What Is Health Insurance? - Meaning, Types And Its Benefits

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• Introduction
• What Is Health Insurance?
• How Does Health Insurance Work In India?
• What Kind Of Costs Are Covered Under Hospitalization?
• Types Of Health Insurance
• Benefits Of Health Insurance
• What Is The Difference Between A Mediclaim Plan And A Critical Illness Insurance Plan?
• Why Cover Hospitalization Expenses?
• When To Buy Health Insurance?
• How Much Does A Health Insurance Cost?
• Key Conditions In Health Insurance Plans You Should Be Aware Of
• Standard Exclusions In Health Insurance Plans
• How To Buy Health Insurance?
• How To Choose The Best Health Insurance Plan?

Introduction

By the name, health insurance looks like a cover for all health-related expenses. Unfortunately, it is not.

Health Insurance in India, also called Mediclaim provides a lifetime cover on hospitalization expenses.

Whether the hospitalization required is for more than 24 hours or less than 24 hours (called Day Care treatments like Cataract, Angioplasty, and Chemotherapy), the expenses for these hospitalizations can be covered under health insurance.

What Is Health Insurance?

A health insurance policy resembles a financial friend that steps in to help pay for your medical bills. It offers financial security for both individuals and families by taking care of the significant expenses of medical services. So, if you find yourself needing a hospital stay, a doctor’s visit, or even some prescription meds, it helps cover those expenses.

And how does it work? You pay a regular premium to your insurance company,  similar to placing money into savings during crises. Consequently, the insurance company vows to assist with covering different clinical costs. This could be anything from a standard examination to a major medical procedure or even preventive care to keep you sound.

Thinking about how health insurance can save you from financial headaches? Let’s dive into the practicalities of using your policy!

How Does Health Insurance Work In India?

Imagine you're sailing smoothly through life when, out of nowhere, a storm hits—those unexpected medical bills. That's where health insurance in India comes in, acting like a sturdy life raft. It’s your security net, ready to catch you and keep you afloat when those surprise hospital expenses try to drag you under. It's positioned in such a way that it gives you the best possible help in dealing with the expenses of everything from surgeries and hospital stays to doctor’s consultations and treatments. Essentially, it assists with reducing those high clinical costs and provides you with a touch of monetary space to breathe when you really want it most.

Ever scratched your head over which health insurance is right for you? Let's navigate through the various types available in India! Go to Top 🆙

What Kind Of Costs Are Covered Under Hospitalization?

A health insurance policy provides comprehensive coverage of hospitalization expenses. Here is a snapshot of the key expenses covered under a standard health insurance policy, of course, subject to terms and conditions.

1. Inpatient hospitalization

Health Insurance covers the room charges, ICU charges, the doctor fee, specialist or consultant fee, cost of surgery, oxygen, blood, etc. payable to the hospital.

2. Pre and post hospitalization

Medical expenses like doctor consultations, medicines, and diagnostic tests incurred for the injury or illness before you are hospitalized are covered under health insurance. These are called pre-hospitalization expenses.

Similarly, after being discharged from the hospital, doctors recommend follow-up check-ups, consultations, medicines, etc. These costs are called post-hospitalization expenses.

3. Organ donor hospitalization

In the case of organ transplant, the costs of hospitalization and the donor's surgery are covered under most health insurance plans.

4. Hospitalisation at home.

Many insurance plans even cover hospitalization at home. It covers hospitalization where a hospital cannot be used for treatment due to the following two reasons.

1. Non-availability of beds in the hospital
2. when the patient is so ill or injured that it is impossible to move him/her to the hospital for treatments

Types Of Health Insurance

Here are the most important types of health insurance in India-

1. Individual Health Insurance:  Covers only one individual and the premium relies upon factors like age, clinical history, and the sum insured.
2. Family Floater Health Insurance: Covers the whole household with one policy, where the total sum insured is divided between every one of the members.
3. Senior Citizen Health Insurance:  Planned explicitly for those aged 60 and older, these plans provide coverage for health issues normally connected with ageing.
4. Critical Illness Insurance: Offers a guaranteed lump sum benefit upon confirmed diagnosis of defined critical illnesses, like cancer, heart attack, or stroke.
5. Group Health Insurance: Typically provided by companies as an employee benefit, group health insurance offers thorough medical coverage for a collective of individuals under one primary policy.
6. Top-Up And Super Top-Up Plans: Offers additional coverage past your main health insurance policy, helpful when your base sum insured runs out.

Prepared to find the unlikely treasures of health insurance coverage? Let's dive into the perks and benefits that make it an unquestionable requirement for your true serenity and prosperity!

Benefits Of Health Insurance

Health insurance provides an abundance of benefits, offering genuine serenity and access to top-notch healthcare. Let’s plunge into some of the vital perks of having health insurance-

Financial Protection

Health insurance guarantees effective financial protection by -

1. Medical Expenses Coverage: Health insurance is like your financial security blanket, covering those hefty hospitalisation bills. It includes room rent, ICU charges, surgeries, and any other medical expenses.
2. Ambulance Charges: Policies frequently cover the expenses for ambulance rides, ensuring you can zoom to the hospital pronto during emergencies.

Better Access To Quality Healthcare

Health insurance plays a critical part in significantly improving the quality of healthcare by -

1. Cashless Treatment: At network hospitals, you can snag cashless treatment, where your insurer handles the hospital bills directly, so you don't need to stress over paying money upfront.
2. Network Hospitals: Insurers tie-ups with a bunch of hospitals, ensuring you gain access to top-notch healthcare facilities without any hassle.

Comprehensive Service Range

Health insurance isn't just about covering hospital bills; it extends its reach to a variety of services, ensuring comprehensive care and financial support. Here's how it covers a wide range of medical needs-

1. Pre- And Post-Hospitalisation Expenses: Your coverage stretches out past the hospital stay, taking care of expenses like consultations, diagnostic tests, and follow-up treatments—fundamentally, everything you need before and after you check-in.
2. Daycare Procedures: Even treatments that don’t need an overnight hospital stay—like chemotherapy or minor medical procedures—are covered. So, you’re sorted for both major and minor treatments.
3. Domiciliary Treatment: Home-based treatments are also covered when you can’t be moved to hospital because of severity of injury/illness or the unavailability of hospital beds. So, you can get the care you want right from the solace of your own space.

Preventative Care

When it comes to staying ahead of health issues, preventive care is your best friend. Here's how health insurance can help you keep your health on track with regular check-ups and vaccinations -

1. Regular Check-Ups: Certain policies even cover preventive health check-ups, so you can catch and oversee medical problems quite early on. It’s like giving your health a regular tune-up to keep things running smoothly.
2. Vaccinations: Some health insurance plans even pay for vaccinations, so you can stay up-to-date on your shots without burning through every last cent.

Tax Benefits

Are you confused about tax deductions while paying health insurance premiums? Bless your lucky stars - those premiums fit the bill for tax deductions under Section 80D of the Income Tax Act. It’s like a reward for your wallet, helping bring down your taxable income and supporting your savings.

Comprehensive Coverage Options

Health insurance plans provide a wide array of comprehensive coverage options, guaranteeing you have the protection you need -

1. Family Floater Plans: These plans bundle all your family members into one policy, giving everyone comprehensive protection with a single coverage. It’s like having one big safety net that catches everyone.

Critical Illness Cover: Certain policies go the extra mile, covering critical illnesses like cancer, heart attacks, and strokes. You get a lump sum payout after diagnosis, which can be a real lifesaver when you need it most.

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What is the difference between a Mediclaim Plan and a Critical Illness Insurance Plan?

Here are the crucial distinctions between a Mediclaim Plan and a Critical Illness Insurance plan-

Parameters | Mediclaim Plan | Critical Illness Insurance Plan Coverage Scope | Covers a vast range of hospitalisation expenses. | Specifically covers major life-threatening illnesses. Claim Process | Reimburses or directly pays for hospitalisation expenses. | Provides a lump sum payment upon diagnosis. Premiums | Generally lower and variable. | Higher due to larger payouts. Payout | Pays actual hospitalisation expenses up to the sum insured. | Pays a lump sum regardless of the actual expenses. Flexibility | Offers extensive coverage for different medical expenses. | Provides targeted coverage for specific illnesses.

Why Cover Hospitalization Expenses?

You may argue that you are young today, and find hospitalization to be a remote possibility. Here's why you should cover hospitalization expenses through a health insurance policy:

1. The surge in lifestyle diseases.

Modern-day lifestyle has changed drastically. We live sedentary lifestyles burdened with pollution, mental stress, and bad eating habits. Many individuals at a very young age are prone to lifestyle diseases like diabetes, hypertension, high cholesterol, even heart-related illnesses.

Health Insurance is like looking for an emergency loan - you may not get it when you desperately need it. Insurers get very nervous, covering young individuals with a disease or medical history. They also find covering people above 50 years very tricky. They may request a medical check-up and further checks, curb benefits, demand an extra premium, even decline covers.* It is therefore recommended that you start small and gradually get adequate health insurance, while you are young and healthy (say by the age of 35/40) *

2. The increased cost of healthcare

While diseases have become common, healthcare has become expensive. In the financial year 2017-18, India's retail healthcare inflation stood at 4.39%, which increased to 7.14% in the financial year 2018-19. On compounded inflation of 8%, a hospital bill of 3 Lakhs today will rise to Rs. 30 Lakhs in 30 years. Such costs can incur when you are retired or close to retirement. Why would you burn your savings and compromise in your retired life without insurance?

3. Access to Quality Healthcare:

When a family member falls ill, we want to give then the best healthcare. (I vividly remember when my dad was diagnosed with a tumor (non-cancerous) in his head. We looked for the best surgeon available in our city to get him treated. I knew I had enough health insurance to take such a call.) Health Insurance ensures that come what may, you have the financial backing of a health insurance plan to avail the best healthcare.

4. Tax Benefits:

Lastly, to sweeten the deal, health insurance premiums also give tax benefits under Section 80D of the Income Tax Act, 1961. You can claim a deduction of up to Rs.50,000 by investing in health insurance plans. Moreover, if you buy health insurance for your senior citizen parents. In that case, you can claim an additional deduction of up to Rs.50,000.

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When To Buy Health Insurance?

You should buy health insurance before you run a risk of meeting with an accident or suffer a chronic disease that requires a major hospitalization.

Insurers find it very tricky and unviable to cover or upgrade the cover for anyone suffering from a lifestyle disease. They may either charge extra premium or put some additional conditions. You should just check out the restrictions in cover Senior Citizens face getting what we mean here.

In short, you should be covered under health insurance as soon as you are born till you die. This cover could be through your parent's policy or your employer's policy, your spouse's policy, your own policy, or your children's policy :)

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How Much Does A Health Insurance Cost?

A health insurance of Rs. 10 Lakhs for a 30-year-old will cost Rs. 8000 to Rs. 10000/- Health insurance for a family of 3 (2 adults aged 30, one kid) will cost Rs. 15000 to Rs. 18000/-

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Key Conditions In Health Insurance Plans You Should Be Aware Of

All Insurance policies have terms and conditions, and health insurance is no different. Here are some essential conditions which you should look out for when buying health insurance plans –

1. Sum insured

The sum insured of a health insurance policy is the maximum amount that the insurance company will pay in a particular year. If the bills exceed the sum insured, you would have to bear the excess costs.

It's not always easy to upgrade, especially if you cross the age of say 50, or someone in your family suffers from a lifestyle disease like diabetes. Therefore, you should opt for an optimal sum insured for your retirement phase, keeping in mind the increasing cost of treatments.

Sum insured is also crucial since it determines many other important covers in the policy, such as room charges and treatment limits.

2. Floater Cover

Individual health plans cover one individual under a single sum insured. Floater plans cover two or more members of the family under a single sum insured. Such type of coverage is beneficial for protecting your entire family under a single plan. Usually, not more than one member undergoes a major hospitalization in a year; in such cases – the whole cover is available. Ensure you buy a floater cover that is a sum of the individual coverage you would have purchased.

3. Room rent limit

Another critical condition to check in a health insurance policy is the room rent limit. Many health insurance plans cap the room rent payable under the policy. This cap is either expressed as a percentage of the sum insured, usually 1% or 2%, or capping on the category of room you can select.

Concept of Proportionate Deduction:

Suppose there is a room rent limit and you choose a room with a higher rent. In that case, you will not only have to pay the difference but a proportionate deduction on nearly the entire hospital bill!

Here's an example for easy understanding –

Suppose you buy Religare Care with a sum insured of Rs.4 lakhs. Room rent limit would be applicable, and you would be eligible for a maximum room rent of Rs.4000. Say if you choose a room with a rent of Rs.8000, and your inpatient hospitalization claim is Rs.1 lakh. The actual claim payable by the insurer would be proportionately deducted, and you may be paid just Rs. 50000. You may have to shell the remaining 50000 from your pocket. Therefore, the claim is calculated in proportion of the prescribed room rent limit to the actual room rent, which reduces the amount of claim you receive. Ensure you buy a policy that is adequate and future proof - which means ensuring there are no limits or only category limits in a health insurance policy.

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Standard Exclusions In Health Insurance Plans

There are medical costs and treatments which are not covered by a health insurance policy. These are called policy exclusions. A study of these exclusions is essential to understand the scope of coverage of your policy. Some of the standard exclusions in health insurance plans include the following –

1. Temporary Exclusions:

A Health Insurance policy usually opens up to a full cover in a phased manner. Here are some waiting periods in a standard health insurance cover for diseases/treatments.

• Accidents are covered from Day zero.
• Conditions that you suffer from at the time of buying the policy (called Pre-existing diseases) like diabetes, hypertension, etc. are typically covered after 2-3 years.
• A specific list of treatments that are not pre-existing like hernia, fistula, cataract, joint replacement, etc. are generally covered after 2-3 years.
• Illnesses apart from the ones above are covered 31 days after the policy is issued.

2. Permanent Exclusions:

Some illnesses and treatments are entirely excluded from the scope of coverage of the policy. Listing a few of them here –

• When there is no active treatment carried out. For instance, if the patient is in the hospital only for carrying out medical tests or for monitoring purposes or for recovery, the insurer will not be liable to pay.
• Healthcare expenses that do not require hospitalization, like doctor consultations or costs incurred for treatment in the emergency room, are not covered.
• Illnesses or injuries suffered under the influence of alcohol, drugs or any other intoxicants
• Maternity expenses are not covered in standard health insurance policies. Some do cover after a waiting period.
• Cosmetic surgeries that enhance your appearance are not covered unless there is a medical need
• Any type of non-medical expenses. For instance, the cost of consumables would not be covered. In the case of COVID 19 treatment, Consumables include face masks, gloves, sanitizers, PPE kits, etc.
• Internal Congenital illnesses
• Illnesses or injuries arising due to self-inflicted wounds or attempted suicide

This should be a good snapshot for you to understand health insurance. We will cover a lot more in future articles, which should help to get clarity on coverage and claims.

Want to ace the health insurance game without breaking a sweat? Buckle up for a fun ride through our step-by-step guide to navigate the world of options and discover the perfect match for you and your family!

How To Buy Health Insurance?

Getting health insurance is like setting up a support system for yourself and your loved ones. It’s a smart move to ensure you’re financially protected and have access to top-notch healthcare. So, let’s break down how to choose and buy the right health insurance plan with this easy step-by-step guide-

Step 1: Assessing Your Needs

You need to assess your needs by -

• Individual Or Family: Decide if you need a health insurance plan for just yourself or a family floater that covers everyone under one policy. A family floater can be more convenient and cost-effective for covering multiple members.
• Coverage Amount: Think about your healthcare needs and pick a sum insured that fits. Consider things like your age, health, lifestyle, and what medical care costs in your area. It’s like finding the right-sized safety net for you and your family.
• Specific Requirements: Don’t forget to think about any special needs you might have. Whether it's maternity benefits, coverage for pre-existing conditions, or critical illness coverage, make sure your plan ticks those boxes. It's all about making sure you’re fully covered for what matters most to you.

Step 2: Research And Compare Various Plans

It is very important to research and compare different health insurance plans. You can do this by -

• Different Insurers And Plans: Check out different health insurance providers and see what plans they offer. Dig into the coverage details, exclusions, and any extra benefits they provide. It’s like comparing options to find the one that best fits your needs and offers the most bang for your money.
• Premiums And Affordability: Compare the premiums of different plans and make sure they fit your budget. Use online calculators to get a rough idea of what you'll be paying.
• Network Hospitals: Take a look at the insurer’s list of network hospitals to make sure you’ve got access to good healthcare facilities close to home. It’s important to know that if you need treatment, you won’t have to travel far to get quality care.

Step 3: Comprehending The Policy Details

To make the most of your health insurance, it’s crucial to get familiar with the policy details. Here’s what to look out for -

• Coverage And Benefits: Check out the coverage details to see what’s included—like expenses for hospitalisation, pre and post-hospital care, day care procedures, domiciliary treatment, and ambulance charges. It’s all about making sure you’re covered for the full range of medical needs.
• Waiting Periods And Exclusions: Watch out for the exclusions, waiting periods for certain treatments, and how pre-existing conditions are covered. It’s important to know what’s not included so there are no surprises down the road.
• No-Claim Bonus: See if the policy comes with a no-claim bonus. It’s a nice perk that bumps up your coverage amount for every year you go without making a claim.

Step 4: Make Sure To Read Reviews And Check Ratings Properly

To get a sense of how an insurer performs, it’s a good idea to read customer reviews and check ratings. Here’s what to focus on -

• Customer Reviews: Take a look at customer reviews and testimonials to get a feel for how the insurer handles customer service and claim settlements.
• Claim Settlement Ratio: Look at the insurer’s claim settlement ratio to see how many claims they’ve settled compared to how many they’ve received. A higher ratio usually means they’re reliable. However, just don’t let this be the only thing you consider when picking an insurer.

Step 5: Utilise Online Comparison Tools

Make sure to go through various comparison websites to see different plans side-by-side. You can compare coverage, benefits, and premiums easily, helping you find the best deal without all the guesswork.

Step 6: Consulting An Insurance Advisor

It might be vital to go for expert advice. If you’re feeling a bit lost choosing the right plan, think about talking to an insurance advisor or broker. They can give you tailored advice and help you find the best option based on your specific needs.

Step 7: Look For Riders And Add-Ons

Riders and add-ons might give you that additional coverage you are exactly looking for. Check out any optional add-ons or riders like critical illness cover, personal accident cover, maternity benefits, or daily hospital cash benefits.

Step 8: Complete The Application Process

Here’s what you need to do to wrap up the application process -

• Offline Or Online: Decide if you want to snag your policy online or go the traditional route. Buying online is usually faster and more convenient.
• Medical Examination: Depending on the plan and your age, you might need to get a medical check-up. Some insurers even offer virtual exams, so you can do it from home.
• Fill Application Form: Complete the application form with all the necessary details—your personal information, health history, and who you’d like to name as a nominee. Make sure everything is spot on!

Step 9: Review The Policy Document

Once you’ve completed your application, it’s crucial to review the policy document carefully. Here’s what to keep in mind -

• Policy Terms: Dive into the policy document and make sure you grasp all the terms, coverage specifics, what’s not covered, and how to file a claim. It’s crucial to understand the fine print.
• Free-Look Period: Keep an eye on the free-look period, which lets you cancel the policy within 15-30 days if it doesn’t meet your expectations. It’s your chance to back out if needed.

Step 10: Make The Payment

Pick a payment plan that suits you—monthly, quarterly, semi-annual, or annual—and wrap up the payment process. Just make sure you get your policy document and receipt to keep everything in order.

How To Choose The Best Health Insurance Plan?

MyInsureBuddy.org is an immensely dedicated platform that gives you unbiased advice for all your insurance needs. Here's a simple guide to help you find the perfect health insurance plan tailored to your needs–

Step 1 – Go To MyInsureBuddy’s Website

Visit MyInsureBuddy.org and go to the ‘find best health section’ and fill in your personal details, medical history, lifestyle, and existing policy information.

Step 2 – Generate Your Trumatch Report

Based on your details, you will get a Trumatch Report containing tailored recommendations for the best health insurance plans customised to your requirements.

Step 3 – Arrange A Call

Schedule a call with your preferred financial advisor.

Step 4 – Advisor Consultation

The advisor will get in touch with you to go over the ideas in more detail and make sure they meet your needs. After you're happy, you can buy the plan that best fits your needs

Got a question you’d like to get clarified?

You can post it on the MyInsureBuddy Insurance Forum - and get answers from vetted experts, for free!