Health Insurance

What Is Health Insurance?

Health insurance is a type of insurance coverage that covers the cost of an insured individual's medical and surgical expenses. Depending on the type of health insurance coverage, either the insured pays costs out-of-pocket and is then reimbursed, or the insurer makes payments directly to the provider.

In health insurance terminology, the "provider" is a clinic, hospital, doctor, laboratory, health care practitioner, or pharmacy. The "insured" is the owner of the health insurance policy; the person with the health insurance coverage.

Types Of Health Insurance Plans:

Hospitalization Plans

Hospitalization plans reimburse the hospitalization and medical costs of the insured subject to the sum insured. For this reason, the plans are also known as indemnity plans. The sum assured can be fixed - for a member of the family in case of individual health policies or – for a family as a whole in case of a family health insurance policy. For instance, consider a three-member family with an individual cover of Rs. 2 lakh each. Each member can claim reimbursement for a maximum of Rs. 2 lakh as all three policies are independent.If the family applies for a family health plan cover of Rs. 6 lakhs, then any family member can claim medical benefit for more than Rs. 2 lakh so long as it is within the overall sum assured of Rs. 6 lakhs.

Hospital Daily Cash Benefit Plans

A hospital cash plan pays you a specific prefixed amount for each day you are hospitalized. The number of days for which this benefit is paid is typically capped. This plan is useful to cover ancillary costs (medical and non-medical) that are not covered under health insurance plan and to provide for loss of income during hospitalization ( for self-employed ). While deciding this plan you need to look into Daily cash limit, Number of days of coverage in a policy year and eligibility (or pre-conditions) for claiming the benefit.

Critical Illness Plans

These are benefit-based health insurance plans which pay a lumpsum amount on diagnosis of predefined critical illnesses and medical procedures. The illnesses are specified at the outset. By nature, critical illnesses are high severity and low frequency and cost of treatment is higher compared to regular medical problems like heart attack, stroke, among others.

Reasons To Buy Health Insurance

  • Rising Cost of Treatments: Medical treatments cost rise by 15% every year due to Inflation.
  • Financial Security: Gives you financial security and quality healthcare access for expenses like hospitalization, day care treatments and even OPD expenses.
  • Tax Benefit: Saves your tax under Section 80D up to INR 55,000 every year

Once you buy a health insurance plan, you might feel relaxed that you have covered you and your family against any possible hospitalization in future. But if you don't go through the exclusion section of your policy, then you might get surprises at the time of claim. So before finalizing on any health insurance plan go through its exclusion and select the one which has least number of exclusions and are clearly defined.

Pre-Existing Diseases are those which you are suffering from before opting to buy a health insurance plan, and therefore insurance companies do not cover them from day 1 of your policy. They have a waiting period ranging between 2-4 years in which they will not be liable for any claim arising on account of your pre-existing disease. Therefore you should look for health plans which will cover your existing disease and have the least number of years of waiting period.