Health Insurance

What is a health insurance policy?

Health insurance, also called Mediclaim, is a way to pay for advanced medical treatments that typically require you to be in hospital overnight. It also covers certain other day care procedures like cataract surgery, etc. that don’t require you to be hospitalized but are expensive nevertheless. A health insurance policy, therefore, covers your medical expenses and gives you financial relief.

Why is health insurance policy important & why should you buy it?

Medical insurance is a form of insurance which covers the medical costs incurred in case of medical emergencies. These plans, thus, take care of the financial burden associated with medical contingencies. In today’s age, when illnesses and diseases are on the rise, a health insurance plan becomes necessary. Though medical developments have provided a cure for most of the illnesses, such cures and treatments come at very expensive costs. These costs become unbearable for the common middle-class man. A health plan, by covering these costs, takes off the financial strain caused by frequently occurring illnesses. It, therefore, proves to be an essential requirement for every individual looking to secure his finances against medical contingencies.

Type of health Insurance:

Individual health insurance plans

Individual health insurance plans which cover a single individual under the cover

Family floater health insurance plans

Family floater health insurance plans which cover the entire family under the plan. A family consists of the policyholder, spouse, dependent children, and dependent parents. One plan covers the entire family on a floater basis. The sum insured is shared by the family members. Any member can make a claim up to the sum insured.

Critical illness health insurance plans

Critical illness health insurance plans which cover major critical illnesses. If the insured is diagnosed with any covered illness, the sum insured is paid. The policyholder can use the sum insured to meet the cost of advanced treatments or pay for any other financial obligations

Top-up health insurance plans

Top-up health insurance plans which provide supplemental coverage at minimal rates of premiums. If individuals feel that their coverage is low, they can buy top-up plans to increase the coverage. There is a deductible limit under these plans. Any claim which is in excess of the deductible limit is paid.

Super top-up health insurance

Super top-up health insurance plans which are also called aggregate health plans. These also help to enhance the sum insured at affordable premium rates. Super top-up plans are like top-up plans. They also have a deductible limit and claims exceeding the limit are only paid. However, while top-up plans consider each instance of claim separately, super top-up plans aggregate the total claims made in a policy year and then apply them against the deductible limit. If the aggregate claims exceed the deductible, the claim is paid

Senior citizen health insurance plans

Senior citizen health insurance plans which are meant to cover individuals in their older ages. Individuals who are 61 years and above can be covered under senior citizen health insurance plans. The sum insured under these plans are limited and premiums are affordable.

Hospital cash plans

Hospital cash plans which pay a fixed benefit for each day of hospitalisation. If the insured is hospitalised, a daily allowance would be paid every day up to a maximum period.

Disease-specific health plans

These can be indemnity oriented or fixed benefit health insurance plans which cover specified illnesses like diabetes, cancer, heart-related ailments, dengue, etc. You should understand the types of medical insurance plans before choosing the best plan suiting your requirements.

Key features of health insurance

The notable key features of any health insurance in present market are-

  • Coverage

The coverage includes the comprehensive expense of everything that can happen during a health emergency. It includes pre-hospitalization, post-hospitalization and ambulance charges. Most insurances also cover critical health diseases like cancer, stroke, heart attack, etc.

  • Renewal Benefits

Most companies offer a no claim bonus benefit to its customers if no claim request is made by them in the previous year. Some companies also offer benefits in the form of discounted premiums or increased cover or a complete free health check up every year as well.

  • Co-payment

It is one of the great features offered by good health insurance companies, helping to reduce the yearly premium. You have to pay a percentage of the total expense while the company will pay the balance.

  • Cashless Treatment

Most health insurance companies have a collaboration with a number of healthcare centres and hospitals. When you seek treatment in a network hospital, the insurance company will pay your bills directly and you will have to pay only for the uncovered expenses.

  • Tax Benefits

Section 80D of the Income Tax Act, 1961 offers tax deductions of up to Rs. 25,000 on health insurance premiums paid in a financial year. The tax deduction limit increases to Rs. 50,000 per fiscal year for senior citizens aged 60 years and above.

Benefits of health insurance plans & policies

Medical insurance policies offer various advantages and come with unique features which are as follows –

Medical insurance plans cover all medical costs incurred right from the time the insured falls sick to his hospitalisation and also after being discharged from the hospital. Thus, the plan has a wide scope of coverage for medical costs

  • There are value-added coverage benefits in medical insurance policies too. These include free health check-ups after a specified period, second medical opinion for serious illnesses, etc.
  • Health plans allow tax advantages. Premiums paid for medical insurance policies for self, family and dependent parents qualify for tax deduction under Section 80D. The limit of deduction if INR 25, 000 for covering self and family and another INR 25, 000 for covering dependent parents. Moreover, if either the policyholder and/or dependent parents are senior citizens, the maximum limit increases to INR 50, 000 in each instance. Thus, a maximum of INR 1 lakh can be claimed as tax deduction though health insurance plans
  • No Claim bonus is allowed in all medical insurance plans if no claim is made in a policy year. This bonus is either allowed as an increase in the sum insured or additional benefits can be availed like gift vouchers, annual health check-ups, etc. 
  • Lifelong renewals are offered by health plans with no maximum cover ceasing age
  • The term of the plan can be for one, two or three years. Moreover, if long term plans are chosen, a premium discount is also allowed
  • Individuals can claim premium discounts for covering two or more family members, by choosing a longer duration, by choosing voluntary co-payment, etc.
  • Cashless claims are settled by the health insurance company if the policyholder seeks treatments at a hospital which is tied-up with the insurance company. In cashless claims, the policyholder does not have to bear the burden of medical expenses. The expenses are settled directly by the insurance company with the hospital.

Does my existing health insurance policy include coronavirus (COVID-19) treatment?

Yes, your existing plans of health insurance in India would cover Coronavirus treatments if you are hospitalised. However, the policy would exclude the costs of consumables incurred on such treatments. Since the cost of consumables is high, you can opt for COVID-specific medical insurance policies which are available. IRDAI has launched these plans of health insurance in India for providing complete coverage against COVID. The plans are as follows –

  • Corona Kavach This is an indemnity oriented health insurance plan which covers all medical expenses incurred on COVID treatments. The policy covers hospitalisation costs as well as home quarantine expenses without any deductibles or sub-limits.
  • Corona Rakshak This is a fixed benefit health insurance plan which covers COVID. If you suffer from Coronavirus and are hospitalised for 3 days or more, the policy would pay the sum insured in a lump sum to provide you with the financial assistance needed for COVID treatments.

Health insurance policy inclusions

A basic medical insurance plan provides all the essential coverage features. You would find coverage for the following – 

  • Inpatient hospitalisationthis includes coverage for room rent, ICU room rent, cost of treatments, doctor’s fees, surgeon’s fees, nurses’ fees, etc.
  • Pre and post hospitalisationexpenses incurred before being actually hospitalised and after being discharged from the hospital are covered under this head
  • Ambulance costscosts incurred in transporting the insured to the hospital is covered up to a specified limit
  • Daycare treatmentstreatments which do not require hospitalisation for a minimum of 24 hours are covered under this section
  • Organ donor expenses expenses incurred on harvesting an organ from a donor are covered
  • Domiciliary treatments treatments taken at home because the insured cannot be moved to the hospital or because there are no vacant beds in the hospital would be covered
  • AYUSH treatments these treatments are alternative, non-allopathic treatments like Ayurveda, Unani, Siddha and Homeopathy. Most health plans cover medical expenses incurred on these treatments.

Besides these common coverage features, different medical insurance policies provide different coverage features too which make the plan comprehensive in nature.

Health insurance policy exclusions

Though medical insurance plans provide coverage for most of the medical expenses, there are some expenses which are not covered. These are called plan exclusions. Some common ones include the following –

  • Pre-existing illnesses during the waiting period
  • Illnesses occurring within the first 30 or 60 days of buying the policy
  • Congenital ailments and diseases
  • Cosmetic treatments
  • Pregnancy-related treatments, unless specifically covered
  • HIV/AIDS infection
  • Illnesses or injuries occurring due to war or related perils, aviation, nuclear contamination, self-inflicted injuries, alcohol or drug abuse, etc.

To know the exact exclusions, you should read the policy document. Different medical insurance policies have different inclusions and exclusions. So, understanding the policy details before buying the policy becomes essential. It’s best to disclose your medical history truthfully before you buy a policy to ensure your claim expectations are met. Discuss this with our expert to figure out your best options – we will maintain strict confidentiality.

Factors to consider while deciding the health insurance company and its plan

Since medical insurance plans are important in providing financial security, they are quite popular. Almost all general insurance companies in India offer a wide variety of health insurance plans for individuals. Among the hundreds of plans available, it becomes very difficult for individuals to understand which plan would be the best health plan for them. So, here is a guide to choose the best health insurance in India –

  • Understand the type of coverage required first and foremost, individuals should understand the type of health plan which would suit their needs. If they don’t have any health insurance, a family floater or individual plan is recommended. If there is an existing health plan, a top-up plan is good for enhancing coverage at low health insurance quotes. Critical illness plans are also a must for protection against major illnesses while disease-specific plans are helpful in protecting against specified ailments. Individuals should assess their requirement and choose the most suitable plans for themselves.
  • Ensure that all family members are covered health contingencies can strike anyone and so individuals should endeavour to cover all of their family members under health insurance plans.
  • The sum insured should be optimal the sum insured of the medical insurance plan should be sufficient to pay for the high medical costs which would incur in an emergency.
  • Look for comprehensive coverage features the medical insurance plan which provides the most inclusive coverage benefits would be the best health plan. Individuals should look for such comprehensive plans and see if the coverage benefits are relevant to their needs.
  • The premium rate should be reasonable besides the coverage benefits which should be all-inclusive, the premium of the best health insurance plan should also be reasonable and affordable. If the plan has very high premiums, it would not be the best health insurance plan.
  • Compare before buying to choose the best health insurance plan in India, the best way is to compare the different plans and then buy one. Comparing lets you see the available plans and helps you in choosing one plan which is the best from the rest.

Health Insurance claim settlement procedures

To make a successful claim in a health insurance policy, policyholders are required to follow the below-mentioned process –

In case of cashless claim settlement

  • The policyholder should inform the insurance company of the claim. This information is to be given by filling up and submitting a pre-authorisation form. The insurance company analyses the form and approves cashless claim settlements. The form should be submitted at least 4-5 days before a planned hospitalisation. If, on the other hand, the hospitalisation was an emergency, the form should be submitted within 24 hours of hospitalisation
  • The health card or the policy bond should be produced to the hospital along with the identity proof of the insured
  • The company would then take care of the medical expenses
  • All medical documents, reports and bills should be submitted to the insurance company along with the claim form.

In case of reimbursement claims

  • The insured should get admitted to a non-network hospital and avail the necessary medical treatments. Payment for the treatments would have to be done by the policyholder himself
  • Once the insured is discharged from the hospital, the discharge summary or discharge certificate should be collected
  • The claim form should be filled and submitted with the discharge certificate, medical reports and all original medical bills
  • The insurance company analyses the documents submitted and reimburses the claim amount to the policyholder’s bank account.

Why buy A health insurance plan at an early age?

There are too many reasons to justify the point why an individual must start investing early in his life:-

  1. Comprehensive cover
    If you make the wise decision of buying a health insurance plan early in life then you’ll enjoy the benefit of a much more comprehensive coverage. You will get more security and enhanced coverage that would be difficult at a later stage.
  2. Cheaper Premiums
    The company charges less premiums from younger individuals as they are expected to be in the pink of health and thus less chance of claim.
  3. Tax benefits for long
    Under section 80D of Tax Act 1961, you will enjoy tax exemptions for paying premiums on health insurance. If you purchase it at a younger age, you’ll enjoy the benefit for a longer time.
  4. Long tenure of coverage
    Taking health insurance at a young age assures more coverage in the longer period of time.
  5. Bonus
    Most insurances provide a ‘no-claim’ bonus when the policy is renewed and the cover is not availed in the previous year. If you buy the insurance at a young age and keep collecting the no-claim bonuses on policy renewal, it will increase your coverage amount when you’re old and grey.
  6. Waiting period
    Most coverage features come with a waiting period of 30 days to 4 years, if you invest early in the policy, you may avail the facilities when required instead of stumbling on the waiting period.

Tax benefits of health insurance

What’s better than enjoying two facilities with one investment? Under the section 80D of Tax Act 1961, if you invest in the premiums of a health insurance, you can enjoy tax exemption upto a certain limit. The following table shows the tax breakdown-

EligibilityExemption Limit* as per the Budget Bill FY 2022-23
For self and family (spouse, dependent children)Up to INR 25,000
For self, family + parents (all below 60 years of age)Up to (INR 25,000 + INR 25,000) = INR 50,000
For self and family (where the eldest member is below 60 years of age) + parents (above 60 years)Up to (INR 25,000 + INR 50,000) = INR 75,000
For self and family (eldest member is above 60 years of age) + parents (above 60 years of age)Up to (INR 50,000 + INR 50,000) = INR 1,00,000

List of documents required for health insurance claim settlement

For successful claim settlement in your health insurance policies, you have to submit a set of documents. These documents include the following –

  • The claim form, filled and signed
  • Pre-authorization form for cashless claims
  • Doctor’s recommendation for advice on hospitalisation
  • All original medical bills
  • All investigative and diagnostic reports in original
  • All hospital records in original 
  • Consulting medical practitioner’s certificate 
  • All pharmacy and medicine bills

Eligibility criteria for health insurance

Here are some of the important eligibility criteria of health insurance plans –

  • A health insurance policy can be bought by an adult aged 18 years and above. The maximum entry age under many plans is 65 years or 70 years while some plans allow lifelong entry. Children can be covered under health insurance plans on an individual basis from 5 years onwards. Under floater coverage, though, dependent children can be covered from 91 days onwards till a maximum of 23 or 25 years of age till they are considered to be dependent on their parents
  • Health insurance plans are renewable for life and there is no coverage ceasing age
  • The sum insured starts from INR 50, 000 and the maximum limit depends on the policy that you choose
  • Under floater plans, you can cover yourself, spouse, dependent children and parents. Many plans also allow extended coverage for parents-in-law, grandparents, siblings and other close relatives of the family
  • The term of health insurance plans is one year but many plans allow you to buy a multi-year policy where the term can be taken for a continuous period of 2 or 3 years

Understand terms included in your health insurance policies

Before investing in any policy be confident that you have understood every term and condition mentioned over there. There might be certain formal words that could make it tough for you to understand the policies. Let us quickly discuss them one by one-

  • AYUSH treatment
    For those who wish to opt for alternate treatment, companies also offer AYUSH treatment that covers Ayurveda, Yoga, Unani, Sidha and Homeopathy.
  • Claim
    The amount of money requested by the insured person due to payment settlement at the hospital.
  • Claim Settlement
    The procedure of you filing a claim and the company paying you the money/ paying it on your behalf is the claim settlement.
  • Co-payment
    Cost payment is sharing the cost under a health insurance policy. When the policyholder agrees to bear a specified percentage of the payment of hospital bills, then the premiums charged are lessened by the insurance company, while the sum insured remains the same.
  • Cumulative Bonus
    Cumulative bonus, also known No-claim bonus is offered on every claim free year, provided the policy is continuously renewed. The sum insured increases by a fixed percentage however, it cannot exceed more than 50% of the main sum insured.
  • Daycare Procedures
    Most policies only cover expenses of hospitalisation that is for over 24 hours. However, certain companies also offer coverage for procedures that do not require a long hospitalisation. For example dialysis, chemotherapy etc.
  • IRDAI
    IRDAI stands for the Insurance Regulatory and Development Authority of India. This apex body regulates the Indian insurance industry.
  • Premium
    A fixed amount of money that has to be paid in order to avail the insurance coverage benefit.
  • Policy It is the legal contract between the insurer and the insured person.
  • Network Hospitals
    A health insurance company has a tie-up with hospitals where their customers can seek cashless treatment. Such healthcare centres are called network hospitals.
  • Sum insured
    It is the payout amount that the insurance company is liable to pay in case of any eventuality. It works on the indemnity principle.
  • Waiting period
    It is the period of time during which you cannot enjoy certain benefits of a policy, if the policy is new. It is usually a fixed period of time that commences from the date of commencement of policy. After the waiting period is over, those benefits become available to you.

What are the factors that affect health insurance premiums?

There are certain major factors that affect the type of coverage you will receive on your insurance. Some of the most important of them are as follows-

  1. Age
    The general rule of thumb is, higher the age, higher the premium. It is because older people are more likely to suffer and claim the insurance than young people who are in the pink of their health.
  2. Past Medical History
    It highly affects the amount of premium you are going to pay. If you have a pre-medical condition, then the premium charged is higher. However if you are relatively healthy, the premium is less.
  3. Occupation
    Your occupation highly influences your premium rates. For example, if you are a corporate employee or a teacher, the premium would be less, however, if you work at a construction site or factory, premiums are generally high. This happened due to the degree of risk factor that is involved with both kinds of task.
  4. Body Mass Index (BMI)
    People with a higher BMI are prone to more ailments like heart diseases, type 2 diabetes, breathing problems, high blood pressure and cancer than people with lower body mass index. Hence the premium is higher for the people with more BMI.
  5. Smoking habits
    Insurance companies view smokers as high-risk insurance buyers since they are more inclined towards health risks. Therefore, smokers are charged more premium in comparison to non-smokers.
  6. Geographical Location
    The location where you stay affects your premium cost since certain regions lack proper healthy food options, climate and health facilities.
  7. Policy Duration
    If you choose a longer term plan, the premium would be less that is why investing earlier in health insurance is always suggested.
  8. Co-insurance feature
    If you choose the co-insurance feature of the company while purchasing the policy, your premiums reduce to a great extent.

Some myths about health insurance

When it comes to health insurance, there are still many who are not very well versed with its components. Due to lack of information, often myths can arise. Here are some of the most common myths regarding health insurance and its coverage-

  1. Myth:   I am young and fit. I don’t need health insurance.
    Reality:   It is the best time to invest in a health policy while you are young and fit. Companies will charge you a lower percentage of premium and you will receive a greater amount of coverage over a long period of time.
    Certain diseases do not show early symptoms and by the time they become critical and evident, it becomes too late to invest in a policy and avail the benefits because pre-existing health conditions come with a waiting period of 36 to 48 months generally from the day of buying the policy.
  2. Myth:   24-hour hospitalisation is mandatory for making a claim
    Reality: No, it’s not. With the rapid improvement in medical technology, certain surgeries/ daycare procedures get completed within 24 hours and do not require hospitalisation. Such coverage is offered by most companies, yet make sure your policy contains all such benefits.
  3. Myth:   My health insurance policy will cover 100% of my hospital bills
    Reality: Every policy has different caps and limits when it comes to claim settlement. Hence, a certain amount of the entire expense is usually provided by the insurance companies at every claim settlement. There are certain exclusions in every policy, these uncovered expenses are to be borne by the policyholder.
  4. Myth:   I do not have to disclose all my medical details.
    Reality: Disclosing all the medical details to the insurer is required in order to confirm that your medical condition falls under the coverage terms of the company. It is also necessary to give proof of expense for making claims. Hiding information can lead to rejection of claims and even legal trouble.
  5. Myth:   If I have a health issue, I will not be able to buy health insurance.
    Reality: You can buy special health insurance if you have pre-existing conditions. There are certain health insurance products specially made for people who have some medical issues. However, the effect of your health condition will directly affect the premium to be paid.
  6. Myth:   A health plan does not cover maternity benefits.
    Reality: Not all health plans cover maternity benefits, so be sure to check the same while investing in a policy. However, most insurances offer that add-on and maternity benefits can be enjoyed only after the completion of the waiting period. There are companies that have especially made health insurance products for women.
  7. Myth:   Buying health insurance through an agent is the best way to buy.
    Reality: Nowadays, with so much information available online, it is best to invest in health insurance after proper comparison with all the other companies. You can use the premium calculators to find policies online and compare. Buying health insurance online will not only save you time and effort, but can also help you get a good deal.

Health insurance portability

Health insurance portability means switching to another health insurance plan either offered by the same insurance company or by another insurance company but retaining the no-claim benefits of the earlier plan.

Porting can be done using the following ways –

  • The medical insurance company should be informed about the porting request, in writing, at least 45 days before the renewal date
  • A porting request should be sent to the insurance company
  • Apply with the new insurance company and provide the details of the existing policy
  • The company checks the existing policy details and then allows porting
  • A new proposal form of the new policy should be filled and submitted with the new insurance company
  • The premium should be paid
  • The plan would be ported and a new insurance policy would be issued containing the renewal benefits of the existing policy

Only if the above steps are followed will the health plan be ported.