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It is not either Mediclaim or Critical Illness, but a mix of both

Given the high levels of pollution, high levels of pesticides in food articles and high levels of stress, it is quite likely for a person to contract some disease or the other. Secondly medical treatment has become very expensive. Therefore, insurance against medical problems is a MUST.

There are two types of broad products available in this regard i.e. Mediclaim Policy and Critical Illness Cover.

It is important to note here that it is not as if you have to choose either Mediclaim or Critical Illness. Both are essential. Why?

Suppose a person suffers a massive heart attack. He would have to be naturally admitted to a hospital. There he would have to incur many costs such as room rent, operation theatre charges, doctors’ fees, tests, medicines, etc. As we are all aware, a Mediclaim Policy would take care of these expenses (including pre and post-hospitalization expenses as per the terms of the policy).

So far so good.

Now we shall see the importance of Critical Illness cover.

Let's say he has to stay in hospital for 15-20 days and is thereafter discharged to go home. But after a serious heart attack and its' medical treatment, he will not be a position to immediately resume his normal activities. He may be advised a 3-4 months of rest. During this period, he cannot go to work and hence he earns no income. But his household expenses have to be met. So what does he do?

He uses his Critical Illness policy. In a Critical Illness Policy, the person gets the entire sum assured soon after the diagnosis of ‘pre-specified’ diseases e.g. heart attack. We don't have to give any proof of expenses incurred/to-be-incurred. In fact we don't need to specifically use this money for treatment. Thus, this money can be used to meet day-to-day expenses, till the person resumes his job.

Therefore, while the mediclaim policy will cover the expenses incurred on treating the disease, a critical illness policy can be used to cover the loss of income during recuperation period.

(Someone might say that why not take a large critical illness policy and then use this money to meet both the hospital bills and the household expenses? The problem with this approach is that a critical illness policy covers only a few specific diseases. What if we get a disease not covered under a critical illness policy? Therefore, a separate mediclaim policy is a must. Taking only a critical illness policy will not cover all the risks.)

Recently, a variant to the conventional mediclaim policy has been introduced viz. the Daily Hospitalisation Cash Plan. This suffers from drawbacks (which I will cover in my next blog). Therefore, it may be prudent to avoid such plans. A combo of conventional mediclaim plan + critical illness plan is a more simpler, comprehensive and cheaper strategy to cover your risk against medical exigencies.

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