Many people go by the one health insurance plan for all medical requirements. However, this may not be a great idea. To ensure complete protection, one must have a critical illness cover for life-threatening illnesses. This is because regular health insurance plans do not cover major ailments. These health plans are often indemnity-based; hence, you have to claim each hospitalization to avail benefits. 

On the other hand, a critical illness cover provides a lump sum benefit to make-up for all the expenses incurred during a life-threatening ailment.

Addition Reading: Do You Need Critical Illness Insurance Cover Find Out Now

Let’s understand the key differences between health insurance and critical illness cover.

What are the Main Differences Between Health Insurance and Critical Illness Cover?


Health Insurance Plan

Critical Illness Cover

How Does it Work

Reimburses the actual costs of expenses incurred at the time of hospitalization.

Gives a lump sum amount at the time of diagnosis of a critical illness – as per the policy terms.

What all does it cover? How can the payout be used?

Cost (total medical expenses as per the hospital billing) incurred for treatment during hospitalization.

Covers the benefit and is not limited to hospitalization and actual expenses. The amount can be utilized as per individual need.

How inclusive is the coverage?

Coverage includes several illnesses.

Covers only major illnesses and surgical procedures which have higher fees. The benefit could be subject to the degree of severity mentioned in the policy terms and conditions.

Ideal for?

Beneficial to those looking for financial security against primary illnesses.

Ideal for those who are likely to have a critical illness. Critical illness with a basic health insurance plan is recommended for additional cover.

How much is the term of insurance?

Cover for a life-time. Annual renewal.

Until age 75 or death. Long-term cover, e.g. 20 years.

Who benefits from this?

Mainly the policyholder. The collateral benefit comes in the form of protection against financial difficulties to the family members due to hospitalization costs.

The policyholder and family members, since the lump sum amount can be used for various purposes.

How much is the premium?

Premium is dependent on age.

Premium does not change throughout one’s lifetime. However, the insurance company could revise the price depending on actual claim experience.

When does the policy mature?

One year from the purchase and subsequent timely renewals. Cumulative claims during the policy do not exceed the sum insured.

Long-term as per the policy’s terms and conditions. Terminates post claim and the lump sum payout.

How much is the waiting period?

30 days, except accident-related cases. Pre-existing ailments covered after 1-4 years of continuous coverage.

180 days. If diagnosed there is no cover.


Why are Regular Health Insurance Plans Insufficient for Critical Ailments?

Regular health insurance plans do not offer sufficient sum insured and they come on an indemnity basis. This means expenses will be paid only in case of hospitalization. Critical illnesses on the other hand require a higher sum insured since a single critical illness can easily cause a financial burden. Hence, a usual health insurance plan may or may not cover critical illness in the longer run.

Premium amounts

Normal health insurance cost is higher since it covers a wider range of possible health events. Thus, the premium amount will also be higher. Critical Illness cover provides financial protection for certain predetermined medical conditions. If an individual is diagnosed with one of the covered illnesses, he/she receives the entire sum assured as a lump sum benefit. However, it allows only one claim during the entire policy duration. Thus, one can avail of a higher coverage through a lower premium.

Insurance coverage

Regular health insurance includes hospitalization related to a medical condition or accident, pre-and post-hospitalization costs, domiciliary treatment, and daycare expenses amongst others.

Critical illness plans cover specific diseases and coverage could differ from one insurer to another. It covers events that are generally not covered by regular health plans. These include travel-related costs, cover for loss of income, boarding, and postoperative care. Funds can also be sought to cover costs incurred due to lifestyle change post-diagnosis.

Waiting period

Most critical illness plans come with a specified waiting period. Insurance companies may require you to wait for at least 90 days from the date of purchase before filing a claim.

Sum insured

While deciding the sum assured, it is important to incorporate future inflation as treatment costs for critical illnesses have risen over the years.

Number of diseases covered

Most online critical insurance plans come with a lower premium amount, making them cost-effective alternatives. However, it is important to check the number of diseases covered in the plan.

Addition Reading: Do’s and Don’ts of Health Insurance


Both health plans and critical illness policies are important. The benefits under both these types of insurance plans are different. Thus, it is advisable to use both options to avoid any financial hardships in the future.


  1. Which illnesses are covered under a Critical Illness Insurance policy?

The following illnesses are covered under the Critical Illness Plans of most insurance providers:

  • Cancer
  • Multiple Sclerosis
  • Primary Pulmonary Arterial Hypertension
  • Kidney failure
  • Coma
  • First heart attack
  • Open Chest Bag
  • Major organ/bone marrow transplant surgery
  • Aorta Graft surgery
  • Complete blindness
  • Stroke
  • Open heart replacement
  • Repair of heart valves
  • Paralysis
  1. Is it better to take critical illness cover or health insurance?

It’s not one but both. You need a standard health plan for regular medical treatments and a critical illness cover for life-threatening ailments. 

  1. Does healthcare cover critical illness?

It depends on the policy you own. Certain healthcare plans offer coverage for critical illnesses while others don’t. Critical illness cover can be combined with health insurance and life insurance policies. A critical illness cover offers a lump sum benefit that can help in paying for the cost of care and treatment of specific illnesses.

  1. Is it good to have critical illness insurance?

Life insurance is generally assumed to cover the needs of one’s family in case of premature death. However, suffering from a critical illness or long-term disability can be financially burdensome. This is when critical illness insurance can prove financially beneficial for the insured and the family.