Health insurance is one of the three hygiene investments in your life – life insurance, health insurance and retirement savings. As soon as you start earning you should ensure to have these three along. However, health insurance plans happen to offer varying benefits.
Two specific types stand out in this selection:
a) Critical Health Insurance or Long-term health Cover
b) Mediclaim Insurance or Short-term health cover
Lets’ see how both these plans can make a difference in your life and should you choose long-term health insurance over short-term cover.
Short-Term vs Long-Term Health Insurance Plan
The two types of health insurance plans cover different health incidents and offer somewhat different benefits.
Let’s take a look at the difference between short-term and long-term health insurance.
|BASIS||SHORT TERM HEALTH INSURANCE (Mediclaim Insurance)||LONG TERM HEALTH INSURANCE (Critical Health Insurance)|
|TERM||12 months to 36 months||5 years plus|
|RENEWABILITY||Annual renewal or for max 36 months||Annual or Monthly modes but the policy continues|
|SCOPE||Medical expenses – Hospital cost, medicine, surgery, etc. May include daycare expenses as well||Specific diseases such as cancer, heart failure, renal failure, etc.|
|PRE-EXISTING ILLNESS||Covered after a waiting period, usually 48 months||Pre-existing illnesses not covered|
|FLEXIBILITY||Only standalone policies are available||You can buy with a life cover or Mediclaim insurance|
|ADD-ONS||Critical and personal accident insurance covers||Not available|
|Unique Features||May cover daycare expenses for specific treatments including chemotherapy||May cover early stage for specific diseases such as cancer and heart failures.|
|Benefit Amount||Depends on the medical bills||Depending on the diagnosis report|
|Tax Benefits||U/S 80D up to 75,000||U/S 80D or 80C depending on the base policy|
Short-Term Health Insurance or Mediclaim Insurance
These are the policies that cover you for a short duration, generally up to 12 to 36 months. After this period, you have to renew your policy to stay active. This health insurance cover will take care of your medical expenses and you can include your other family members in it:
These plans can range from one year to three years.
b) No-Claim Bonus
Policy will offer a no claim bonus in the way of the increased sum insured for every claim-free year.
If the policy is not renewed then you can lose your no-claim bonus.
You can port your health insurance from one insurer to the other without losing benefits.
e) Tax Benefits
You can claim a deduction u/s 80D for premium payment of up to Rs 75,000.
f) Cashless Hospitalisation
The policy allows you to avail of the cashless facility at networked hospitals. Thus, quite useful in emergencies.
g) Pre-existing Diseases
Policies may have a waiting period before they start covering pre-existing diseases. This is why it’s more practical to continue your old health insurance policies.
Long-Term Health Insurance or Critical Illness Cover
These are health insurance policies that you can buy for longer periods, eg. 10 years, 20 years. The policy has the option to renew annually or pay a lump-sum premium for a long-term cover. Other features of long-term health insurance are as follows:
a) Benefit Payment
Benefit is payable in lump-sum and does not depend on the medical bills.
b) Emergency Usage
The policy does not allow cashless hospitalisation.
c) Covered Causes
Long-term health insurance covers specific diseases and not treatments. So, the policy benefit becomes payable upon diagnosis of a disease rather than on treatment.
d) Level Premiums
Policies can have a level premium if you choose to pay annually.
e) Increasing or Level Cover
You can buy an increasing sum assured or level sum assured policy.
This policy is available as a rider with a life insurance plan or Mediclaim insurance.
Benefits of Buying a Health Insurance Plan
Health coverage or health insurance plans are now improving constantly, trying to provide you with the best protection. Here are some of the advantages.
1. Coverage for your Medical Expense
The major benefit of health insurance is that it helps to cover your medical expenses. With increasing stress and a sedentary lifestyle, many diseases are now getting common. They are even catching up with the younger age as well.
These diseases can hit you anytime. Health insurance will take care of a large part of the expenses related to hospital, medicine and surgery. Thus, health cover saves your long-term savings from breaking their growth.
2. Protect your Family
With health insurance, you not only protect yourself but can protect other members of your family too. With some health policies, you can include your family in the same plan. Thus, ensuring that they get the best medical help.
3. Protects Against Rising Costs
The cost of treatments and hospitalisations are ever-increasing. With inflation, these are most likely to further increase. Not only hospitalization, the consultation fees, doctors fees, and costs of various diagnoses are also increasing.
But if you have purchased health insurance with adequate cover, it can help you combat inflation as well.
4. Portability Benefit
Health insurance policies involve the feature of portability. Thus, you can switch to another health insurance company and still retain your benefits. IRDAI, the body regulating these policies, allows you to port your policy if you are not happy with your current one.
5. Tax Benefits
Health insurance policies come with tax benefits as well. The premiums that you pay towards your health cover are eligible for tax deductions u/s 80D of the Income Tax Act 1961.
Can you do without a Short-term Health Cover?
Short-term insurance covers your emergency medical bills. Whether you are hospitalised due to illness or accident, short-term health insurance will take care of a large part of the bills.
Thus, short-term health insurance is the emergency health plan you need from an early age. So, you must include short-term health insurance in your contingency plan as soon as you start earning.
Also, you can cover your entire family under the same plan.
Why Should you Buy a Long-Term Health Cover?
Long-term health insurance grows more important as you age and have dependents. This plan ensures that your family does not face financial hardships if you are down with a critical illness.
Illnesses like cancer, heart failure, etc. can affect your earning capacity. Thus, you need a plan which provides a lump sum benefit to cover both the possible treatment and kitchen expenses.
Here are a few more reasons why you should go for long-term insurance:
a) Offers lump sum benefit
b) You can get a cover for an early stage of most dangerous ailments
c) Get tax benefits
d) Have an increasing cover for inflation adjustment
e) Offer adequate financial safety to your family from life-threatening illnesses
Health First Plan – Long-term Health Insurance Plan
Canara HSBC Life Insurance Health Insurance plan Health First Plan is comprehensive long-term health insurance. This policy takes care of medical as well as covers your life. It can cover up to 80 years of age. Here are some of its other benefits.
a) It offers to cover 26 Major Critical Illnesses under its 3 variants
b) It offers you high coverage and also allows you to increase the coverage within the plan
c) The plan also involves a monthly payment option. A percentage of the sum assured will be given to the family every month for 5 years after diagnosis.
d) Premium waiver option waives all the premiums on the first diagnosis of the minor Conditions
e) Lump-sum payout will be given to you just after the first diagnosis of the illness
A contingency plan ensures financial stability for everyone dependent on you for their survival and future. Long-term and short-term health insurance plans to complete your contingency plans and make them fool-proof. So, instead of short-term vs long-term health insurance, the question should be short-term & long-term health insurance.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.