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Health Insurance Vs Mediclaim: Know The Key Difference

Mediclaim policies and health insurance plans are types of  health insurance, and the key difference lies in their nature and extent coverage. Mediclaim policies are basic plans that offer limited coverage for hospitalisations and accidents only, while health insurance plans offer a broader base cover.
 

Health insurance plans are key assets when planning for the future. They help mitigate financial risks associated with medical emergencies, but one common mistake many people make is that they often confuse mediclaim policies with health insurance plans. 
 

In this blog, we will break down what both of these health policies are and explain their differences to help you figure out which health policy is the right one for you.

What is Mediclaim Insurance?

Mediclaim policies are basic health plans that offer a limited sum insured. These plans strictly cover the cost of hospitalisations during medical emergencies. 
 

Some may even cover the treatment of specific illnesses up to a particular limit. For the most part, you must bear medical expenses outside hospitalisations. These plans will have a maximum sum insured up to ₹5 lakhs and are generally inexpensive.  

What are Health Insurance Plans?

Like mediclaim policies, health insurance plans cover hospitalisation expenses, but they offer a broader range of medical coverage. 
 

For example, most health insurance plans will cover pre and post-hospitalisation expenses, offer ambulance transport coverage up to a specific limit, and even cover diagnostic tests and consultation charges that preceded hospitalisation. 
 

As a result, these plans will have a higher sum insured and comparatively higher premium rates.

Difference Between Health Insurance and Mediclaim
 

Parameters 

Mediclaim Policy

Health Insurance Plan 

Offered Coverage 

Only for hospitalisations, treatment of accidental injuries and certain illnesses covered under the policy. 

Covers pre and post-hospitalisation charges, ambulance transportation costs (to a limit), critical illnesses and compensation for a certain period in case of loss of income due to an accident.

Sum insured (For 1-year Policies)

Most mediclaim policies generally do not exceed ₹5 lakhs annually.  

Can vary from ₹50,000 to ₹6 crore annually.   

Critical Illness and Maternity Coverage

Most basic mediclaim policies do not offer coverage for these condtions.

Available once you have completed the specified waiting period for each of them. 

Flexibility 

Less flexible in terms of customisation of the plan.

Allows you to enhance or reduce your coverage amount and policy tenures on policy renewal/purchase.

Claims

Can file multiple claims in a policy year until the sum insured is exhausted. 

Can also file multiple claims in a policy year until coverage exhaustion. However, for critical illness claims and accidental disability covers, the claims can only be filed once as the sum assured is paid as a lump sum. 

Add-On Covers

Most insurers will offer add-ons for both types of plans. 

Cost 

Affordable  

Moderate to expensive based on your sum insured 

Ideal For

Individuals without pre-existing or chronic conditions who want to account for medical emergencies.

People who want comprehensive medical coverage or those with/prone to developing chronic health conditions later in life.

Health Insurance Vs Mediclaim Policy: Important Factors to Consider Before Buying



 

  • Cost and Premiums

    Your ability to make regular and timely premium payments plays a huge part in determining the type of health insurance plan you choose. 
     

    Mediclaim policies are generally pocket-friendly options with more affordable premiums. They allow you to file multiple claims until the sum insured is exhausted. 
     

    However, if you can afford it, most health insurers often recommend buying health insurance plans over a mediclaim policy as they offer more comprehensive base coverage and a higher sum insured all under one plan.  
     

  • Sum Insured

    Most mediclaim policies come with a pre-determined sum insured that can not be extended or modified past the upper limit of ₹5 lakhs. 
     

    In contrast, health insurance plans offer a higher sum insured amount that can be increased on renewal past ₹5 lakhs. This will increase your premium, but you and your family will be offered higher coverage in exchange. 
     

    Generally, it is recommended to get a minimum cover of ₹5 lakhs to insure yourself or a minimum of ₹20 lakhs if you wish to insure your family under a health policy.  
     

  • Your Medical History

    Your medical history or your family's medical history will play a vital role in determining which health policy you will buy. This is because a higher likelihood of developing a critical illness or chronic condition later in life may cause you to require higher coverage in the future. 
     

    If this is the case, opting for a health insurance plan rather than a mediclaim policy in your younger years may be beneficial as you can pre-emptively complete the waiting periods under the policy well before you require coverage. 
     

    Moreover, the premium rates for younger individuals will be lower for mediclaim and health insurance plans, so this method can be a viable solution. 
     

  • Hospitalisation Expenses

    Mediclaim policies will strictly cover hospitalisations and the treatment of accidental injuries. Hence, a health insurance plan may be the better choice if you require frequent hospitalisations or suffer from chronic health condtions. 
     

    You will get more comprehensive coverage that includes pre and post-hospitalisation expenses - costs incurred for a number of days before and after hospitalisation. These expenses can be the diagnosis, doctor's consultation charges, medical tests, etc., (leading to hospitalisation). 
     

    You will also be reimbursed for ambulance transportation costs up to a certain limit under your insurance claims. 
     

  • Flexibility

    A health insurance plan will always win out if you desire customisation and flexibility. You can adjust the sum insured amount, the policy tenure, and base coverage options during renewals and policy purchases. 
     

    With this type of plan, you are also offered more add-on riders# to enhance your coverage. In contrast, some mediclaim policies do not offer add-ons under thier plans and have hard upper limits that can not be modified.

Health Insurance Vs Mediclaim Insurance: Which to Buy?

With the information provided above, we can summarise that you should buy a:
 

  • Mediclaim policy if you do not suffer from chronic health conditions or have any dependants that do. These will help cover medical emergencies and are a more affordable option overall. 
     

    Moreover, you can always get a top-up plan to go with your basic health plan if you want more coverage, as it will be less expensive overall than buying a higher coverage plan if you do not wish to over-extend your budget.

  • Health insurance plan if you want more comprehensive coverage for you and your family. These plans will have higher premiums but are considered worth the investment if you consider the additional coverage they provide.  
     

In addition to your health policy, we recommend buying a life insurance plan from a reliable life insurance company if you do not have one already. It will ensure your family's financial security during medical emergencies and other circumstances.

Conclusion

Mediclaim policies and health insurance plans offer ways to mitigate health-related risks. Both of these plans exist to fulfil different needs, and it is up to you to decide the type of medical coverage you need when looking into mediclaim vs. health insurance in India.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Frequently Asked Questions

Is mediclaim and health insurance the same?

No, they both fall under the category of health insurance, but they are different products. 

  • A mediclaim policy will offer limited coverage (maximum ₹5 lakhs ) and will only cover hospitalisation expenses and the costs of treating accidental injuries. 

  • A health insurance plan will offer higher and broader coverage and will cover pre and post-hospitalisation expenses, ambulance costs, critical and pre-existing illnesses (after a waiting period) and other medical costs that lead up to your hospitalisation, like consultations, diagnostics, etc.

What is the difference between life insurance, health insurance plans, and mediclaim?

Mediclaim policy is a health policy that offers basic medical coverage for accidents and hospitalisations. It covers high hospitalisation costs. It is an affordable and short-term insurance plan.
 

On the other hand, a health insurance plan offers all that a mediclaim policy covers and some more. It includes medical expenses and ambulance costs. Just like mediclaim policy, health insurance plans are also short-term insurance plans. 
 

Lastly, a life insurance policy is a long-term insurance policy that offers the policy nominee a death benefit upon the insured’s death. It protects against life’s uncertainties.

How much health insurance should I buy?

This will depend on your age, the number of dependents, and your financial obligations. Generally, the health insurance plan coverage should be at least 50% of your annual income. 

Is Mediclaim taxable*?

Medical insurance claim amounts received from insurers are not taxable* as the payment received is not a form of income or profit. It is reimbursement of your medical expenses; hence, the money received in the bank is not taxable*.

Are accidents covered under health insurance?

Yes, injuries and hospitalisations due to accidents are covered under mediclaim policies and health insurance plans up to your available sum insured amount.

Disclaimers

Generic Disclaimer

  •  Insurance cover is available under the product.

  •  The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

Other Disclaimers

  • Tax: *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.

  • #Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office.