meet the unexpected medical bill .
      The health insurance is governed by IRDA. All laws are same. But the interpretation differs. So you try to select the best company in claim settlement.
      Before taking a mediclaim policy understand the working concept, not the benefits and exclusions alone.

      2.Mediclaim policies taken in India can be used within India only.

      For a short period of 180 days maximum, there is an insurance called travel insurance which will support you
      with medical , loss baggage, medical and transportation of mortal remains back to India and much more.


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