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According to the World Health Organization (WHO), it is expected that chronic and infectious diseases will see a rise by 57%. We all have been witnessing the spread of chronic diseases such as coronavirus, which are expensive in treatment as well. Therefore, it is crucial to have some financial shield against unexpected medical emergencies.
This is where health insurance plays an important role.
A health insurance plan is a commitment undertaken by the insurance company such that if the insured person is hospitalised for any illness or disease or even injury, then all agreeable expenses would be paid by the insurer. To avail this benefit, the insured would have to pay a price at the beginning of the policy term, called “premium”.
For example, say you have a fixed deposit of INR 2 lakhs in savings and you get coronavirus and need to be hospitalised. You need to undergo treatments the total costs of which amount to INR 3.5 lakhs. Now consider the following scenarios –
|Without a Health Insurance Plan||With a Health Insurance Plan of INR 5 lakhs|
There are multiple types of health insurance plans which have been designed to suit the diverse coverage needs which you might have. Let’s have a look at these variants –
Broadly, health insurance plans can be categorised as indemnity and fixed benefit plans, and each category has different health plans under it.
The need for a health insurance plan cannot be stressed enough. However, here are the top reasons why health insurance is beneficial –
As mentioned in the benefits that health insurance plans offer a wide scope of coverage, here’s a look into the standard coverage benefits which you can find under a standard health insurance plan –
|In-patient Hospitalisation||The costs incurred on hospitalisation and treatments are covered if you are hospitalised for 24 hours or more|
|Pre-hospitalisation Expenses||The costs incurred before being hospitalised are covered for up to a specific duration which is usually between 30 to 90 days|
|Post-hospitalisation Expenses||The costs incurred after being discharged from the hospital are covered for up to a specific duration which is usually between 60 and 120 days. These costs are incurred for monitoring your recovery after treatments|
|Daycare Treatments||Those which do not require hospitalisation for 24 hours due to advanced medical techniques. Such treatments are also covered under health insurance plans|
|Domiciliary Hospitalisation||If you are hospitalised at your home its expenses would be covered if such hospitalisation is because of non-availability of hospital beds or because you cannot be shifted to the hospital|
|Organ Donor Expenses||In case you undergo an organ transplant surgery, this feature would cover the expenses incurred on harvesting an organ from a donor|
|Ambulance Costs||For hiring an ambulance to transport you to the hospital is covered up to a specific limit|
|AYUSH Treatments||Non-allopathic treatments like Ayurveda, Unani, Siddha and Homeopathy are also covered under many plans|
|Free Health Check-ups||Health insurance plans allow you the benefit of monitoring your health through free preventive health check-ups. This facility is allowed once in 1-4 policy years depending on the policy you choose|
|Sum Insured Restoration||If you use the sum insured on a previous claim, this feature restores the sum insured to its original amount so that you get complete coverage for subsequent claims which occur within the same policy year|
|Maternity Benefit||Under this benefit the costs associated with pregnancy, childbirth and pre- and post-natal care are covered up to specified limits. Maternity cover is beneficial if you are planning a family|
|OPD Expenses||OPD expenses are those which are incurred on an outpatient basis on doctor’s consultations, medicines, diagnostic tests, etc. Many health plans allow coverage for such expenses up to specified limits|
|No-claim Bonus||No-claim bonus (NCB) is a reward for you if you don’t make a claim in a policy year. You are either allowed an increase in the sum insured free of cost or a premium discounts on renewal through no claim bonus|
Though health insurance plans allow a comprehensive scope of coverage, there are some medical costs and treatments which are not covered. These are called policy exclusions and some of the most common exclusions include the following –
|Pre-existing Illnesses||Which already exist at the time of buying the plan. Usually, it is either not covered or not covered at least in the initial 2-4 years (waiting period)|
|Specific Illnesses||Like hernia, joint replacement surgeries, fistula, cataract, etc. are not covered within the first one or two years of the policy|
|Illnesses contracted Right After Buying the Policy||Illnesses suffered within the first 30 to 90 days of buying the policy are usually not covered, other than accidental injuries, which is covered from the first day itself|
|Cosmetic Treatment||Which are not medically necessary would not be covered|
|Dental Treatment||Other than resulting from an accident|
|STD||Venereal diseases and sexually transmitted diseases like HIV or AIDS are not covered under health insurance plans|
|War and Allied Perils||Injuries or illnesses suffered due to war, mutiny, civil unrest and other similar reasons, including nuclear contamination, would not be covered|
|Overuse of Drugs/Alcohol||Health complications due to overuse of intoxicating substances would not be covered|
|Experimental Treatment||An unproven and experimental treatment is usually not covered|
You should know these policy exclusions to know the instances when your claims would not be paid by the insurer.
You should buy a health insurance policy only after comparing it with other plans in its category. The comparison allows you to choose the best health insurance plan available in the market which –
Comparing health insurance plans is quite simple, thanks to the online platform. However, when comparing, there are several parameters which should be used to judge and compare health plans. Let’s have a look at these parameters –
Premium is the cost that you pay to the insurance company to provide you coverage against medical costs. This premium is calculated by the insurance company considering different factors which impact your health risk. If the health risk is high, the premium would be high. Let’s have a look at the factors which affect the premium –
When you are hospitalised and such hospitalisation is covered under your health insurance policy, you can lodge a health insurance claim. The insurance company would cover the medical costs incurred on hospitalisation when you raise a claim on your policy, as per the terms and conditions of the policy.
Health insurance claims can be of two types –
For example, if you are hospitalised and your medical bills amount to INR 3 lakhs, here’s how both the claims would be handled for a health insurance plan of INR 5 lakhs
|Cashless Claims||Reimbursement Claims|
· You pay the medical bill of INR 3 lakhs yourself
· After you are discharged, you file a claim with your insurance company
· The company reimburses upto INR 3 lakhs to your bank account for the medical bills that you paid for the accepted amount
There is a claim process which you should follow under both these claims.
Health Insurance Claim Process –
Documents for Claim:
Under both cashless and reimbursement claims, you would have to provide the following documents to the insurance company for settlement of your claims –
Here is a list of top ten health insurance plans in India which offer you a comprehensive scope of coverage –
|Name of the plan||What Makes the Plan Special|
|Care Health Insurance(Care Plan)|
|HDFC Ergo Health Optima Restore|
|ManipalCigna ProHealth Insurance|
|Star Health Family Health Optima|
|ICICI Lombard Complete Health Insurance|
|Aditya Birla Activ Health Platinum|
|Niva Bupa (formerly Max Bupa) Health Premia|
Health insurance plans allow tax benefits. The premiums paid for the health insurance policy are allowed as a deduction from taxable income under Section 80D of Income Tax Act, 1961.
The limit of deduction is as follows –
|Premium Paid for||Limit of Deduction||Total Deduction|
|Self and/or spouse and/or children if you are below 60 years||Up to INR 25,000||Up to INR 25,000|
|Self and/or spouse and/or children if you are 60 years and above||Up to INR 50,000||Up to INR 50,000|
Self and/or spouse and/or children if you are below 60 years
Dependent parents aged 60 years and above
Up to INR 25,000
Up to INR 50,000
|Up to INR 75,000|
Self and/or spouse and/or children if you are 60 years and above
Dependent parents aged 60 years and above
|Up to INR 50,000 + Up to INR 50,000||Up to INR 1 lakh|
Thus, a maximum deduction of INR 1 lakh can be claimed through health insurance premiums.
Let’s understand with an example:
Mr. A, aged 45 years, buys a family floater health insurance policy for his family, excluding dependent parents. The sum insured is INR 15 lakhs and the premium paid for the policy is INR 30,000. He buys an additional senior citizen health insurance policy for his dependent parents and the premium for the policy is INR 18,000.
The deduction which Mr. A can claim would be as follows –
|For the family floater health plan||INR 25,000 (maximum limit)|
|For the senior citizen policy||INR 18,000|
|Total deduction available||INR 43,000|
If Mr. A is in the 30% tax bracket, he can claim a deduction of INR 43, 000 from his taxable income and save a tax of INR 12,900 (30% of 43,000).
Hospitals which are tied-up with a health insurance company for providing cashless claims to its policyholders are called network hospitals. If you want your claims to be settled on a cashless basis, choose plans which have a wide range of networked hospitals. The wider the network, the easier it would be for you to locate a hospital near your locality which is tied-up with the insurance company and provides cashless treatments.
The list of networked hospitals of an insurance company can be checked on the insurance company’s website. You can also call the customer care department of the insurer to find the details of the networked hospitals in your city and/or locality at the time of claims.
With the help of health insurance, you don’t lose your lifelong savings while paying heavy medical bills. It looks after the expenses of not only the policyholder but his family as well.
An individual aged between 18 to 65 years is considered to be eligible to buy health insurance. While eligibility age for children lies between 90 days to up to 18 years.
Yes, you can buy more than one health insurance plan, based on your needs and medical conditions.
There are various types of health insurance plans available to buy such as Individual Health Insurance Plan, Family Floater Health Insurance Plan, Senior Citizen Health Insurance Plan, Critical Illness Insurance Plan, Maternity Health Insurance Plan, Group Health Insurance Plan, Personal Accident Insurance Plan.
Apart from paying the premiums annually, policyholders can also use other modes such as monthly, quarterly or semi-annually.
Yes, under Section 80D of the Income Tax Act, premiums paid towards a health insurance plan are exempted from tax. You are allowed to claim a maximum deduction of up to INR 25,000 per year for you, your spouse and dependent children.
Yes, you can increase the sum insured of your existing policy as many insurance companies offer such policies to the customers, where sum insured can be increased easily. However, if your insurer doesn’t offer this provision, you can either opt for top-ups or increase your cover at the time of policy renewal.
Yes, you can buy health insurance, such a situation is considered to be a pre-existing medical condition, wherein you have to wait for 2-4 years. This is known as waiting period, after completing the same period, you will be covered under your health insurance plan.
Mediclaim policies cover hospitalization expenses but fixed benefit health insurance plans provide a fixed lump sum upon diagnosis of certain critical illnesses. Use mediclaim to cover your regular health related expenses. Use a fixed benefit health insurance plan to cover critical illnesses.
Generally, there is a free-look period of 15-30 days, and if you cancel health insurance within this period, the entire premium amount would be refunded after deducting the stamp duty fees and proportional risk charges for the days you are being covered.
A pre-existing condition is broadly defined as a condition or a disease which existed before the health insurance policy is bought. It is important because most health insurance providers do not cover pre-existing conditions, for a period of 4 years from purchase of the first policy.
There is a grace period of 15 days available to pay the premium from the date of expiry of the policy. However, coverage would not be available for the period for which no premium is received by the insurance company. The policy will become non existent if the premium is not paid within the specified grace period.
Of course. The Insurance Regulatory and Development Authority ( IRDA ) , the sole body looking after the insurance sector in India, has issued a circular which directs the insurance companies to allow transfer 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.
A policy holder can claim any number of claims under a policy, within a year. But the claim amount cannot exceed the maximum amount for which the policy has been insured.
Family plan is one single policy that covers all the members of a particular family. It takes care of the family members hospitalisation expenses. The policy has one single sum insured, and one single premium is paid for the policy. The advantage of having a family floater policy is that all members of the family are covered and there is no need to buy individual policies for each member of the family and there is no need to pay different amounts of premiums for different policies. Family Floater plans take care of all the medical expenses during sudden illness, surgeries and accidents.
In most cases, you will not have a maternity cover under your health insurance policy. However, some insurance providers do include this advantage, albeit after a waiting period. You can buy a maternity cover rider or a specific maternity insurance plan to stay covered.
Yes, you can expect a discount on your health insurance premium when you go for a renewal with the same insurance company. Many insurers offer loyalty benefits in the form of discounts when you continue with them for more than one policy period.
An increase in the Sum insured by a specified percentage for every claim free year, subject to a certain maximum. An important point to be remembered is that the policy should be renewed without a break to avail of the cumulative bonus.
Yes, your health insurance policy is very much applicable even if the hospitalization is less than 24 hours. This is known as Day Care Treatment. Here, 24 hours hospitalization is not required and you do have a scope of coverage too.
Yes, with NCB, you can avail discounts. Not only this, some insurance companies have the concept of loyalty benefit under which they offer a discount on renewal of policy from the same company.
Once your policy has been lapsed, you won't get the claim amount from your insurance company. Yes, a lapsed policy is considered to be null and void. Thus, your insurance won’t pay the hospital expenses and you have to bear the cost from your own pocket.
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