Regular health insurance reimburses (or directly settles) your actual medical expenses. Critical illness cover pays a fixed sum the moment you're diagnosed with a covered condition, which you can use for anything — ongoing treatment costs not covered by your health policy, loss of income during a long recovery, alternative treatment, or simply replacing your salary while you're unable to work.
This distinction matters because a serious illness often creates costs well beyond the hospital bill itself: extended time off work, follow-up treatments, travel for specialist care, or lifestyle adjustments — expenses a standard health policy's hospitalisation-focused cover doesn't address.
It's generally considered a supplement to health insurance, not a replacement for it. If you're the primary earner in your household and don't have a large emergency fund or disability cover to fall back on, a modest critical illness policy alongside your regular health insurance can fill a gap that's easy to overlook until it's actually needed.