Health Insurance vs Mediclaim: 9 Crucial Differences You Need to Know

Health Insurance and Mediclaim are two such terms that are often used interchangeably but have evident differences. Despite their dissimilarities, both Health Insurance and Mediclaim are gaining popularity in India to manage the rising healthcare expenses. However, many individuals make mistakes when purchasing Mediclaim or Health Insurance, assuming that the two have similar features. Continue reading to explore and get clarity by delving deeper into the 9 crucial differences between Health Insurance and Mediclaim.

What is Health Insurance?

Health Insurance is a type of insurance that offers protection against unforeseen medical emergencies resulting from accidents, injuries, or illnesses. It encompasses various medical expenses, including hospital bills, medication costs, and consultation fees.

To cover yourself and your family with health insurance, you can purchase a policy for a specific duration by paying premiums on a monthly or yearly basis. The cost of health insurance premiums is determined by three primary factors: the insured person's age, the sum insured, and their health habits.

What is Mediclaim?

A Mediclaim policy enables individuals to receive reimbursement for hospitalisation expenses related to accidents, emergency surgeries, or planned surgeries that occur within the policy duration. It specifically covers the costs incurred during hospitalisation. Mediclaim policies provide claim settlement through either cashless or reimbursement methods.

What is the difference between Health Insurance and Mediclaim?

1. Coverage:

Health Insurance plans offer a broader scope of coverage compared to Mediclaim policies. They encompass not only pre and post-hospitalisation expenses but also cover charges related to ambulance services, day-care treatments, and other additional medical expenses. Certain health insurance plans even provide compensation in cases of permanent disabilities or death, which can result in a loss of income for the insured individual.

Mediclaim plans offer coverage specifically for hospitalisation, treatment related to accidents, and pre-existing diseases within a policy period. These are the only aspects that are included in the coverage of Mediclaim policies.

2. Maximum Sum Insured:

The Health Insurance policies do not have an upper limit for the sum insured. It is determined based on factors such as the policyholder's age, health assessment, and premium paying capacity. So, depending on these factors, the coverage can be as high as Rs 2 crores or even more. Whereas, in the case of the Mediclaim plan, the maximum coverage limit could be fixed at a few lakhs.

3. Operation:

Health Insurance operates on the principle of benefit, meaning that if you become ill and the illness is covered by your health insurance plan, the insurance company will provide a lumpsum payment to cover your treatment expenses.

On the other hand, Mediclaim operates based on the principle of indemnity, which implies that refunds can only be requested after hospitalisation has taken place.

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4. Insured:

An individual has the option to buy a health insurance policy to cover themselves and/or their dependents, including their spouse, children, parents, and parent-in-law. On the other hand, Mediclaim policies can be obtained on behalf of another person, such as an employer providing coverage for their employees.

5. Personalisation:

Health Insurance plans provide various add-ons, such as coverage for accidental disability, critical illnesses, maternity expenses, and accidents. This allows policyholders to personalise their basic policy according to their family's specific needs. In contrast, personalisation of Mediclaim policies is not possible as they typically do not offer any add-ons.

6. Flexibility:

Policyholders have greater flexibility in choosing the desired coverage under a health insurance plan. They can customise the coverage based on their specific requirements, and the premiums are determined accordingly. On the other hand, Mediclaim policies have fixed features set by the insurance provider, and there is no flexibility to modify them.

7. Cost:

The cost of a health insurance policy is subject to change as policyholders can receive discounts for not lodging any claims or for opting for longer-duration policies, such as two or three years. On the contrary, the cost of a Mediclaim policy remains constant over the years and does not undergo any changes.

8. Critical Illnesses:

A Health Insurance plan typically includes coverage for approximately 30 critical illnesses. Among the commonly covered ailments are brain stroke, cancer, cardiovascular diseases, and kidney failure. But a Mediclaim plan does not cover any critical ailments.

9. Claims:

In Health Insurance, individuals can submit claims as long as the sum insured has not been fully utilised. However, in cases where claims are related to critical illness or accidental disability coverage, the assured sum is paid as a lumpsum. Such claims can only be made once throughout the entire duration of the policy.

On the other hand, under a Mediclaim plan, policyholders can file multiple claims until the total insured amount is exhausted.

Should you buy a Health Insurance Policy or a Mediclaim Policy?

In the present economic landscape, traditional sources of support, such as family assistance and emergency savings, may not be sufficient. The soaring expenses associated with medical treatments have made health insurance essential for ensuring your health and financial well-being.

Both Mediclaim and Health Insurance plan offer tax benefits under Section 80D of the Income Tax Act, 1961. Considering their key features and differences, it is advisable to opt for a health insurance plan. This is because health insurance plans offer more comprehensive insurance coverage. However, when selecting the best health insurance plan, you should research and identify the insurance company that provides the best services.

It is noteworthy that there is no universally "best" insurance company or health insurance plan that suits everyone. Insurance needs, and expectations are subjective, and no single plan can cater to the healthcare requirements of every individual. Similarly, one insurance company may meet the expectations of one buyer but fall short of another. That is why it is crucial to compare different health insurance plans offered by several insurance companies based on their coverage, services, benefits, and premium rates.

Conclusion:

Mediclaim and Health Insurance are two types of policies that assist in medical emergencies. While Mediclaim policies are limited to covering hospitalisation expenses, health insurance is more comprehensive and offers benefits for the entire family. Additionally, the inclusion of add-ons in health insurance policies can further enhance their usefulness by providing financial support during challenging times.

KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

Disclaimer: This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision.