Health Insurance Explained



Summary of the Blog:

The blog explains the meaning and concept of Health Insurance. The blog also discusses the importance of having health insurance. The various types of health insurance policies available in India dwelled upon.

The Government of India has introduced many health insurance schemes for the benefit of the common people. Those options are mentioned in a separate section. There are some benefits of having health insurance; those benefits are listed and described in the blog. There are some eligibility criteria for purchasing a health insurance policy; the main criteria are also discussed and explained. Apart from the information on the plans, a few useful tips to help you choose the right plan are given in the blog.

What is Health Insurance?

A health insurance policy is a bipartite contract by which the insurance company pledges to pay for the expenses towards the insured’s healthcare. The insured, i.e. the person buying the policy, has to pay a premium for the contract.

Typically, a health insurance policy stands in to meet the expenses for medical treatment, surgical interventions etc., on behalf of the insured. You may avail of a cashless facility whereby the insurance company pays the clinic directly. Otherwise, you may reimburse medical expenses after incurring the same.

You may exercise the option of choosing your health insurance plan and buying the same with your resources. On many occasions, health insurance comes in as a prerequisite, and the employer buys group medical policies on behalf of the employee.

Importance of Health Insurance:

Our life is full of uncertainties. One of the major uncertain situations may arise due to the need for medical treatment for yourself or near ones. The medical expenses do not come cheap, and if hospitalisation is required with surgical interventions, treatment costs spiral up.

It may happen that when you are faced with this crisis, you may not have the money to fund the treatment. An unexpected medical emergency can disrupt your financial status. Suppose you are caught on the wrong foot because of steep medical expenses. In that case, you may compromise on critical expenses like your children’s education or start defaulting on an existing loan.

Health insurance policies cover the cost of hospitalisation, consultation fees, expenses towards medical tests, ambulance charges, providing you with peace of mind at the time of predicament.

Different Types of Health Insurance Policies in India:

There are different types of health policies available through different insurance companies. When buying the policy, you may choose the plan that suits your requirement the best. Read about the different types of health insurance policies existing in the Indian market.

1.Individual Health Plan:

An Individual Health Plan is meant for one person. However, a family may buy an individual health insurance policy where each family member will be covered under a predetermined capital sum insured.

The premium for this policy depends on the insured’s age; hence, at the same sum insured, there will be a difference of premium.

2. Family Floater Plans:

Under a family floater plan of health insurance, a cumulative amount is considered the sum insured for the entire family. There is no fixed amount for a family member; the insured amount “floats”. E.g., if the floater plan has a limit of Rs. 5 lacs, and one of the family members avails of the policy and exhausts the amount, other family members are left uncovered.

3. Senior Citizens’ Plan:

Senior Citizens’ Health Insurance plans are meant for the gentry at least 60 years of age. These are generally tailor-made policies covering the ailments normally faced by people of advanced age.

4. Group Medical Policies:

The group medical policies are bought by the employers covering its staff members. This is offered as a perk to the employees of an organisation. The flip side of this policy is the coverage is till the time you are working in that company. The cover ceases the moment you part ways with your employer. Also, the sum insured for a person depends on the level at which one is working. Hence, you do not have the flexibility to choose a sum insured. Most of the group medical policies do not have critical illness cover.

5. Critical Illness Health Insurance:

These are specific health insurance plans covering the cost of treatment for life-threatening diseases.

6. Top Up Health Insurance:

Under this type of health insurance policy, you may opt for a top-up limit of additional cover over and above the sum insured in the parent policy. One needs to pay a premium separately for getting this benefit.

Government Health Plans:

The Government of India has launched various health insurance schemes at subsidised premiums aimed at the masses who may not afford to buy a health policy on their own. Some Government Health Insurance plans include Employee State Insurance Scheme, Pradhan Mantri Suraksha Bima Yojna.

However, a Central Health Insurance Scheme is available for the government employees to cover their medical expenses.

From Where the Health Insurance Policies are Available?

In India, general insurance companies offer health insurance policies. Both the public and private sector insurance companies have health insurance plans as a part of their product line. However, there are some specialised health insurance companies that have a monoline of business in offering health insurance policies.

Benefits of Health Insurance:

Following are the benefits of a health insurance policy:

1. Tax benefits under Section 80D of Income Tax Act, 1961

2. Grants protection to you and your family members

3. Offers you financial help in a moment of need

4. Cashless claim settlement at a network hospital

Frequently Asked Questions on Health Insurance:

1. What is Health Insurance?

The insurance policy that covers the expenses for medical treatment is called health insurance.

2. What is the Policy Period of Health Insurance?

The health insurance policies are issued for a period of 365 days from the commencement of cover.

3. How to Choose a Health Insurance Plan?

When choosing a health insurance plan, you must consider the list of approved hospitals, policy exclusions, the cooling period for any pre-existing ailment.

4. What Documents are Required for Health Insurance?

Basic KYC documents are required to buy a health insurance policy. However, you may have to undergo a medical test before the insurer’s insurance is granted to you.

5. When is the Right Time to Buy Health Insurance?

It is advisable to buy a health insurance policy at an early age, as one of the criteria for calculating the premium is the insured’s age.

6. Can I Change My Insurer?

Yes, you choose to change your insurer at the time of renewal of the policy.

7. Who Sells Health Insurance Policies?

Health insurance policies are sold by intermediaries like agents or brokers, duly licensed by IRDA. Nowadays, many online platforms are also offering health insurance policies.

8. What is the Maximum Tax Benefits Derived from Health Insurance?

The maximum limit is Rs. 25,000 per year. However, for senior citizens, the tax benefits go up to Rs. 50,000 per year.

With the rising cost of treatment for ailments, a person must have one’s own health insurance policy. Even if your employer grants you health cover, it is advisable to buy a health policy that suits your needs. There are online platforms like ShePays that guide you in this regard.

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