What is Health Insurance?
The term health insurance is a type of insurance that covers your medical expenses. A health insurance policy is a contract between an insurer and an individual /group in which the insurer agrees to provide specified health insurance cover at a particular “premium”.
Why is Health Insurance important?
A. In case of a sudden illness.
B. In case of an accident.
C. In case of any surgery, which is required in respect of any disease which has arisen during the policy period.
Buying health insurance protects us from the sudden, unexpected costs of hospitalization (or other covered health events, like critical illnesses) which would otherwise make a major dent into household savings or even lead to indebtedness.Each of us is exposed to various health hazards and a medical emergency can strike anyone of us without any prior warning. Healthcare is increasingly expensive, with technological advances, new procedures and more effective medicines that have also driven up the costs of healthcare. While these high treatment expenses may be beyond the reach of many, taking the security of health insurance is much more affordable.
What are the forms of Health Insurance available?
The commonest form of health insurance policies in India cover the expenses incurred on Hospitalization, though a variety of products are now available which offer a range of health covers, depending on the need and choice of the insured.
The health insurer usually provides either
i) Direct payment to hospital (cashless facility) or
ii) Reimburses the expenses associated with illnesses and injuries or disburses a fixed benefit on occurrence of an illness.
The type and amount of health care costs that will be covered by the health plan are specified in advance.
What kinds of Health Insurance plans are available?
Health insurance policies are available from a sum insured of Rs 5000 in micro-insurance policies to even a sum insured of Rs 50 lakhs or more in certain critical illness plans. Most insurers offer policies between 1 lakh to 5 lakh sum insured. As the room rents and other expenses payable by insurers are increasingly being linked to the sum insured opted for, it is advisable to take adequate cover from an early age, particularly because it may not be easy to increase the sum insured after a claim occurs. Also, while most non-life insurance companies offer health insurance policies for a duration of one year, there are policies that are issued for two, three, four and five years duration also. Life insurance companies have plans which could extend even longer in the duration. A Hospitalization policy covers, fully or partly, the actual cost of the treatment for hospital admissions during the policy period. This is a wider form of coverage applicable for various hospitalization expenses, including expenses before and after hospitalization for some specified period. Such policies may be available on individual sum insured basis, or on a family floater basis where the sum insured is shared across the family members.
Hospital Daily Cash Benefit policy : It provides a fixed daily sum insured for each day of hospitalization. There may also be coverage for a higher daily benefit in case of ICU admissions or for specified illnesses or injuries.
A Critical Illness benefit policy: It provides a fixed lumpsum amount to the insured in case of diagnosis of a specified illness or on undergoing a specified procedure. This amount is helpful in mitigating various direct and indirect financial consequences of a critical illness. Usually, once this lump sum is paid, the plan ceases to remain in force.
There are also other types of products, which offer lumpsum payment on undergoing a specified surgery (Surgical Cash Benefit), and others catering to the needs of specified target audience like senior citizens.
What is cashless facility?
Insurance companies have tie-up arrangements with several hospitals all over the country as part of their network. Under a health insurance policy offering cashless facility, a policyholder can take treatment in any of the network hospitals without having to pay the hospital bills as the payment is made to the hospital directly by the Third Party Administrator, on behalf of the insurance company.
What happens if cashless facility is availed and expenses exceeds the insurance limit ?
Expenses beyond the limits or sub-limits allowed by the insurance policy or expenses not covered under the policy have to be settled by you directly with the hospital.
when cashless facility is not available ?
Cashless facility is not available if you take treatment in a hospital that is not in the network.
What are the tax benefits I get if I opt for Health Insurance?
Health insurance comes with attractive tax benefits as an added incentive. There is an exclusive section of the Income Tax Act which provides tax benefits for health insurance, which is Section 80D. Purchasers of health insurance who have purchased the policy by any payment mode other than cash can avail of an annual deduction of Rs. 15,000 from their taxable income for payment of Health Insurance premium for self, spouse and dependent children. For senior citizens, this deduction is higher, and is Rs. 20,000. Further, since the financial year 2008-09, an additional Rs 15,000 is available as deduction for health insurance premium paid on behalf of parents, which again is Rs 20,000 if the parents are senior citizens.
What are the factors that affect Health Insurance premium?
Age ; Age is a major factor that determines the premium, the older you are the premium cost will be higher because you are more prone to illnesses. Previous medical history is another major factor that determines the premium. If no prior medical history exists, premium will automatically be lower.
Claim free years : It can also be a factor in determining the cost of the premium as it might benefit you with certain percentage of discount. This will automatically help you reduce your premium.
What does a Health Insurance policy not cover?
You must read the prospectus/ policy and understand what is not covered under it.
- Generally, pre-existing diseases (read the policy to understand what a pre-existing disease is defined as) are excluded under a Health Insurance policy. Further, the policy would generally exclude certain diseases from the first year of coverage and also impose a waiting period.
There would also be certain standard exclusions such as
- cost of spectacles, contact lenses and hearing aids
- Dental treatment/surgery ( unless requiring hospitalization)
- general debility,
- congenital external defects,
- venereal disease,
- Intentional self-injury,
- use of intoxicating drugs/alcohol,
- Expenses for diagnosis,
- x-ray or laboratory tests not consistent with the disease requiring hospitalization,
- treatment relating to pregnancy or child birth including cesarean section, Naturopathy treatment.
Is there any Waiting Period for claims under a policy?
Yes. When you get a new policy, generally, there will be a 30 days waiting period starting from the policy inception date, during which period any hospitalization charges will not be payable by the insurance companies. However, this is not applicable to any emergency hospitalization occurring due to an accident. This waiting period will not be applicable for subsequent policies under renewal.
What is pre-existing condition in health insurance policy?
It is a medical condition/disease that existed before you obtained health insurance policy, and it is significant, because the insurance companies do not cover such pre-existing conditions, within 48 months of prior to the 1st policy. It means, pre-existing conditions can be considered for payment after completion of 48 months of continuous insurance Cover
If my policy is not renewed in time before expiry date, will I be denied for renewal?
The policy will be renewable provided you pay the premium within 15 days (called as Grace Period) of expiry date. However, coverage would not be available for the period for which no premium is received by the insurance company. The policy will lapse if the premium is not paid within the grace period.
Can I transfer my policy from one insurance company to another without losing the renewal benefits?
Yes. The Insurance Regulatory and Development Authority (IRDA) has issued a circular making it effective from 1st October, 2011, which directs the insurance companies to allow portability from one insurance company to another and from one plan to another, without making the insured to lose the renewal credits for pre-existing conditions, enjoyed in the previous policy. However, this credit will be limited to the Sum Insured (including Bonus) under previous policy. For details, you may check with the insurance company.
What happens to the policy coverage after a claim is filed?
After a claim is filed and settled, the policy coverage is reduced by the amount that has been paid out on settlement. For Example: In January you start a policy with a coverage of Rs 5 Lakh for the year. In April, you make a claim of Rs 2 lakh. The coverage available to you for the May to December will be the balance of Rs.3 lakh.
What is ‘Any one illness’?
‘Any one illness’ would mean the continuous period of illness, including relapse within a certain number of days as specified in the policy. Usually this is 45 days.
What is the maximum number of claims allowed over a year?
Any number of claims is allowed during the policy period unless there is a specific cap prescribed in any policy. However the sum insured is the maximum limit under the policy.
What is “health check” facility?
Some health insurance policies pay for specified expenses towards general health check up once in a few years. Normally this is available once in four years.
What do you mean by Family Floater Policy?
Family Floater is one single policy that takes care of the hospitalization expenses of your entire family. The policy has one single sum insured, which can be utilised by any/all insured persons in any proportion or amount subject to maximum of overall limit of the policy sum insured. Quite often Family floater plans are better than buying separate individual policies. Family Floater plans takes care of all the medical expenses during sudden illness, surgeries and accidents.