» Parveen Sharma, 49, a Max New York Life agent, also stopped the Mediclaim policies of his two daughters Neha, 23, and Nidhi, 21, both call centre workers and, instead, signed on for life insurance policies with CI riders for them. Reason? "Every year, one has to pay large premiums for Mediclaim, which does not give any returns," says Sharma.

These two examples highlight what is fast becoming a trend-of people replacing regular medical insurance with life insurance policies that come with a critical illness rider. The apparent simplicity of the scheme almost reduces it to a no-brainer; by investing a little extra, you get a critical illness rider, which entitles you to receive a given sum of money in case of a pre-defined critical illness (see CI's 10 Maladies) during the subsistence of the policy. For instance, Sharma paid just Rs 173 for a critical illness rider (30-year duration) with Nidhi's Rs 1 lakh-life policy. Similarly, Neha's Rs 1 lakh life cover got her a dread disease rider of the same amount for 20 years at the cost of only Rs 155.

The scheme is attractive and private insurers are marketing it aggressively. The question, though, is: are CI riders effective alternatives to medical insurance policies? The answer to that is a firm 'No'. "A critical illness rider or policy is not a substitute for a Mediclaim policy," declares Dalip Verma, Managing Director, Tata aig General Insurance. Verma's contention is that medical insurance and CI riders are two very different products; therefore, one cannot be a substitute for the other.

Rahul Bose, 43, Operations Manager, IMRB Family: Wife Nina, 43, government official; sons Rupayan, 14, and Dipayan, 6, both students Insurance brief: Bose has a Mediclaim for Rs 2 lakh, and his sons have medical insurance of Rs 1 lakh each. Wife Nina's medical expenses are covered under government schemes. Bose also has an LIC policy (Jeevan Nidhi) with a life cover of Rs 1.5 lakh and a CI rider of Rs 1.5 lakh. Total life cover: Rs 5 lakh Expertspeak: Sudhir Salian, Head (Strategy and Technology), ICICI Lombard, advises: Bose should take a family floater medical insurance policy (which any one family member can use if required) worth Rs 4 lakh. Should include his wife also because with age, it gets difficult to get medical coverage

One big advantage of CI riders is that you get paid the entire sum assured upon diagnosis of a critical illness. This means that once you have the money, you can plan your expenses-the cost of travelling to another city for treatment, compensating for the loss of income due to the illness, donor expenses in a transplant surgery, repeated dialysis in the case of a kidney failure, etc. A World Health Organisation (who) study reveals that 35-40 per cent of medical expenses incurred by Indians on critical illnesses relate to travelling and boarding and lodging.

There's a catch here, though. A CI rider ceases to exist after the sum assured is paid out, although the underlying life insurance policy continues to be effective. And you can't take another CI rider with this policy again. A medical insurance policy, on the other hand, is an annual contract. This means if you are hospitalised (for at least 24 hours), all permissible expenses-room charges, doctors' fees, diagnostic expenses and cost of medicines-are reimbursed, subject to the limit of the sum assured. You only need to submit the necessary bills to support your claim. If you are not hospitalised that year, you get nothing. The policies can be renewed every year, regardless of whether you make any claims or not. The premiums are, however, higher than those of CI riders. For instance, a 35-year-old male, buying a 10-year dread disease cover of Rs 4 lakh from Max New York Life Insurance along with a life insurance policy, will have to pay around Rs 2,000 per annum as premium. A medical insurance cover for the same amount from a general insurance company will cost more than twice that amount.

Deepak Bisht, 36, Maintenance Engineer, Transocean Inc. Family: Wife Benika Deepak, 31, TV actress; son Aidash Deepak, 8, student Insurance brief: Deepak has a Rs 4 lakh Mediclaim policy. Benika has a Rs 5 lakh Mediclaim policy, of which Rs 1 lakh cover is for Aidash. Deepak's life is insured for Rs 35 lakh, Benika's for Rs 5 lakh. Her policy covers her son Expertspeak: Sudhir Salian, Head (Strategy and Technology), ICICI Lombard, advises: The medical insurance coverage seems adequate. However, the purchase of a family floater policy could result in cost savings to Bisht

CI riders, being relatively new to the Indian market, are yet to become as popular as medical insurance. "Every household must go in for a health insurance product like Mediclaim," says Jaya Nagarmat, MD, Investor Shoppe, a Mumbai-based investment advisory firm. One reason is that CI riders cover only 10 specified illnesses, whereas medical insurance policies cover a much broader spectrum of diseases. There's another reason why CI riders are a wee bit unattractive. "Critical illness riders have more conditions attached to them; hence, they are more restrictive and conditional," says Aniruddha Sengupta, Senior Consultant at Arthashastra Financial Planners, another Mumbai-based investment advisory firm. For instance, anyone aged between six months and 80 years can be insured through a medical insurance policy, but CI riders limit this to people between the ages of 18 and 59 years.

That doesn't mean CI riders aren't of any use. Medical insurance covers are available up to Rs 5 lakh only, whereas CI riders provide coverage up to Rs 50 lakh. Treatment for critical illnesses can be prohibitively expensive, so getting covered for a higher amount is a safer option. Over the next couple of months, private insurers plan to launch several such critical illness products. These may even include new diseases-such as a female diseases cover-and are likely to be sold as independent policies (not just riders).

That means consumers will soon have a greater array of products to choose from. So, to cover all fronts, your best option is to go in for both, like Vinod Shrivastava, 57, Reader at Delhi's Ram Lal Anand College, who's bought a life insurance policy with a CI cover as well as medical insurance for his entire family. "Unforeseen hospital expenses can take their toll on family finances. I experienced that when my father was unwell," he says. Don't wait for a similar experience to make your move.