Indians are known for their savings habits. Generations after generations have been taught the benefits of savings so that they can sail through financial emergencies, particularly health–related ones

Healthcare costs in India have grown exponentially in the past few years on account of advanced technology. Mere savings are no more enough to meet the medical expenditure

That is where health insurance comes into the picture. By paying an amount every year for health insurance, you can guarantee yourself adequate financial assistance at a time when you need it the most

What is health insurance?

Health insurance is a financial product that offers coverage against any healthcare-related expenses that you or your family might incur in future.

It is a contract between you and the insurance company, where you agree to pay a small premium to the insurer at regular intervals of time, mostly annually. In return, the insurance company owns the responsibility of meeting medical expenses you incur during the policy period.

The medical expenses usually include costs of hospitalisation, day–care expenses, pre and post-hospitalisation expenses, consultation fees of doctors, etc.

Why do you need health insurance?

Now that you know what is medical insurance, you should also understand why it is so important. Let’s take a look.

• To meet sudden medical expenses: At the time when you or any of your family members need to undergo sudden hospitalisation to treat an illness or injuries suffered in an accident, the last thing you want to worry about is finances. You would want the best treatment for yourself, and health insurance would help you access that.

• To protect your savings: Hospital bills can eat into your savings and put you in a debt trap. To avoid that situation, it is important that you buy an adequate health cover for your entire family so that your savings can be put to better use.

• Tax benefits: The premium paid for health insurance plans qualifies for deduction under Section 80D of the Income Tax Act, 1961. An amount of up to Rs. 25,000 of premium paid for self, spouse and children is exempted from tax, with additional deduction of Rs. 25,000 allowed for covering parents. If parents are senior citizens, aged 60 years or more, then the exemption limit is Rs. 50,000.

Types of health insurance plans

There are two main types of health insurance plans available in India – Indemnity Plans and Definite Benefit Plans. Let’s check their features in detail:

• Indemnity health insurance plans: This type of health insurance plan would reimburse actual expenses incurred by you during hospitalisation up to the extent of the total sum insured under the insurance policy.
  Indemnity health insurance plans can be further classified into individual insurance policies (where just one individual is covered), family floater plans (an umbrella cover for the entire family) and group mediclaim insurance (bought by companies for their employees and their families).
  Definite benefit plans: Unlike indemnity plans, definite benefit health insurance plans do not wait for hospitalisation and bills. Rather these plans pay a pre-decided lump sum amount to policyholders as soon as they are diagnosed with an illness covered under the policy. There are various sub-division under definite benefit plans, too.

  a) Critical illness plan: This type of health insurance plan covers specific critical diseases such as cancer, heart disease, organ transplant etc.

  b) Hospital daily cash: This health insurance plan offers policyholders a fixed amount of cash daily in the event of an accident or illness that first occurred during the policy period. This daily cash allowance amount is pre–decided and can be used to meet either hospital expenses or sometimes even to compensate for loss of income.

  c) Personal accident plan: This health insurance plan covers the policyholder in case of an accidental injury or accidental death. The insured person gets a lump sum amount if hospitalised. Otherwise, in case of the unfortunate demise of the insured person, the same amount is paid to the nominee

Factors to keep in mind before buying health insurance

Here is a quick checklist of factors that you should keep in mind before selecting and buying a health insurance plan

• Sum insured: Sum insured is the maximum amount you can get as reimbursement from your insurer in a given year. Higher the sum insured, higher the premium. Assess your finances and get the best possible coverage in terms of sum insured.

• Age: While buying health insurance, age is one of the most crucial factors that directly impacts your premium amount. Your chances of filing a claim for healthcare–related expense increases with an increase in age. Hence, the premium amount is higher for older buyers. So, it is advisable to buy a health policy as early as possible to keep your premium amount low.

• Insurer’s claim-settlement ratio: Claim settlement ratio refers to the number of claims settled by the insurance company over the total claims received. High claim settlement ratio is a positive as it indicates that the company is clearing most of the claims raised by policyholders. So, choose an insurance company with a high claim settlement ratio to reduce the chances of claims being rejected..

Health insurance tips

• Read the policy document or get in touch with your insurance company to get all possible details of your policy, like coverage, diseases covered, inclusions, exclusions etc.

• Enquire about health insurance top–up plans. These plans can supplement your existing policies by providing added benefits at a nominal premium.

• Compare policies and health insurance information of different insurers online to ensure that you don’t miss out on any major benefit and pay a fair premium for your sum insured

Check the cashless facility option and network hospitals. Cashless facility allows policyholders to get hospitalised in any network hospital of the insurer without having to pay any money for the treatment. The insurer directly reimburses the hospital up to the extent of the sum insured. This benefit can prove to be very helpful.

Disclaimer:

The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.