Difference between Mediclaim Policy and Health Insurance in India

There cannot be second thoughts on the importance of taking care of one’s health, especially when the entire world is recovering from a major pandemic. In India, the awareness of having a health insurance policy has increased recently, but there is a general misconception among people between mediclaim and health insurance as both sound similar. The truth is, both are different products and are often used commonly in situations. To understand them better and help you choose the right policy, let us first look at mediclaim vs health insurance and understand which is better mediclaim or health insurance.

What is Mediclaim Policy? 

A mediclaim policy, also referred to as mediclaim insurance, is a type of health cover that minimizes your expenses by providing coverage for hospitalization expenses for illnesses. It usually covers diagnostic reports, consultation with doctors, treatment bills, medical bills, etc. In addition, you can avail of a dedicated mediclaim for family members such as your spouse, children, parents, etc., for a pre-specified value, so it guarantees coverage for the entire family. It also offers tax benefits under section 80D of the Income Tax Act, similar to the deductions available for the insurance premium paid under a health plan.

What is Health Insurance?

Health insurance is a type of medical coverage that can be availed for an individual to protect from rising medical costs. Here, the policyholder is either reimbursed for the hospitalization expenses or is offered a cashless facility if admitted to the insurer’s network hospitals. One may also opt for family floater health insurance which ensures complete health coverage for the entire family at an affordable cost. Since there is exhaustive coverage offered in a health insurance policy than a mediclaim cover, many low-cost health insurance plans are available in India to bring more people into the health insurance umbrella.

6 Major Differences between Mediclaim Policy and Health Insurance Policy in India

After a brief introduction about what a mediclaim and health insurance policy mean, let us move on to their differences, which will significantly help you decide on which among the two is beneficial for you to buy.

1. Sum Insured: The sum insured offered in a mediclaim policy is limited; at the most, it could be only for Rs. 5 lakhs, but such a cap does not exist in health insurance policies. Therefore, the value of the sum insured is limited and restricted in a mediclaim policy. Still, a health insurance policy cover can be increased as per needs and requirements, making it a comprehensive plan that can provide coverage for treatments that involve high costs, which may not be possible with a mediclaim policy. 
2. Coverage: A mediclaim policy covers only the hospitalization expenses, but a health insurance policy, on the other hand, will include hospitalization expenses, pre, and post-hospitalization, ambulance charges, consumables, diagnostic costs, etc., as per the chosen plan, which is also part of the treatment. To utilize the mediclaim benefits, the individual should be admitted to the hospital, which isn’t necessary in the case of health insurance, as their coverage includes treatments that take place at home, at times where hospitalization is not possible and for day care treatments also. 
3. Add-ons: It is possible to add multiple covers to a health insurance policy, such as critical illness coverage, personal accident coverage, accidental disability coverage, maternity coverage, etc., under a single plan. Such a facility to extend the coverage isn’t available in a mediclaim policy, making it quite disadvantageous if you prefer to extend the functionality of the cover taken.
4. Customisation: A mediclaim policy lacks flexibility when it comes to customizing it as per your requirement. It is pretty much standard, and one has to be satisfied with what it already offers, and the mediclaims provided by your employers belong to this category. But, a health insurance policy offers various customization options, allowing you to choose the tenure, premium payment frequency, and various other policy features, making it quite flexible.
5. Claim Settlement: The claim settlement process with a health insurance policy is much more streamlined than a mediclaim policy as the insurers offer cashless claims facility, which isn’t the case in mediclaim policies. In addition, since mediclaim allows the expenses up to hospitalization only to be used, the claim may not cover all other expenditures made at the time of treatment. On the other hand, a health insurance policy pays a lump sum at a time and also covers most expenses incurred at the time of hospitalization. While talking about the mediclaim vs health insurance difference, in terms of claim settlement, many new-age health insurers offer the facility to get claims multiple times in a year, outpatient department costs, daily cash during hospitalization, etc., which make them more feature-rich compared to mediclaim.
6. Tax Exemption: In the question between mediclaim policy and health insurance, each plan’s income tax benefits also matter most since we Indians choose to get some benefit in the form of IT outgo. Both are eligible for tax benefits under section 80D of up to Rs 25,000 that can be availed for the premium paid towards health insurance for self, spouse, and children by investing in a health insurance policy. The maximum exemption amount can go up to Rs 75,000 in terms of health insurance plan if you have covered your senior citizen parents also.

Now, coming to the question of among mediclaim or health insurance which is better – both serve a different purpose, and it is up to the individual to assess their needs and choose the product that works for them. Since the number of lifestyle diseases is increasing daily, it is our responsibility to protect ourselves and our families from getting sick. If there is a need to get hospitalized, it is required to have a good insurance plan at hand to avoid burning a hole in the pocket.