What is Health Insurance?

Health Insurance, also known as medical insurance is a form of insurance which covers the expenses incurred on medical treatment and hospitalization. It covers the individual and family against any financial constraints arising from medical emergencies. In case of sudden hospitalization, illness or accident, health insurance takes care of the expenses on medicines, oxygen, ambulance, blood, hospital room, various medical tests and almost all other costs involved. Thus, by insuring ones health, he ensures that if he pays an amount of health insurance premium every year depending on the persons age, then till a certain limit of medical expenses, he/ she would be covered by the insurance company and will not have to spend it from his own pocket.

Basically, since medical expenses are increasing every year, it becomes difficult for someone to suddenly pay about Rs. 2,00,000 to Rs. 3,00,000 towards medical emergencies. Since medical emergencies cannot be postponed or neglected, this unforeseen expense becomes inevitable if health insurance has not been availed. Thus by paying a nominal amount of premium of say Rs. 1,200 per annum, a 35 year old man can get covered till Rs. 1, 00,000 of medical expenses per annum. Thus, a sudden expense of Rs. 1, 00,000 may seem very high for the individual; however a nominal amount of Rs. 1,200 per annum, i.e. Rs. 100 per month may seem to be a very reasonable cost. This amount however, has to be paid every year; otherwise the cover ceases to exist.

Key Features and Benefits of a Health Insurance Policy

Over and above the basic benefit of health insurance (also called mediclaim) i.e. covering the unforeseen medical expenses, there are few other features and benefits in most of the products offered in the market. Some of them are listed below:

Family Floater Policies: Most health insurance plans give the flexibility of covering up to 4 members of the family under the same plan with a slightly higher premium than an individual health insurance policy. It gives the flexibility of choosing say 4 or 5 lakhs of cover for the entire family. If one member in the family is hospitalized and uses about Rs. 2 lakhs for his treatment, then the rest 3 lakhs can be availed by others. It is very unlikely that more than 1 or 2 members would require hospitalisation in the same year. Hence the family floater serves the purpose whoever in the family falls ill.

Hospitalisation Cash Benefits: This benefit entitles the customer to cash benefits for every completed day of hospitalisation, which helps him to take care of the increased financial burden incurred at the time of hospitalisation, such as loss of earnings away from work and other expenses.

Cashless facility: There is a network of hospitals tied up with each insurance company which accepts the insured’s medical identity card (issued by the insurance company) for providing cashless facility to the insured. Hence either part or entire expenses are covered by the policy and the individual doesnt need to spend from his pocket.

Pre-hospitalisation and Post-hospitalisation benefits Some mediclaim policies provide for up to 60 to 90 days of pre-hospitalisation and post-hospitalisation benefits, i.e. the cost of medical tests, medicines, scans, etc. This is usually provided under maternity benefits and treatments which do not require hospitalisation.

Ambulance Charges In most cases the ambulance charges are taken up by the policy and the policy holder usually doesnt have to bear the burden of the same.

Health check up Some health insurance policies have a facility of free health check-up for the well being of the individual if there is no claim made for certain number of years.

Cover for Pre-existing Diseases Some health insurance policies have a facility of covering pre-existing diseases after 3 or 4 years of continuously renewing the policy, i.e. if someone has diabetes, then after completion of 3 or 4 years of continuous renewal with the same insurer (depending on the plan offered and his age), any hospitalisation due to diabetes will also be covered.

No-Claim Bonus Some health insurance policies provide a no-claim bonus. If there has been no claim in the previous year, i.e. if the person covered has not availed any hospitalisation benefit, then a bonus is declared; either by reducing the premium or by increasing the sum assured by a certain percentage of the existing premium.

Tax Benefits of taking a Health Insurance Policy Under Section 80D of the Income Tax Act, income tax benefit is provided to the customer for the premium amount till a maximum of Rs. 15,000 for regular and Rs. 20,000 for senior citizen respectively.
Source: myinsuranceclub


Q.1. How is the agent helpful in settling claims in future? 

Ans. Yes your agent will be helpful but he is getting 100% of his income from the insurance company and he may be getting .001 % of his income from you. If he has to make a choice, he will favour Insurance Company. You are the best person to decide whether directly from the company or through an agent. Theoretically he is supposed to help you in claim settlement but time will tell when the claim is to be lodged. Be positive and buy it through agent but better buy through an Insurance Brokerage Firm as it offers wider choice.


Q.2. What are the minimum and maximum policy durations?

Ans. Minimum is 1 year. Some companies offer 2 years duration also.


Q.3. Can I buy more than one Health Insurance policy?

Ans. Yes, you can buy more than one insurance policy but the claim should not be duplicated to two insurance companies. Under normal circumstances the claim amount will be shared by both insurance companies in the ratio of the sum insured. Let us say Company A insured you for Rs. 2 lakhs and Company B insured you for Rs. 3 lakhs, then the claim will be shared in the ratio of 2:3. In case you have gone in for a normal policy of Rs. 2 lakhs from Company A and Top-Up policy of Rs 3 lakhs from United, then in that case first Rs. 2 lakhs will paid by Company A and the claim above Rs. 2 lakhs will be paid by United. Top up Policy costs less than normal policy of Insurance Company. For right advice it is always better to consult an Insurance Brokerage Firm.


Q.4. Can I buy health insurance policy even if I am not an Indian National but am living in India?

Ans. Yes, if you are a student studying in India or you are working on a valid Visa then you can get the policy. But if you are a tourist coming to India for a short duration say 3 weeks then it will not be worthwhile to buy health insurance as 30 days cooling off period will take away the benefits, you are looking for.

Those who are coming for Medical Tourism cannot buy the policy and avail the benefit i.e. claim.


Q.5. Who will receive the claim amount under health insurance if the policyholder dies during treatment?

Ans. Nominee will receive the amount if the policyholder dies during treatment.


Q.6. Can I seek treatment at home and be reimbursed for it under health insurance?

Ans. It can be possible in exceptional cases only when there is an epidemic and no beds are available in hospitals. This is called domiciliary treatment in insurance language/terminology.


Q.7. I might be laid off soon. Should I see my doctor before I lose my insurance?

Ans. No purpose will be served by seeing your doctor. You should consult an insurance brokerage firm and buy a health insurance policy which should be in place 30 days before your last day in your company. This protects your interests as on the day you leave the present employer –on the same day cooling off period of your new policy will be over.

Q.8. I am unable to work due to Disability. What are my options for health coverage?

Ans. It depends on the disability. We suggest that you should buy a health insurance policy. Suppose you are disabled due to poor eyesight, you may not be able to work but you may fall ill and need hospitalization. Insurance company will put eye disease /ailment as pre existing disease and it may not be payable –but there can be hundreds of other ailment and accidental happenings, which get covered.


Q.9. Who is a Third Party Administrator?

Ans. TPA is an abbreviation for Third Party Administrator. These companies are BPOs of insurance companies and are responsible for coordinating all aspects of claims pertaining to health insurance policies. 

These companies are licensed by IRDA (Insurance Regulatory & Development Authority) and are having
•    Telecom facility generally with phone number starting with 1600 (toll free no.)
•    Computer network having details of all policies holders.
•    Medical specialists, for assessing need for hospitalization treatment being given in the hospital and for passing of the claim bills.

The role of TPA is to coordinate with hospitals with respect to treatment and also
to pass the bills on behalf of the insurance companies. The actual payment is made by the insurance company. As far as the legal contract is concerned, it is between the insurance company and the person insured.

The individual insured will get an ID card issued by the TPA. This ID card is useful and may be needed at the time of hospitalization.


Q.10. Are naturopathy and homeopathy treatments covered under a health policy?

Ans. In all policies naturopathy is not covered. However Homeopathy is now being covered by some insurance companies, provided treatment is taken in a Homeopathic Hospital, which is empanelled with the insurance company. Star Health permits use ofHomeopathic medicines during post hospitalization period.

We foresee more and more Insurance companies will start covering naturopathy and homeopathy treatments in future.


Source : prajnacapital

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