Health insurance and critical illness plans are often confused - but they serve very
different purposes.
While health insurance covers hospitalization expenses, a critical illness plan pays a
lump-sum amount when you’re diagnosed with a serious disease like cancer, heart attack, or
kidney failure.
Both are essential in a complete protection strategy - one pays hospital bills, the other
replaces lost income.
At PolicyBachat, we help you compare and combine both types of policies to create 360°
medical and financial security for your family in Hyderabad, Telangana.
Here’s how they differ and how to decide which one to buy in 2025.
Health Insurance Vs Critical Illness - Quick Comparison
| Feature |
Health Insurance |
Critical Illness Insurance |
| Purpose |
Covers hospitalization costs
| Pays lump-sum on illness diagnosis |
| Claim Type
| Reimbursement / cashless |
Lump-sum payout (no bills needed) |
| Trigger |
Hospitalization |
Diagnosis of listed illness |
| Coverage |
All illnesses, treatments, surgeries |
Specific major diseases (15 - 60 types) |
| Claim Frequency |
Multiple times |
Usually once per policy term |
| Waiting Period |
30 days (accidents covered Day 1) |
90 days (standard) |
| Tax Benefit |
Section 80D |
Section 80D & 10(10D) |
| Ideal For |
Medical expense protection |
Income replacement during illness |
Example Scenario
Case 1: Health Insurance Only
Ravi has ₹10L health cover. He gets hospitalized for cancer treatment costing ₹8L.
- Hospital bills are paid by his health plan.
- No income protection during treatment leave.
Case 2: Health + Critical Illness Combo
Same case, but he also has ₹20L Critical Illness Plan.
- ₹8L hospital cost paid by health insurance.
- ₹20L lump sum received to manage recovery and income loss.
Why You Need Both
- Health Insurance handles hospital bills.
- Critical Illness plan handles long-term financial impact.
- Together, they cover treatment + income replacement.
Diseases Covered Under Critical Illness Policy
- Cancer (any major type)
- Heart Attack / Stroke
- Kidney Failure
- Liver Failure / Organ Transplant
- Multiple Sclerosis
- Paralysis
- Alzheimer’s / Parkinson’s
- Coronary Artery Bypass
Local Insights
- Avg. critical illness coverage chosen: ₹30L
- Most common illnesses claimed: Cancer, Stroke.
- Avg. cost of treatment (per major illness): ₹7L
- Top insurers offering combined cover: HDFC ERGO, ICICI Lombard, Max
Bupa.
Benefits Of Health Insurance
- Covers multiple illnesses, surgeries, accidents.
- Cashless hospitalization across 10,000+ hospitals.
- Annual preventive check-ups.
- Tax benefits under Section 80D.
Benefits Of Critical Illness Insurance
- Lump-sum payout on diagnosis.
- No need to submit hospital bills.
- Use payout for treatment or income replacement.
- One-time premium plans available.
- Tax-free claim under Section 10(10D).
Cost Comparison
| Coverage |
Health Plan (₹/yr) |
Critical Illness (₹/yr) |
| ₹10L |
₹9,500 |
₹2,500 |
| ₹20L |
₹14,000 |
₹4,000 |
| ₹50L |
₹25,000 |
₹8,500 |
Who Should Buy Critical Illness Policy
- Professionals with dependents.
- Self-employed / business owners.
- Anyone with family history of major diseases.
- People in high-stress jobs.
Combo Strategy For 2025
- Base Health Plan: ₹10 - ₹20L individual or family floater.
- Critical Illness Add-On: ₹20 - ₹50L standalone or rider.
- Top-Up Plan: ₹25 - ₹50L for hospitalization buffer.
Result = Hospital + Recovery + Income Protection.
Policybachat Tip
“Your health plan pays the hospital. Your critical illness plan pays you. Together, they
protect both your savings and your peace of mind.”
Tax Benefits Summary
| Policy Type |
Section |
Deduction / Benefit |
| Health Insurance |
80D
| ₹25k - ₹75k deduction
|
| Critical Illness
| 80D + 10(10D) |
Premium deduction + tax-free payout |
FAQS
Is health insurance same as critical illness?
No - health covers hospital costs; CI pays lump sum on diagnosis.
Do I need both policies?
Yes, for complete protection against medical and financial risks.
Can I add critical illness as a rider?
Yes, many plans allow CI rider with base health or term insurance.
Is CI payout taxable?
No, under Section 10(10D).
How many illnesses are covered?
Varies from 9 to 64 depending on insurer.
Can I buy critical illness after age 50?
Yes, but premiums are higher.
Can CI cover be used multiple times?
Usually once; multi-claim options exist in select plans.
Is medical test mandatory?
Yes, for higher cover or age above 45.
Can I use CI plan for non-medical expenses?
Yes - payout can be used freely.
Which is best combo plan in 2025?
HDFC ERGO Optima Restore + Aditya Birla Activ Secure CI.
Customer Reviews
- “Didn’t realize I needed both — now fully covered.” - Ravi Menon,
- “Clear, simple comparison — great read.” - Sneha Deshmukh,
- “PolicyBachat helped me buy both plans together.” - Ananya Iyer,
- “Love the lump-sum CI benefit explanation.” - Vikram Nair,
- “Now I understand difference between cover and payout.” - Kavya Sharma,
- “Combined both via PolicyBachat — perfect setup.” - Rajesh Rao,
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