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Health Insurance vs Medical Insurance – How To Choose Between The Two

Find out more about the differences and similarities between medical insurance and health insurance. Visit right away to learn more about health insurance policies.

  • 16,558 Views | Updated on: Feb 27, 2024

The possibility of a health crisis seems to loom far but always strikes at the time least expected. This year, we saw the impact of COVID-19 on the country’s citizens and the economy. Health-based insurance has become more of a necessity than a choice with the increasing number of health issues and diseases. Thus, more and more people are buying medical or health insurance to protect themselves and their loved ones. Both health and medical insurance are used interchangeably but differ in the scope of benefits they provide.

What is Health Insurance?

Health insurance is a type of insurance coverage that provides financial support in a health crisis. It aims to provide 360-degree and comprehensive coverage for any illness, accident or injury. There are different types of health insurance plans to suit diverse needs.

Types of Health insurance plans

  • Individual Health Insurance
  • Family Floater Health Insurance
  • Critical Illness Health Insurance
  • Senior-citizen Health Insurance
  • Personal Accident Health Insurance
  • Group Accident Health Insurance
  • Maternity Health Insurance
  • Corporate group (Employer-Employee) Health Insurance
  • Daily Hospital Cash Allowance Insurance

Health insurance covers:

  • Pre and post-hospitalisation costs
  • In-patient hospitalisation costs
  • Costs for daycare procedures
  • Costs for cataract treatment
  • Costs for non-allopathic treatment
  • Costs for organ donor transplantation
  • Costs for delivery and newborn baby expenses
  • Costs for modern/ advanced treatments
  • Costs for other surgical procedures
  • Ambulance and transportation costs
  • Costs for diagnostic tests, annual health check-ups, second consultations

However, there are some exclusions to what health insurance covers:

  • Pre-existing diseases
  • Cosmetic surgery like botox, liposuction, etc.
  • Voluntary abortion
  • Health supplements
  • Self-inflicted injury
  • Sexually transmitted diseases
  • Infertility treatment
  • Injuries due to alcohol consumption

What is Medical Insurance?

Medical insurance is a very targeted and limited form of health insurance wherein you get coverage for a pre-defined and limited set of medical expenses. Additionally, there is a ceiling on the maximum sum assured - generally Rs.5,00,000, and there is no scope to enhance the coverage through riders/add-ons.

Following are some common types of medical insurance plans:

Types of Medical Insurance:

  • Individual Medical Insurance
  • Family Floater Medical Insurance
  • Senior-citizen Medical Insurance
  • Critical Illness Medical Insurance

Medical Insurance covers:

  • Costs of in-patient hospitalisation at an allopathic facility/registered hospital
  • Costs for domiciliary hospitalisation (home care treatment)

Key Differences between health insurance & medical insurance


Health Insurance

Medical Insurance

Insurance Coverage

Hospitalisation coverage (as long as you’re in the hospital for at least 24 hours), specific diseases, and a set amount are all covered by medical insurance. Additional to actual hospitalisation costs, it doesn’t cover any other fees.

Comprehensive coverage is provided by health insurance, including coverage for hospitalisation, acute sickness, routine checkups, ambulance, and more.

Availing Benefits

Hospitalization is required in order to receive the benefits of medical insurance.

Benefits from health insurance can be obtained without being hospitalised.

Number of claims

Allows additional claims until the amount insured is gone.

typically a single claim, such as one for a lump sum payment in the event of a critical illness.


When using a cashless payment method, payments are either repaid to the policyholder or made directly to the hospital.

When using a cashless payment method, the policyholder is either refunded, the hospital receives payment, or a lump sum payment is made in circumstances like critical illness, certain illness policies, etc.

Sum assured

Typically, the maximum sum insured is Rs. 5 lakhs.

The amount insured may be increased to many crores.

Add-on benefits

Extensions and add-ons to coverage are not permitted with medical insurance.

For a variety of healthcare requirements, including maternity, accidents, serious illnesses, etc., health insurance offers add-ons.

Is Health Insurance the Same as Medical Insurance?

  • In a broad sense, both health and medical insurance provide financial support in a health emergency. This is in the form of cashless claim settlement or reimbursement. They also offer tax benefits under Section 80D of the Income Tax Act, 1961. However, this is where the similarity ends.
  • Health insurance provides extensive coverage for various health conditions. Medical insurance provides limited coverage for specific health emergencies. The extent of coverage in Medical Insurance is pre-defined and limited to specific injuries, accidents and illnesses. The amount of coverage provided is restricted to Rs.5,00,000 only. Alternatively, the SI amount in health insurance can even go above Rs.1,00,00,000.
  • The coverage provided by medical insurance is lesser than that provided by health insurance. Since the sum insured (SI) amount is pre-capped, the premium rate payable for medical insurance is low and affordable. Medical insurance also doesn’t give its policyholders the option to add extra covers or riders as health insurance does.
  • Health insurance is much more flexible. Policyholders can choose the scope of coverage and the SI amount, and the policy term. Medical insurance does not provide any add-on covers. In comparison, Health insurance offers optional add-on covers like maternity and newborn, accidental, critical illness, etc. One can avail of it on a standalone basis or as a rider.
  • Conclusion

    To conclude, health insurance and medical insurance are not the same. Medical insurance suits those with specific health needs. Health insurance works for those looking for comprehensive coverage for various health needs.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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