Medi-claim versus Health Insurance from Life Insurance Companies

Mediclaim Policies from General Insurance Companies provides for reimbursement of expenses incurred on your hospitalization. This might be cashless i.e. you will not have to pay from your pocket to the hospitals. The facility of cashless access to hospitals is managed by Third Party Administrators (TPAs). You can enjoy the cashless facility at hospitals enlisted by the TPAs across the country.

Reimbursement can also be made directly to you by the insurance companies after you submit all the Bills, receipts, discharge reports etc. In this case you will have to first settle the bills with the hospitals and then submit them to the insurance companies for reimbursement.

These type of policies are known as indemnity policies. These policies make good for the actual expenses incurred by you and these are the most popular form of medical insurance. Only treatment related expenses are reimbursable.  If there is no claim made during the policy period you will not get back anything from the premium you have paid. The Mediclaim policies offered by General Insurance companies are on yearly basis and you will have to be renewed every year.

On the other hand, most of the Health Insurance policies offered by Life Insurance Companies are called defined or fixed benefit plans. Here a particular sum is paid to you as per the policy terms once you are diagnosed with a covered disease.  This has no relation to the actual expenses incurred by you for your treatment. For example, if the policy provides for payment of Rs.2,00,000/- for a particular critical illness, the company will pay you the entire amount of Rs.2,00,000/- irrespective  of your expenditure on treatment.  The advantage here is that you do not have to worry about claim settlement as you know beforehand the amount that would be paid. Most of these policies cover certain named critical illnesses. Some of the illnesses covered are, cancer, stroke, renal failure, major organ transplants, Multi trauma, First Heart attack, Multiple sclerosis, etc. The list may vary from company to company. Some companies do have scheme for daily  fixed cash allowance payable during the period of hospitalization also.

The tenure of the policy is  long term, 15 to 20 years, compared to usual Mediclaim policy which is annual. The Premium for this policy is having an element for investment also which will be invested in various funds and market related instruments. And the proceeds from the investments will be paid back to you on maturity of the policy if you have not made any claims till then.

In short, ideally, you can have a Health Insurance Policy from a life  insurance company as a top- up or additional cover to the usual Mediclaim Policy.  The Mediclaim policy will take care of your hospital bills and the fixed benefit one will help you to meet other expenses and recovery costs.