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What is the Difference Between a Mediclaim Policy, Health Insurance, and Term Insurance?

Understanding the differences between mediclaim policy, health, and term insurance is crucial to ensure financial security in the future, especially concerning healthcare expenses.

  • 4,599 Views | Updated on: Apr 10, 2024

A mediclaim policy, a health insurance plan, and a term plan each offer financial protection in return for premiums paid by the policyholder. However, their similarities cease here. These three types of insurance offer distinct sets of benefits tailored to diverse health requirements and circumstances. Financial planning with the help of mediclaim insurance, health insurance, and term insurance can reduce the burden of expenses when a health crisis strikes while providing monetary support in your absence.

Difference Between Health Insurance, Term Insurance, and a Mediclaim Policy

While health insurance, term insurance, and a mediclaim policy all serve the purpose of providing financial security, they have distinct features and purposes. Let us take a look at the differences between these policies to help you make an informed decision:

Criteria

Health Insurance

Term Insurance

Mediclaim Policy

Purpose

Provides coverage for medical expenses, hospitalization, and healthcare-related costs.

Provides a lump-sum payout in case of the policyholder’s demise during the policy term.

Provides coverage for hospitalization expenses due to illness or accident.

Coverage

Covers healthcare expenses, including doctor’s visits, surgeries, medications, and preventive care.

Does not provide coverage for medical expenses but offers a death benefit to beneficiaries.

Focuses solely on covering hospitalization costs and related medical expenses.

Policy Term

Renewable annually or for multi-year periods, offering long-term coverage.

Covers a specific term, after which the policy expires.

Usually, it is a short-term policy, covering one year at a time.

Premium Payments

Regular premium payments are required as long as the policy is in force.

Regular premium payments for the specified term; no returns if the policyholder survives the term.

Premiums are paid annually and may vary based on age and health conditions.

Payout

Reimburses medical expenses or provides cashless hospitalization based on the policy coverage.

Provides a lump-sum payout to beneficiaries if the policyholder dies during the term.

Covers hospitalization expenses up to the sum insured, minus deductibles or co-payments.

Survival Benefit

Offers no survival benefit; premiums are paid for coverage of medical expenses.

Provides no survival benefit; the policyholder receives nothing if they outlive the term.

No survival benefit; premiums provide coverage only in case of hospitalization.

Tax Benefits

Premiums paid and benefits received are eligible for tax benefits under Section 80D of the Income Tax Act.

Premiums paid and the death benefit are eligible for tax benefits under Section 80C and 10(10D) of the Income Tax Act.

Premiums paid are eligible for tax benefits under Section 80D of the Income Tax Act.

Riders/Add-Ons

Additional riders can be added for enhanced coverage, such as critical illness or maternity benefits.

May offer riders like accidental death or disability coverage, which can be added for extra protection.

Some mediclaim policies may offer riders for specific illnesses or extended coverage.

What is a Mediclaim Policy?

A mediclaim policy is a type of insurance cover that provides only limited financial protection for specific health needs. The extent of coverage in a mediclaim policy is pre-defined and restricted to specific ailments, accidents, and injuries. In the event of an unforeseen health crisis, a mediclaim policy will only take care of the costs of in-patient hospital care at an allopathic facility or domiciliary care (treatment at home). It does not settle ancillary medical expenses or provide financial support to the policyholder’s insured person’s family. Moreover, a mediclaim policy covers hospitalization costs up to ₹5,00,000 only.

 What is the difference between mediclaim and health insurance?

Benefits of Mediclaim Policy

With different types of term insurance policies, a bucket full of benefits also comes to you. Mediclaim policy offers coverage for medical expenses incurred before and after hospitalization, such as diagnostic tests, consultations, and follow-up treatments. Some of the other advantages of having a mediclaim policy are as follows:

Hospitalization Coverage

Mediclaim policy provides reimbursement or coverage for expenses incurred due to hospitalization, including room charges, medical tests, doctor’s fees, and medication costs.

Pre and Post-hospitalization Expenses

It also offers coverage for medical expenses incurred before and after hospitalization, such as diagnostic tests, consultations, and follow-up treatments.

Daycare Procedures

It also provides coverage for medical procedures or treatments that do not require overnight hospitalization but are still necessary for treatment, such as chemotherapy, dialysis, or minor surgeries.

What is Health Insurance?

Health term insurance is a type of insurance product that provides extensive financial protection for a wider scope of health issues. The coverage in health insurance is more than that of a mediclaim policy. The policyholder receives all-around protection in the event of an illness, injury, or accident. Health insurance settles the costs of hospitalization for medical treatment and the cost of additional medical expenses. It takes care of pre and post-hospitalization expenses, expenses for domiciliary care, and expenses for non-allopathic treatment systems (AYUSH - Ayurveda, Yoga, Unani, Siddha, and Homeopathy). It also includes the costs of various surgical procedures, traditional and modern forms of treatments, outpatient treatments, medicines, and ambulance and transportation charges, among other allied expenses.

Benefits of Health Insurance

Health insurance plans are meant to take care of financial emergencies during medical crises. These benefits help you take care of health issues without worrying about finances. Let us now understand the benefits of health insurance:

Coverage for Medical Expenses

Health insurance provides financial protection against medical expenses incurred due to illnesses, injuries, or accidents. This includes hospitalization costs, doctor’s fees, diagnostic tests, medications, and surgeries.

Preventive Care Services

Many health insurance plans offer coverage for preventive care services such as vaccinations, health screenings, and annual check-ups, helping policyholders maintain their health and detect potential health issues early.

Emergency Care

Health insurance covers emergency medical services, including ambulance transportation, emergency room visits, and urgent care treatment, ensuring that policyholders receive prompt medical attention during emergencies.

What is Term Insurance?

Term insurance is a type of life insurance product in which the family members receive financial support in the unfortunate event of the policyholder’s death in the form of a pre-fixed monetary sum (called a sum assured) to the policyholder’s chosen nominee(s) or beneficiary. To receive the sum assured, the policyholder has to pay a specific premium during the policy term.

Benefits of Term Insurance

Term insurance offers various benefits to the policyholders and its beneficiaries. As a policyholder, it is important to know what the major benefits of term insurance are. Let us take a quick look:

Affordable Premiums

Term insurance typically offers coverage at lower premiums compared to other types of life insurance, making it a cost-effective option for obtaining a high coverage amount.

Death Benefit

In the event of the insured’s death during the term of the policy, term insurance provides a lump-sum payment, known as the death benefit, to the beneficiaries named in the policy. This benefit can help replace the insured’s income and provide financial security to dependents.

Income Replacement

Term insurance helps replace the insured’s income and provides financial support to beneficiaries, ensuring that they can maintain their standard of living and meet financial obligations in the absence of the insured.

Considerations Before Buying any Health, Term or Mediclaim Policy

Before buying any health, term, or Mediclaim policy, it is crucial to consider several factors to ensure that the chosen policy aligns with your individual needs and provides adequate coverage. Here are some key considerations:

Assess Your Needs

Evaluate your current health status, financial situation, and future requirements to determine the type and amount of coverage you need. Consider factors such as age, medical history, family medical history, income, dependents, and financial goals.

Coverage Scope

Understand the scope of coverage offered by the policy, including inpatient and outpatient care, pre-existing conditions, maternity benefits, critical illness coverage, prescription drugs, and other specific benefits relevant to your needs.

Premium Costs

Compare premium costs across different insurance providers and policy options to find an affordable plan that offers comprehensive coverage without compromising on quality.

Policy Exclusions

Review the policy exclusions carefully to understand what is not covered under the policy, such as specific medical conditions, treatments, or procedures, and assess whether any critical aspects are excluded.

Claim Process

Understand the claim process, including documentation requirements, claim settlement timeframes, and the insurer’s reputation for prompt and hassle-free claim settlement.

Waiting Periods

Be aware of any waiting periods associated with the policy, such as waiting periods for pre-existing conditions, maternity benefits, or specific treatments, and factor them into your decision-making process.

Wrapping It Up

Health insurance, term insurance, and mediclaim policies serve different purposes and cater to distinct financial needs. Health insurance focuses on healthcare-related expenses, term insurance provides a lump-sum payout upon the policyholder’s demise, and mediclaim policies offer coverage for hospitalization expenses. Depending on your financial goals and priorities, you may need one or more of these policies to ensure comprehensive financial protection. It is essential to carefully evaluate your requirements and consult with insurance professionals to choose the right insurance policies for your specific needs.

Key Takeaways

  • Mediclaim policies offer limited coverage for specific health needs, focusing on in-patient hospital care.
  • Health insurance provides extensive coverage for a wide range of health issues.
  • Term insurance provides a lump-sum payout to beneficiaries in the event of the policyholder’s death during the policy term.
  • Health, term, and Mediclaim policies differ in coverage scope, policy term, premium payments, tax benefits, and available riders/add-ons.

FAQs


1

Which one is better mediclaim or health insurance?

It depends on your specific healthcare needs and financial situation; health insurance typically offers broader coverage than a Mediclaim policy.



2

Do I need health insurance if I have term insurance?

Yes, because term insurance provides a death benefit, while health insurance covers medical expenses, offering complementary protection.



3

What is covered in the mediclaim policy?

A Mediclaim policy typically covers hospitalization expenses, pre and post-hospitalization costs, and some daycare procedures.



4

What is covered in term insurance?

Term insurance primarily covers the risk of premature death, providing a lump-sum payment (death benefit) to beneficiaries.



5

What is covered in health policy?

Health insurance covers a wide range of medical expenses, including hospitalization, emergency care, preventive care, prescription drugs, and more.

- 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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