What is Health Insurance?

Health insurance is a financial tool that provides financial coverage for medical expenses. A health insurance policy is a contract between the insurance company and an individual. The individual pays a premium to the insurer and the insurer offers financial protection against healthcare expenses to the individual in return.

Health insurance covers wide-ranging medical expenses like the cost of medicines, surgery, doctor's consultations, room rent, ambulance charges and more.

Types of Health Insurance

There are two basic types of health insurance:

1. Mediclaim Plans

Mediclaim or hospitalisation plans are the most basic type of health insurance plans. They cover the cost of treatment when you are admitted to the hospital. The payout is made on actual expenses incurred in the hospital by submitting original bills. Most of these plans cover the entire family up to a certain limit.

2. Critical Illness Insurance Plans

Critical Illness Insurance Plans cover specific life-threatening diseases. These diseases could require prolonged treatment or even change in lifestyle. Unlike hospitalisation plans, the payout is made on Critical Illness cover chosen by the customer and not on actual expenses incurred in the hospital. The cover gives the flexibility to use the monies for changing lifestyle and medicines. Also it's a substitute for income for the time you could not resume work due to illness. Payout under these plans are made on the diagnosis of the disease for which the original medical bills are not required.

3. Family Health Insurance Plan

A family health insurance plan covers multiple members within the same family, such as the individual, as well as their spouse, father, mother, children and sometime father-in-law and mother-in-law. These policies offer coverage to the entire family on a single health insurance premium, making it ideal for families who want a simplified and structured approach to health insurance.

4. Senior Citizens Health Insurance Plan

Senior citizens health insurance plan offers financial coverage against medical expenses incurred by senior citizens. This health policy is catered to the needs of the elderly and ensures that their healthcare needs are adequately met without any financial constraints. Senior citizens health insurance plans cover age-related health conditions, pre-existing illnesses as well as other treatments arising out of an illness or an accident.

5. Personal Accident Insurance Plans

Personal accident insurance plans offer financial protection against health complications arising out of an accident. These plans cover expenses like ambulance costs, surgeries, medicines and post-operative rehabilitation expenses, among other things.

6. Individual Health Insurance Plan

An individual health care insurance plan covers a single person. It functions like any other health plan and offers financial coverage for medical expenses like surgeries, doctor’s consultations, medicines, ambulance costs, room rents and more.

Benefits of Health Insurance

Below are some benefits of health insurance plans:

Critical Illness Cover

Apart from basic healthcare expenses, health insurance also covers critical illnesses, such as cancer, health diseases, kidney ailments and more. These illnesses can require long-term medical care and burden you with high costs. Health insurance can be suitable to deal with these expenses so you can focus on your treatment and recovery.

Coverage for Pre-existing Illnesses

A health policy not only covers any future health complications that you may have but sometimes also pre-existing illnesses. At the time of purchasing the plan, you may have pre-existing illnesses, such as thyroid, diabetes, high blood pressure or others. Health insurance will cover the costs of these conditions after a brief waiting period and ensure optimal financial protection for you.

Quality Healthcare

Health insurance lets you access healthcare from a wide network of hospitals and healthcare providers affiliated with the insurance company. This ensures timely and quality medical attention when you need it the most.

Cashless Claims

Health insurance is a convenient tool that prioritises your well-being in your hour of need. You can avail of cashless claims without having to go through any lengthy claim procedures. The insurance company settles the bills with the hospital on your behalf. This streamlined process ensures you do not have to pay upfront and seek reimbursement later.

Cashless Treatments

A health policy lets you avail of the required medical treatment at a network hospital without making any upfront payments. You can get the treatment you need, and the insurance company directly settles the bill with the network hospitals, offering convenience and speed.

Tax Savings

If you invest in health insurance, you can get deduction up to ₹ 25,000 under Section 80D for yourself and your family (₹ 50,000 if the age of the insured is 60 years or above) and up to ₹ 25,000 (₹ 50,000 if the age of the insured is 60 years or above) for your parents.

Why do you need Health Insurance now?

No one plans to fall ill or get hurt, but a serious illness can strike anyone at any time. The cost of treating the illness can cause severe financial strain on the savings you have accumulated over time. This means that you might have to compromise on providing your child the best quality education or defaulting on your home loan payments. Today, the cost of medical treatment is continuously rising.

For e.g., Herceptin, a cancer medicine costs approximately 1,10,000 for a vial of 440 mg. Depending on the weight, a patient usually requires 17-19 bottles for treatment over a year . That's 18 - 20 lakh just for the medicine^~. Then add hospitalisation costs, doctor consultation fees, chemotherapy costs, etc. and your overall expenses could exceed 25 lakh. These costs which are already very high are increasing every year. Most smart people have taken necessary precautions to insure their health as soon as possible. Health insurance is a living benefit, where you would need monies at the time of dire need. One disease can drain out all the savings you have made for your children's education, marriage, for buying a house or even retirement. You would not want your family's dreams to get shattered just because of an illness, especially when you could have protected yourself financially. It is beneficial to take a health insurance policy when you are young and healthy . As you get older, not only does your premium increase, but you also stand a chance of being denied a health cover by the insurance company.

How to Choose the Right Kind of Health Insurance For Yourself?

There are several health insurance plans available in the Indian market, which makes it confusing to buy a policy best suited to your financial and medical requirements. Below are some factors to consider to ensure you select the right product:

Right Coverage

The coverage of a health insurance plan must align with your health needs. If you have pre-existing illnesses or a history of poor health in your family, it is advised to get a higher coverage that can cover all your potential medical expenses.

Additionally, your coverage must also be adequate to deal with rising medical costs in the long run.

Suits Your Budget

The higher the coverage, the higher can be the health insurance premium. Therefore, you must analyse your requirements and assess whether the premium fits your budget or not.

Individual Plans or Family Plans

Individual plans cover a single person whereas a family plan covers multiple people in the family. You can assess your needs and those of your family members to determine whether you need a separate health policy for each person or a combined plan for all.

Lifetime Renewability

Lifetime renewability enables you to renew your plan when it matures and enjoy uninterrupted financial protection for a long time. This feature eliminates the process of purchasing a new health policy every few years. Therefore, it can help if you buy a plan with a lifetime renewability option.

Preferred Hospital Coverage

It is important to check if the health insurance plan includes your preferred hospital in their network of hospitals. This can help you access speedy and suitable medical attention at your convenience.

High Claim Settlement Ratio

Claim settlement ratio is the percentage of claims that an insurer has settled in a given period out of the total claims received. It is recommended to go for a company which has a high claim settlement ratio. This helps ensure that your claim will be settled in your time of need.

COMP/DOC/May/2024/305/6231

Should I buy a Mediclaim plan or a Critical Illness Insurance plan?

A Mediclaim plan will either reimburse all your hospitalisation expenses or settle the hospital bills via a cashless facility. With a Critical Illness Insurance plan, you will receive a lump-sum payout on the detection of a critical illness. You don't have to be hospitalised for the same. If you are unable to work because of the illness, then you can use the amount as a substitute for your monthly income. You can even use the money to cover expenses for doctor visits, medicine purchases, medical tests or any other expense that might arise during this time. That is why you need both – a Mediclaim plan to cover your hospitalisation expenses and a Critical Illness Insurance plan to cover your loss of income and other expenses that arise due to an illness.