Health Insurance Vs. Mediclaim

Points that will be covered here:

(1) Meaning;

(2) Differences;

(3) The better option.

(1)(a)Mediclaim: Mediclaim policy is one that offers coverage up to specified limit on hospitalization & treatment of specified diseases. There are 2 ways in which these medical expenses are settled – cashless or reimbursement.?

-Health Insurance: Health insurance policy goes beyond hospitalization & treatment. It also offers comprehensive cover for expenses incurred on an ambulance, maternity expenses, alternative therapy, vaccination for animal bites, emergency domestic evacuation & so on. Moreover, you don’t have to be hospitalized to make health insurance claims. Even if the treatment is done in the out-patient department, you are reimbursed for it.?

(2)(a)Mediclaim provides coverage only for hospitalization, accident-related treatment & pre-existing?diseases up to pre-specified limit.?

-Health insurance plan offers comprehensive medical coverage against hospitalization charges, pre & post- hospitalization charges, ambulance expenses, etc.?Additionally, it offers compensation in case of loss of income as a result of an accident.

(b)Mediclaim does not offer add-on coverage whereas, health insurance provides for Add-ons that increase coverage available under the policy. Some important add-ons are critical illness cover, personal accident cover, accidental disability, loss of income, daily hospital cash.

(c)Features of mediclaim policy are fixed according to insurance provider & no customization is possible.?

-Health insurance provides for more flexibility to policyholder to choose the kind of coverage required. As premiums are determined according to features chosen, policyholders can customize coverage under the policy according to their requirements.

(d)Cost of mediclaim policy does not change over years whereas, that of health insurance policy can change as policyholders can get discounts for no claims lodged or on policies of longer duration, such as 2-3 year policies.

(e)In mediclaim the maximum coverage available is ?5 lakhs.

-Health insurance coverage does not have an upper limit & depends on policyholder's age, assessment of health status & capacity to pay determined premium. It can even be as high as ?2 crores.

(f)Floater coverage (coverage for the entire family in 1 policy) under the mediclaim policy may or may not be allowed.

-Whereas under the family floater health insurance policies cover self & family members in single policy & thus provide coverage at an affordable cost.

(g)Premiums paid on mediclaim policy are tax-deductible under Section 80D of Income Tax, up to Rs. 25,000. If you are over 60, deductions go up to Rs. 50,000. If you are over 60 & your policy includes a parent, you can claim up to Rs. 1 lakh from your taxable income & same is the case with health insurance policy.

-The tax benefit is one of the few similarities between mediclaim & health insurance policy.?

(h)Since coverage of mediclaim is restricted, cost of it is less than that of health insurance policy.?

(i)In health insurance, an insured can file claims as long as his/her sum insured isn’t exhausted. But when claims related to critical illness/ accidental disability cover?arises, the assured sum is paid in a lump sum.?Such claims can only be made once during the entire policy tenure.

-Under mediclaim multiple claims can be filed until total amount insured is exhausted.

(3)The answer to which is better between mediclaim & health insurance depends entirely on need of policyholder & specific circumstances in which either can be useful.

-For eg., suppose you are reasonably healthy young person who wants coverage for an unexpected hospitalization due to, say, an accident-prone profession; in that case, you can choose to have mediclaim policy. On the other hand, if you have family history of predisposition to certain illnesses or you feel that your lifestyle could lead to critical illnesses in future that would strain you financially, then health insurance policy is the ideal solution.

-It depends on several factors like amount of premium you want to pay, your age, the number of dependents you have, family history of diseases & so on. But you must remember that higher the coverage, higher the premium you have to pay.?

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