There was a time when Indian households preferred taking a life insurance policy just for the breadwinners of the families and overlooked the concept of health insurance. But those days were gone. Thanks to the rise in awareness among the public about the importance of health insurance policies during medical emergencies. There has been an increase in the number of young people showing interest and purchasing health insurance policies in recent times. It is often confusing for youngsters to choose the right policy that caters to their personal needs because insurance companies offer numerous policies. What really matters now is understanding the concept of health insurance and the technical terms used in the policy documents to pick the right one.
Understanding health insurance:
A health insurance policy is a contract between an individual and the insurer under which the latter agrees to bear some of the former's medical expenses during a medical emergency. An individual must pay a premium to the insurer to avail of coverage for medical expenses. With the rise in medical inflation and the prevalence of chronic diseases, purchasing health insurance coverage takes a forward seat during financial planning as it safeguards one from unexpected medical expenses. Policies are available at various prices based on the level of coverage that one might require.
Types of health insurance:
Since a single health insurance policy is not sufficient to cater for the unique requirements of every individual, insurers have introduced numerous types of policies. Below are some of the commonly available health insurance policies.
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- Individual health insurance:
An individual health insurance is a type of policy that provides coverage to cover an individual's hospitalization, out-patient and medical bills. It can be for oneself, their spouse, children or parents. Since the individuals do not share their insured amount with anyone, exhaustion of coverage amount will not impact others. The age of the insured and the sum he wishes to insure determine the policy's premium.
- Family floater health insurance:
It is a type of health insurance policy that covers different family members under a single coverage, and the insured sum is shared among the insured family members. If one of the insured members claims a certain amount from the policy, only the remaining amount will be available for the rest of the family members.
- Group health insurance:
As the name suggests, group health insurance coverage is a plan that organizations and companies collectively offer to their employees. As per the Insurance Regulatory and Development Authority of India (IRDAI) guidelines, an employer should have at least 20 employees working in their company to become eligible for a group insurance policy.
- Senior citizen health insurance:
Senior citizen health insurance is a specially designed insurance plan to address the healthcare needs and medical expenses of individuals aged above 60 years. It helps them cover medical treatment and hospitalization costs at the hospital of their choice. It offers numerous benefits like pre-existing disease coverage, cashless hospitalization coverage, pre and post-hospitalization coverage, preventive health check-ups and tax benefits.
Things to consider while purchasing health insurance policies:
- The right combination of premium and coverage:
It may be lucrative to buy health insurance coverage with the lowest premium. But it has its own advantages and disadvantages. It can be good if the insurer offers extensive coverage for the lowest premium, but in most cases, a lesser premium means lower insurance coverage. So, purchasing a policy that provides adequate coverage at an affordable premium is better.
- Waiting period clause:
Most insurance companies have a 'waiting period' clause in their policies. It prevents the insured from availing of all the health insurance policy benefits right after purchasing it. It is a period policyholders need to wait before enjoying the policy's benefits. The waiting period starts from the date of policy commencement, and one cannot claim the benefits before the expiry of the waiting period. So, purchasing a plan with a minimal waiting period is better. It usually ranges from two to four years.
- Cashless hospitalization:
It is convenient for the insured if they purchase a health insurance policy that includes cashless Mediclaim. Because they neither need to submit medical documents and bills nor wait several weeks for reimbursement. Since most of the insurers offer cashless Mediclaim only if the insurer receives treatment in one of their network hospitals, it is better to choose a policy from a company that covers a wide range of hospitals.
- No-claim bonus:
One of the remunerative benefits the insurers offer policyholders for every claim-free year is a no-claim bonus. Since it provides a monetary benefit for every no-claim year, it will help increase the insured amount. The insurer can either offer a cumulative bonus – under which policy holders' insured amount will increase by a certain percentage – or a considerable discount on premiums – under which the premium rate of policies will come down by a certain percentage.
- Co-payment and sub-limits for treatment:
Co-payment is a sum in the claim that the insured agrees to pay, irrespective of the claim amount. Policyholders pay the agreed co-payment amount during a medical emergency while the insurer bears the remaining expense. It is advisable to purchase a policy with no co-payment or less co-payment.
Many health insurance companies set a sub-limit for medical procedures. For instance, an insured might be allowed to claim up to 60% of the total insured sum for cataract surgery. While this clause helps the insurer buffer their costs, it also assists the insured if they get hospitalized multiple times in a year.
These are the important elements to consider when purchasing a health insurance policy. By picking the right policy, one can tackle financial crises during medical emergencies without much hassle. It is better to buy a policy as early as possible.