Medical Loan vs Health Insurance 2022
Unfortunately, he suffered an accident which caused a brain haemorrhage. 20 lakhs was spent on treatment. Without insurance cover, his family had to take a medical loan for his treatment. Not only this, his family also had to go through physical and emotional trauma. With rising medical expenses and rise in lifestyle related diseases, having a health insurance policy has become important.
While some people rely on a health policy to pay for medical expenses, some are unprepared and rely on getting a personal loan in case of emergency. Today, banks and NBFCs offer personal loans for medical emergencies that can help individuals pay for medical expenses.
If you too are thinking of opting for a medical loan or health insurance, read below to know the difference between the two.
This is a type of personal loan that helps a person to take care of various medical expenses including surgery expenses, operations and other medical conditions.
This is a type of insurance that provides coverage for medical expenses based on the coverage amount chosen by the policyholder. Coverage is provided based on the premium paid which is determined based on age, income, existing medical condition etc. Cashless treatment facility can be availed in the insurance company’s network hospital. Reimbursement is provided if the hospital is not part of the insurance company’s network where the insurance company has to pay the medical bills and pay for the treatment first and then reimburse the bill.
What is the difference?
Health insurance is purchased as a precautionary measure to combat medical inflation and take care of medical expenses in case any medical emergency strikes.
While medical loans are usually taken only after a medical emergency strikes.
Health insurance provides coverage for certain illnesses after a waiting period of 2-3 years. Depending on the insurer and the plan chosen, coverage may or may not be provided for critical illnesses like cancer, kidney failure, etc. Whereas, medical loans do not come with any waiting period or limit. The loan amount can be used immediately for treatment of any type of medical condition.
Health insurance premiums can be paid in EMIs and have no impact on the borrower’s credit score. However, EMIs will have to be paid based on the medical loan tenure, interest rate and the loan amount chosen.
Health insurance has to be renewed every year which means you have to pay the premium every year regardless of whether you make a claim or not. On the other hand, medical loans are chosen only when required.
A medical loan can be taken by any salaried, self-employed person. Health insurance can be purchased by anyone without any major previous history of heart attack, cancer etc.
It is important to keep in mind that the health insurance premium increases if the policyholder has pre-existing medical conditions like diabetes, cholesterol etc. Depending on the existing condition, the insurance company may charge you a higher premium or deny coverage.
Medical Loan Benefits
- Fast approval and delivery
- Covers all types of medical conditions
- The money can be used to take care of all kinds of health expenses
- Collateral free loan
- Flexible EMI tenure
- Health insurance benefits
- Covers hospital bills
- Provides tax benefits up to 1 lakh
- Saves your savings from being siphoned off
- Can get health cover of Rs. 1 crore and above
Health Insurance Riders
Riders in health insurance are additional coverage that you can purchase to get additional benefits and make your health policy more comprehensive. The cost of health insurance rider depends on your age, sum assured, type of coverage etc. Take a look at the five most common riders you might consider purchasing under your health insurance policy:
- Maternity Cover Rider- A maternity cover rider can help you cover your maternity expenses, including childbirth, pre-natal and post-natal expenses etc. Some insurance companies may offer coverage for newborn baby expenses till the end of the policy term. However, this rider comes with a waiting period which can range from 2 years to 6 years depending on the health insurance company.
- Critical Illness Rider- A critical illness rider will ensure that your health insurance policy covers critical illnesses, such as heart attack, cancer etc., that are diagnosed for the first time during the policy period. It will provide you a lump sum benefit amount irrespective of the actual medical expenses incurred during treatment. It comes with a waiting period of 90 days and a survival period of 30 days and covers around 10 to 40 critical diseases depending on the insurer.
- Personal Accident Rider – A personal accident rider can help you get compensation from your insurer if an accidental injury causes your disability or death. It will pay you the full sum assured in case of permanent total disability but only a part of the sum assured depending on the type of injury in case of partial disability. It is also known as double indemnity rider as your family will get additional death benefit in case of accidental death.
- Hospital Cash Rider- Hospital Cash Rider enables you to get a certain daily cash allowance from your insurer to cover the incidental expenses you may incur during hospitalization for injury or illness. It offers double the coverage amount for certain days if you are admitted to ICU. The daily cash amount may vary as per the policy terms and coverage chosen. However, you need to be hospitalized for at least 24 hours to activate this rider.
- Room rent waiver- Room rent waiver ensures that your health insurance policy covers the room rent in the hospital of your choice during hospitalization. It ensures that no limit on room rent applies to you and thus, allows you to opt for rooms with higher sub-limits or no sub-limits without paying extra money from your pocket.
Why Compare Health Insurance Plans Online?
Comparing health insurance quotes online helps you choose the best health plan to suit your healthcare needs. Sometimes, it can be confusing to choose the best health insurance plan as many insurance companies offer different health insurance products with impressive features.
Fortunately, Policybazaar.com understands the confusion of customers and hence, offers a platform where you can compare the features, sum assured and quotes of various health insurance plans online. Here are some of the key benefits of comparing and shopping for health insurance plans online:
- Access to accurate information: It provides easy access to every medical insurance policy available in the market. It also saves buyers from dealing with insurance agents who are often known to provide unreliable and biased information.
- Easy Comparison of Different Health Plans: Comparing different health insurance plans online is both time saving and convenient. You don’t need to keep meeting with agents to compare and choose the best plans. Moreover, many tasks, such as paying premiums, renewing health insurance plans, etc., are also easy through the online mode.
- Find a policy with the right premium: If a customer buys a health plan online, he can compare the premiums and choose the one that fits the budget. Also, no brokerage or agent fees are charged and hence, the buyer saves a considerable amount of money.
- Availability of Provider/Plan Reviews: You can check the insurance company’s ability to meet your claim requests by comparing claim settlement ratios online on our website. Doing so will help you get an overall idea of the insurer’s reputation, enabling you to make an informed decision.
What Factors Affect Health Insurance Premiums?
With the advancement in medical facilities, healthcare costs have also increased. The main advantage of health insurance is that it takes care of health care costs. It provides financial security to you and your family in case of unexpected critical illness or accidental injuries that can drain all your savings. Here’s how your insurance premium is priced:
- Medical History: Your medical history is one of the major determinants of health insurance premium. Almost all health insurance companies in India make a pre-medical test mandatory (after a certain age) before buying a health insurance policy.
- While some insurance companies do not mandate a medical examination, they do consider your current medical condition, lifestyle-related health risks, and your family’s medical background. That’s why medical insurance premiums for smokers are higher than others.
- Gender and Age: Age is another important determinant of medical insurance premium. The premium varies depending on the age of the insured person. That is why it is recommended to buy a policy at a young age as the premium cost is lower for young applicants.
- Elderly people are prone to cardiovascular diseases and other serious illnesses like cancer, kidney problems etc. For this reason, senior citizen medical insurance premiums are usually higher. Also, premium cost for women health insurance is lower as compared to male candidates due to lower risk of stroke, heart attack etc.
- Policy Term: The premium for a 2-year health insurance plan will be higher than a 1-year plan. However, almost all insurance companies offer discounts on long-term medical insurance plans.
- Type of health insurance plan: The health insurance policy you choose also affects the premium cost. The higher the coverage, the higher the premium. With the help of an online health insurance premium calculator, you can compare the premiums of various health insurance plans before purchasing them.
- No-Claim-Discount: If you have not made any claim during your previous policy term, you can get NCB or No Claim Bonus discount. Also known as a cumulative bonus, savings on premiums range from 5 to 50 percent, depending on the number of claim-free years. It is one of the most important factors that is considered while calculating the cost of premium.
- Lifestyle: If you drink or smoke regularly, you are more likely to be charged a higher premium amount. In some cases, the insurer may even reject your request for a medical insurance policy.