A Beginner’s Guide to Understanding Health Insurance
Securing your health and finances against rising medical costs is vital today. Health insurance provides a safety net by offering financial coverage for medical expenses in case of hospitalisation or treatment for illness or injury. This article explains the purpose, types, key features and selection criteria of health insurance plans to help you make an informed decision.
What is Health Insurance?
Health insurance is a contract or policy between an insurance provider (insurer) and an individual or organisation (policyholder). As per the agreement, the policyholder pays a regular premium to the insurance company in exchange for medical treatment coverage. If the insured person falls sick, gets hospitalised or needs medical care, the insurer reimburses the costs of doctor/hospital bills, surgery, medicines, diagnostics tests, etc.
This way, health insurance reduces the financial burden of unforeseen illness/accidents. It provides access to quality healthcare without paying out of one's pocket.
The insured individual could be you, family members, or employees of your organisation. The insurance company pays either directly to the hospital or reimburses claims to the policyholder after treatment.
Moreover, while choosing a health insurance company, make sure you assess your needs, compare offerings across the market, including trusted providers like ACKO Insurance, and read terms and conditions diligently before buying.
Types of Health Insurance Plans
There are several types of health insurance policies based on who they cover and the kind of coverage offered. Individuals and groups can choose the apt plan as per their needs and budget from options like:
● Individual Health Insurance: As the name suggests, these plans offer coverage to a single person. You can customise this plan by choosing the ideal coverage duration, sum insured, inclusions like domiciliary benefits, OPD expenses, etc., based on current health conditions, lifestyle, family medical history, etc.
● Family Floater Health Insurance Plans: The total sum insured amount floats across the entire family, which is cheaper than buying individual policies. However, the floater amount gets exhausted faster if multiple members make claims. This means that the insurer's total reimbursement is capped at the overall limit.
● Senior Citizen Health Insurance Plans: These specialised plans are designed for people over 60, who tend to have a higher incidence of illnesses, hospitalisations, and medical costs. They offer benefits like lower premiums, shorter waiting periods, and faster claim settlement.
● Critical Illness Health Insurance Plans: These plans provide a lump sum payment on diagnosis of pre-defined critical illnesses like cancer, stroke, renal failure, etc. It offers financial support for expensive treatments like chemotherapy, surgery, etc.
● Group Health Insurance Plans: Employers provide these policies as an employee benefit to cover entire organisations. All company staff members and their families enjoy the health cover facilitated by employer-paid premiums.
● Top-up Health Insurance Plans: These plans help enhance your existing health insurance coverage by providing additional sum insured once the base policy amount gets exhausted during treatment.
Key Features of Health Insurance
While buying health plans, consider these aspects for maximum flexibility and enhanced financial protection:
● Flexible Coverage Options: Policies offer choices of ideal sum insured, room rent limits, coverage tenure, deductibles, and inclusions like pre/post hospitalisation, OPD, ambulance, day care procedures, etc., to suit individual needs.
● Cashless Hospital Network: This facility is a key advantage, allowing direct settlement of hospital bills by the insurer without paying from your pocket. Check policies with the widest cashless networks, including your preferred hospitals.
● Range of Add-on Covers: Additional riders provide further benefits like critical illness, personal accident, maternity, infertility treatment, OPD expenses, medical check-ups and more.
● Claim Settlement Ratio: This ratio indicates an insurance provider's transparency in claim settlement. Check insurers with the highest claim settlement records for assurance at the claim stage.
● First Notification of Claim: Notifying about hospitalisation within the initial 24 hours allows faster processing and prevents rejections. This is part of the policy terms.
● Lifelong Renewability: Health plans guarantee renewal until late adulthood to ensure you never lose coverage.
● Tax Benefits: Premium paid offers tax deductions under section 80D of the Income Tax Act. Even claim payouts are tax-exempt, which enhances overall savings.
With this understanding of inclusions, let's now see how to select the ideal health insurance policy.
How to Choose the Right Health Insurance Plan
Follow this step-by-step checklist when purchasing a suitable health insurance policy as per your family’s needs:
● Estimate Future and Present Needs: Analyse your family's health status, disease history, hospitalisation, lifestyle, etc. This will help you decide on appropriate coverage in terms of sum insured, policy term, riders, etc.
● Compare Health Plans: Compare best market products of top insurance companies based on inclusions, exclusions, claim settlement ratio, network hospitals, etc. Shortlist the plans according to your expectations.
● Evaluate Policy Benefits: Read the policy contracts in detail to understand policy terms, limits, usage conditions, etc. Before buying, know about waiting periods, deductibles, claim process, etc.
● Add-ons Evaluation: Find out added covers you can opt for, such as critical illness rider, OPD fees, maternity/newborn benefits, etc. and add them to your policy.
● Match Premium Affordability: Compare affordability considering premium payments on an annual, half-yearly, or quarterly basis, along with taxes and surcharges. Also, check if premium rates stay the same or go up by a percentage annually.
The Bottom Line
This detailed guide offers clarity on health insurance functioning, policy types, and aspects to evaluate when purchasing cover for yourself. Ultimately, choose a comprehensive, affordable health plan from trusted insurers that provides adequate coverage and maximum peace of mind.
Disclaimer: This article is published in association with ACKO and not created by TNM Editorial.