What is health insurance: meaning, benefits and types?

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What is health insurance: meaning, benefits and types?

What is health insurance? Meaning of health insurance
Health insurance policy is a guarantee that provides immediate financial help in case any medical emergency arises. It is a contract between the policyholder and the insurance company that covers medical expenses that may occur due to an illness, injury or accident. If you have a health insurance policy, some or all of the medical expenses will be borne by the insurance company, against which the insured is supposed to pay a certain amount known as premium.

There are two ways in which the insurance company compensates your medical expenses:

Cashless Treatment: Here, the policyholder is not supposed to pay anything to the network hospital. Since the insurance company pays the hospital directly.

Reimbursement: Here, the insured must first pay his or her medical expenses and then request reimbursement from the insurance company.

Why should you have a health insurance policy?
Buying a health insurance plan is something that we all avoid until the time we understand its importance. Before purchasing one, it is essential to understand the various benefits of a health insurance plan as medical emergencies can strike at any time and cause a big hole in your pocket. Therefore, it is advisable to purchase a health insurance policy at a very young age, where one can have comprehensive coverage at an affordable premium cost, along with getting the advantage of tax deductions on the premium paid.

Simply put, one should take out a health insurance policy because:

It makes it easy for you to get superior medical treatment without worrying about high medical costs.
Offers specialized coverage for critical illnesses.
Covers emergency road ambulance expenses.
It offers an affordable premium for young people.
It provides a cashless claim benefit, allowing you to take care of your health instead of worrying about high medical bills.
Protect your savings during medical emergencies.
Provides tax benefits under Section 80D.
Lastly, it protects you and your family and protects your savings.
Read More: Best Health Insurance Policy in India

Types of health insurance policies
Basically, there are two types of health insurance policies such as individual or self-plan floater policy and family floater policy. As the name suggests, the individual policy would only provide coverage and benefits to the primary insured. On the other hand, in the case of a family floater plan, there is only one plan that provides coverage for your entire family, such as a spouse, dependent children, parents, and dependent in-laws or siblings.

The plan should be selected, depending on factors such as your age, family medical history, age of children, medical history and, of course, your budget. Let us understand each of these plans in detail:

Individual or own health insurance plan

An individual health insurance policy is issued in the name of a single policyholder, which means that the sum insured and benefits of the policy are entirely dedicated to the insured and does not cover anyone else. Here, the individual purchases the policy to maintain his or her own health, which in turn provides financial help in case of his or her own medical emergency.

Family Floating Health Insurance Plan

Family floating health insurance is a policy that aims to provide sum insured coverage to the individual and also to his or her family members. Instead of taking out a single policy for each family member, family health insurance plan is a better option as it acts as an umbrella for the entire family. Here the insured sum of coverage is shared by all members who have been covered under the same plan.

However, it is advisable to have a separate plan for your elderly parents or in-laws as it will prove to be a more affordable option. Similarly, if any family member has significant medical history, it is also better to purchase a separate plan for them instead of covering them in the family floater plan.

Factors to consider before deciding on a health insurance plan

Step 1: Find the right insurance company
Below are some factors you can use to decide which health insurance company is right for you:

  1. The range of plans offered

Check out the different types of plans a company offers, as well as the plan’s USPs. Some companies offer a range of products to suit the various coverage requirements you have. Choose a company with a wide range of plans so you can find the right policy to suit your needs.

  1. The Hospital Network

Hospital network is extremely important to leverage cashless claims. The broader the network an insurer has, the better it will be. This would allow you to easily locate the nearest cashless hospital.

  1. Claim settlement ratio

The claim settlement ratio tells you one thing: what percentage of claims did the company settle in a financial year? A higher rating indicates that the company is firm in resolving your complaints. A factor that works in favor of the insurer.

  1. Claim-Based Charging

Some companies tend to increase the renewal premium if you made claims in the previous years. This translates into higher premium expenses. As such, avoid companies that follow this practice.

  1. Premium Rate

The pricing policy is the premium that the company charges over its competitors. You can check the pricing policy by comparing similar plans between different companies.

For example, the Aarogya Sanjeevani policy offers uniform coverage features across all insurers. However, your premiums depend on the insurer’s pricing policy. Compare plan premiums between insurers to find the insurer that charges the least. Chances are, their pricing policy is fair across all of their plans.

  1. Ease of complaint resolution
Insurers have revolutionized their claims process and simplified it. The following concepts are gaining ground:

AI-enabled claims processing
whatsapp intimation
Digital documentation
Faster approvals
App-based claims indication and tracking, etc.
These facilities speed up the claim process and make it hassle-free. Therefore, look for insurers that provide such services for faster claim settlement.

  1. Reviews

Lastly, don’t ignore customer testimonials and reviews. Most insurers display customer reviews on their websites. You can consult them. Alternatively, you can talk to your friends and family about their insurers. If they have filed a claim, learn about their claims experience to know which company follows best practices.

Step 2: Find the right plan

Once you have zeroed in on the right insurance company, the next and also most important step would be to select the plan. With multiple insurers offering multiple plans, you have many options. However, choosing the right policy is important.

As such, here are some factors that will help you with the same:

  1. Benefits of coverage

The first thing you should check is the coverage benefits offered by different plans. While most plans offer basic coverage benefits, look for plans that have unique features.

First, evaluate your coverage needs and then look for plans that offer them. For example, if you plan to have a child in the near future, look for plans that offer maternity coverage. Alternatively, if your family is full, skip such plans.

Second, look for other additional features that can improve the scope of coverage. For example, restoration of sum assured, high no-claims bonus, value-added benefits, annual medical check-ups, etc., are some of the features you should look for.

Choose a plan that has the most comprehensive scope of coverage. This would minimize your out-of-pocket expenses during claims and give you greater financial security.

  1. Customization option

Look for plans that allow you to customize coverage features to your requirements. This is possible thanks to the supplements offered by health insurance plans. Add-ons help you opt for additional coverage features based on your needs and make customization possible.

  1. Premium amount

Of course, the amount of the premium is important. Check the premium charged against the coverage offered. To get a better idea, compare. Compare the premium with other plans from different insurers that have similar coverage benefits. See if the premium is competitive or inflated given the coverage.

Choose a plan with the most competitive premium to get the same coverage benefits, even if that means selecting another insurance company.

  1. Sublimits

Health plans may have sub-limits for different expenses like room rent, ICU room rent, AYUSH cover, home treatments, etc. These sublimits limit the scope of coverage and may result in out-of-pocket costs. Therefore, choose a policy that does not have sublimits so that you can enjoy the maximum coverage possible.

  1. Copay Clause

Health insurance plans may have co-payment clauses for different reasons. Co-payments mean that in each claim case, you are supposed to pay out of pocket for the specified portion of the claim. For example, a 10% copay means you will pay 10% of each claim. The common co-payment clauses are applicable in the following cases:

If the insured is 61 years or older at the time of taking out the policy
If you purchase the policy in a city that belongs to a lower tier and avail the treatments in a city of a higher tier
In the case of specific diseases and/or treatments
Look for health insurance plans that do not have a co-pay clause. Even if the clause is unavoidable, as in the case of plans for seniors, opt for plans with a lower copay.

  1. Waiting period

The waiting period is when the health insurance policy does not allow specific coverage. Once the waiting period is over, coverage is allowed.

Health insurance plans impose waiting periods in several cases. These include the following:

First 30 or 60 days of waiting period for illness coverage. Also called a cooling off period during which illnesses are not covered. Accidental injuries, however, are covered from day 1.
Waiting period for specific diseases or treatments such as hernias, fissures, hydrocele, tonsillectomy, cataracts, joint prostheses, etc. This waiting period is generally 24 months. However, in some plans the length of the term may vary.
The pre-existing waiting period ranges from 12 to 48 months. This waiting period is for illnesses or medical conditions you may have when purchasing a new policy. Complications arising from existing conditions are not covered during this period.
The maternity waiting period can range from 9 to 48 months.
Waiting period for coverage of OPD expenses, bariatric treatments, etc.
Waiting periods are inevitable. However, you can find a plan where the term is low. This is especially relevant if you are looking for maternity cover or if you have pre-existing conditions and want cover for them as soon as possible.

  1. Discounts available
Health insurance plans allow various types of discounts to attract customers. Some of the commonly available discounts include the following:

Discount for purchasing a two or three year policy
Discount for covering two or more members under the policy individually
Discount for purchasing the policy online
Discount for paying premium in a lump sum instead of in installments
Discount for existing customers of the company.
Discount for maintaining a healthy lifestyle
Renewal discount if you have not made any claim in the last policy year
Discount for choosing a voluntary deductible
Discount for receiving treatments at a network hospital
Look for available discounts. Choose a plan that offers the biggest discount so you can get the best deal on the premium.

Now that you’ve found the best company and the most suitable plan, you might think your job is done. It is not. You must take another aspect into account: choosing the appropriate sum insured.

Step 3: How to Find the Right Coverage Amount?
An optimal sum insured is important to ensure that your health plan sufficiently covers your medical expenses. A low sum assured defeats the entire purpose of investing in health insurance and is a strict no-no.

Selecting the right sum insured is easier than you think. You just have to consider the following factors:

The number of members insured under the policy.
If you or any other member suffers from any pre-existing condition
The basic cost of hospitalization and medical treatments.
Rising medical inflation
Most insurers help you calculate the ideal sum insured based on your income, expenses, existing coverage and members to be insured. You can also estimate the optimal requirement using a simple formula which is as follows:

Sum insured = 50% of your annual income + total hospitalization costs incurred during the last 3 years

For example, let’s say your annual income is INR 15 lakh and in the last three years you have incurred a hospital bill of INR 5 lakh. In this case, the optimal sum insured would be calculated as follows:

50% of INR 15 lakh + INR 5 lakh = INR 12.5 lakh

Step 4: How to pay for a health plan
Premiums for health insurance plans are affordable. Additionally, insurers offer you the option of installment premiums where you can pay the premium monthly, quarterly or semi-annually. This makes health plans affordable.

Also, if paying a high sum insured is a challenge, you can opt for health plans with super recharges. Super recharge plans help improve coverage by keeping the premium low. For example, let’s say you want coverage of INR 15 lakh but the premiums are not affordable. In such cases, you can opt for a comprehensive health plan of INR 5 lakh or INR 10 lakh and add a super recharge plan of INR 10 lakh or INR 5 lakh respectively.

The super recharge plan would help you enjoy an added coverage of INR 15 lakh. However, the added premium would be less compared to purchasing a health plan of INR 15 lakh.

How to buy a health insurance policy online?

The easiest way to purchase a health insurance policy through online mode that can be done in minutes with a paperless process and without physical signatures.
All you have to get is complete and detailed information on various health policies as per your needs and requirements.
Check out the best health insurance policies and compare them further based on your needs and requirements to finally select the best one. Research them online to learn more about coverage, benefits and premium quotes at a time and place that suits you.
Once you have finalized the policy, read the policy document carefully and complete the documentation process.
Once the documents have been uploaded, it is time to make the final payment which can be made by credit card, debit card or by net banking. Insurance companies usually take seven to ten days to complete the entire process and then deliver the policy document to you.
Things to Avoid When Buying a Health Insurance Policy
Rushed to buy a policy: Don’t buy a health insurance plan in a hurry. It is advisable to do proper research and then select the best health insurance for you or your family. You can do your own research and compare premium quotes online before choosing a health insurance policy.

Choosing insufficient coverage: The cost of the premium is an important consideration when purchasing a health plan. Do not choose insufficient or restricted policy coverage to save premium cost. Instead, opt for a comprehensive coverage plan that takes into account the size of

Do not purchase a separate health insurance policy: Do not completely rely on the health coverage provided by your employers as you only have limited coverage. Furthermore, upon leaving the organization, the contract will be terminated immediately. It is essential to purchase a standalone health insurance plan where the amount of coverage is greater and is not affected by the terms and conditions of your current employment.

Ignore the terms and conditions of the policy document: Do not ignore or ignore the terms and conditions of the policy document. Whether it is related to coverage, premium costs, renewal conditions, discounts, sub-limits, free trial period, waiting period, co-payment clause or any type of deductibles, everything is clearly mentioned in your policy document. If you still have questions, do not hesitate to contact the relevant insurance company to get more clarity on your health insurance policy.

Buy a policy just to save taxes: Don’t buy a health insurance policy just to save taxes on the premium paid. One should definitely be aware of the tax benefits provided under the premium paid for health insurance, but the main objective of purchasing a health insurance plan is to get sufficient coverage that will help you and your family financially at the time of medical contingencies and of health.

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