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All you should know about Health Insurance to prevent a hole in your pocket
What is Health Insurance?
Health insurance is a type of insurance where an organization (health insurance company) takes the risk of a policyholder’s illness, sickness, accident, or any other mentioned medical expenses and financially secures them and their families.
It’s an agreement between policyholder and health insurance company wherein companies compensate all the mentioned illness, accident or any other reasons in the policy due to which the policyholder has to get hospitalized and in return of which policyholder pays a yearly amount to the health insurance company in the form of premium.
In such policies, companies have tie-ups with an extensive network of hospitals where the policyholder can get admitted and have their treatment by just showing the card provided by health insurance companies.
Or in other cases, if the company doesn’t have tie-ups with the hospitals, they reimburse the expenses caused by the treatment. The Government of India also promotes Health Insurance for all by giving Tax Concessions.
Importance of Health Insurance
Health insurance is a type of insurance where an organization (health insurance company) takes the risk of a policyholder’s illness, sickness, accident, or any other mentioned medical expenses and financially secures them and their families.
It’s an agreement between policyholder and health insurance company wherein companies compensate all the mentioned illness, accident or any other reasons in the policy due to which the policyholder has to get hospitalized and in return of which policyholder pays a yearly amount to the health insurance company in the form of premium.
In such policies, companies have tie-ups with an extensive network of hospitals where the policyholder can get admitted and have their treatment by just showing the card provided by health insurance companies.
Or in other cases, if the company doesn’t have tie-ups with the hospitals, they reimburse the expenses caused by the treatment. The Government of India also promotes Health Insurance for all by giving Tax Concessions.
Benefits of Health Insurance
Plan Name | Min. Entry Age | Max. Sum Assured | Network Hospitals |
|---|---|---|---|
Adult - 5 Years Child - 91 Days | 50 Lakhs | 10,000+ | |
Adult - 18 Years Child - 16 Days | 25 Lakhs | 9,900+ | |
Adult - 5 Years Child - 91 Days | 75 Lakhs | 11,000+ | |
Adult - 5 Years Child - 91 Days | 2 Crore | 7,000+ |
Importance of Health Insurance
Cashless Treatment
All medical treatment bills are paid directly by the insurance company, and you don’t have to worry about a single penny (up to the amount of Sum Assured taken by the policyholder). You can go to any of the network hospitals provided by the health insurance company and get your treatment done by showing your policy card supplied by the company against the policy taken.
Pre & Post Hospitalisation Expenses
All the expenses incurred before the policyholder’s hospitalization are called Pre-hospitalisation Expenses, and costs after getting discharged are termed Post-hospitalisation benefits.
The health insurance companies cover Pre & Post Hospitalisation Expenses if the illness is under the stated terms and conditions of the policy taken.
So, one should Consult a Health Insurance Expert who can clear all terms and conditions mentioned in the policy.
Tax Benefits
To promote the health security of its citizens, the government of India provides tax benefits against premiums paid under Section 80D of the Income Tax Act, 1961.
Daily Hospital Cash
There are miscellaneous expenses during hospitalization, like food, travel, etc. Hence, this benefit is significant.
Generally, these benefits are up to Rs. 2000/day, but it may vary depending on the type of illness like an accident, ICU Covers, etc.
Organ Transplant Expenses
Insurance companies cover organ transplantation surgery expenses if the policy is considered.
No Claim Bonus
When the policyholder doesn’t have claims against their policy for the whole year, they are entitled to a no-claim bonus. With this benefit, the policyholder is entitled to a discount on the payable premium for next year or an increase in Sum Assured from the current one.
Companies also provide free health checkups for such policyholders in their network hospitals.
One should always give a check to No Claim Benefits at the time of premium payment.
Free Health Check-ups
To motivate policyholders for healthy living, companies also provide occasional free health checkups for their policyholders, and this is sometimes also included in the policy itself.
Depending on the policy taken and companies, you are also available for a master checkup.
Lifelong Renewability
As age increases, the illness risk increases. Hence health insurance premium also rises drastically with age. Lifelong Renewalibilty ensures that policyholders renew their policy at any age without any restrictions.
Lifelong Renewability waves off the financial burden for senior citizens in the events when they face extreme medical conditions.
Restoration Benefit
Once the policyholder utilizes the whole amount of the sum assured, restoration of the sum assured is available in policies without additional costs. The policyholder can again avail of the sum assured amount within the same period of the first claim.
Policies with restoration benefits are comparatively costlier than standard policies.
One should check with their health insurance advisors before taking a health restoration benefit under the policy.
Types of Health insurance policy
Critical Illness Plan
Several chronic diseases are not covered in the average Health Insurance Policy. Hence companies made specific insurance companies to cover conditions such as cancer, heart attack, kidney failure, etc.
Senior Citizen Health Plan
This policy is for senior citizens, i.e., people aged 60 years or above. It is designed to meet all contingencies in the hour of need. It includes critical illness, cashless hospitalization, pre-existing disease cover, and a higher sum assured.
Maternity Health Insurance
These are specially designed insurance covers that are made for pregnant women to cover all the expenses in different stages of pregnancy, like pre-hospitalization of 30 days and post-hospitalization of 60 days, delivery expenses, pre & post-natal expenses, vaccination expenses, and others, as per the policy document.
Individual Health Insurance
It covers the medical expenditures of a single individual where there’s always an option to go for a more significant sum assured.
Family Floater Health Insurance
Family floater, health insurance plans, cover all the family members wherein all the family members can utilize the whole sum assured or part of it individually or together as per the needs. It is comparatively cheaper in comparison to individual health insurance policies.
Corona Health Insurance
A recent health insurance type emerged after the global pandemic due to Covid-19. It covers all your expenses to recover from the newly emerged disease once the waiting period is over. Hence, it allows you to relax in peace for your cost.
Unit Linked Health Plan
These are such plans which are a combination of two concepts where one part of the premium is used to cover health insurance expenses, and the other is used as an investment to build a corpus that will be utilized to protect other diseases not included in the plan. These are a combination of investment and insurance.
How to Select the Right Insurance Policy
Tax Benefits on Health Insurance
The premium charged for medical insurance provides tax benefits under Section 80D of the Income Tax Act. The Finance Act 2018 gives higher deductions for medical benefits charged to senior citizens.
If no one above 60 Years
The deduction is up to Rs 25,000 if no family member is over 60. The conclusion for medical benefits provided to parents under 60 is up to Rs 25,000. Therefore, the total deduction one can demand is up to Rs 50,000.
Things to keep in mind when buying a Health Insurance Policy
The following are the aspects that one should keep in mind while buying a health insurance policy from any company:
Cashless Benefit
One should always opt for a cashless policy during hospitalization. By doing this, policyholders stay at peace as every expense is paid directly by the health insurance company only.
Pre & Post Hospitalisation Period
All companies differ in their pre & post-hospitalization periods in their policies. One should look into it instead of carrying this confusion to the time of claim.
Room Rent Capping
Again, all insurance companies differ with room rent cappings, i.e., what amount of room a policyholder can opt for while getting hospitalized; some companies don’t keep such cappings as well.
Sum Assured
Everyone should be aware of their policy sum assured. It doesn’t create any confusion during the time of claim. Also, one should look if the policy has the option to opt for a higher sum assured in between the policy period and, if it is there, then in what conditions.
Reliability of the Company
To have surety about the company’s claims of the policy terms and its market reputation, one should visit the official website and check the plan’s benefits on its official policy document.
Nearby Network Hospitals
They are the hospitals in direct contact with the health insurance companies. One should always check about the network hospitals near their residence location so that they don’t panic to search for a network hospital near them.
Ambulance Expenses
All insurance companies differ with their claims on ambulance expenses covered. With a difference in the plan, the amount also varies.
Restore Benefit
This is among the essential benefits of checking their health insurance policy. In this benefit, when the policyholder(s) exhaust their total amount of sum assured during their hospitalization, the company automatically restores the amount equating to the sum assured for the subsequent hospitalization (its terms differ as per the policies and companies).
No Claim Bonus
When the policyholder doesn’t make any claim during a premium year, they are entitled to no claim bonus benefit under which companies increase their sum assured covers. One should always check for this before paying the following year’s premium.
Other Additional Benefits
There’re many additional benefits like riders, donor expenses, daily cash, e-opinion assistance, air ambulance, domiciliary treatment, daycare expenses, etc., for which one can look.
Health Insurance Claim
The most important part of the health insurance policy is claim settlement. All companies have two primary ways to deal with any claims by policyholders, either offering an immediate filing process or Third Party Administrators (TPA).
It is always advised to take assistance from your financial consultant or insurance advisor for the right and hassle-free processing of your claims. This is the part where online third-party insurance sellers lack behind, as they sell policies online, but they don’t assist personally, and then their policyholders suffer.