8 Common Health Insurance Terms Decoded
Having a health insurance policy is a must these days. However, while purchasing a health insurance plan, you might come across some confusing terms. It is necessary to know these terms and even the circumstances associated with these terms.
So, let us check out the most common health insurance terms which have been decoded below.
Health Insurance Jargons Decoded
1. Waiting Period
It is quite common that you must have heard about the term Waiting Period but did not know the actual meaning of the term. The waiting period can be defined as the period after which you start getting the benefits from your health insurance policy. In simple words, it means after the waiting period, your health insurance provider would be liable for you to pay for the claims you make. The waiting period of one policy would be different from another policy and is dependent on several other factors like your age, your previous medical records, the type of health insurance policy you have chosen, etc.
Let us explain this with the help of an example. Samantha is 40 years old and suffers from diabetes. After six months of purchase of the health insurance policy, she needed hospitalisation. However, she was not provided coverage for the hospitalisation as the policy had a clause of providing coverage for pre-existing conditions after a waiting period of 2 years.
2. Grace Period
In order to keep a health insurance policy active, all the insurance premiums must be paid before the due date. However, with a busy life which we all have, it is quite obvious to forget the due date for health insurance premium payment. Health insurance companies usually would grant a grace period of around 15 days to 30 days for making the premium payment. If the insurance premium payment is not made within this grace period then the health insurance policy might lapse.
However, if you need to raise a claim within the grace period, your claim would not be admitted unless you pay up the due premium first.
3. Free-Look Period
The free-look period is the period within which you are eligible to cancel your health insurance policy. For a health insurance plan, the free look period would begin from the policy start date and would extend up to 15 to 30 days from the policy start date. If you decide to cancel your health insurance plan, then you can request for that during this free look period.
For instance, Soumya purchased a health insurance plan which has a free-look period of 15 days. This means that she can cancel her policy within 15 days from the start date of the policy. She would also get her health insurance premium refunded by this.
4. Pre-existing conditions
Pre-existing conditions are said to be the conditions, ailments, or any injury which was diagnosed or whose symptoms were seen before the policy issuance. Some health insurance policies do not cover any pre-existing disease but some do after a waiting period.
So, the health insurance plans that have now started providing cover for the pre-existing conditions but after a certain waiting period of continuous renewals. For example, if you have a health insurance plan which covers your pre-existing health condition like hypertension after a period of 4 years, then for the first 4 years no claim pertaining to hypertension would be admitted. However, all other claims would be accepted.
However, after the tenure of 4 years of continuous renewal is over, any claim pertaining to your pre-existing health condition like hypertension would also be admitted.
A deductible is the base amount you mention while opting a top-up and a super top-up health insurance plan. Once the treatment expenses cross the threshold deductible amount, only then you can file a claim under a top-up or super top-up plan.
You as the policyholder can either use your base health plan cover as a deductible amount or choose to pay from your pocket to pay the medical expenses up to the deductible amount. Ideally, a combination of a base health plan plus a top-up or super top-up plan is recommended to increase the coverage in a budget-friendly way. And, when opting for a top-up or super top-up plan, it is advisable to keep the deductible amount equal to the sum insured of your base health plan. So that you don’t have to shell out money from your pocket.
For example, Karan has a base health plan cover of INR 5 lakhs and a super top up health insurance plan cover of INR 5 lakhs. The deductible for the super top-up is INR 5 lakhs. Imagine that he is hospitalised and his medical bill is around INR 8 lakhs.
So, the initial amount of INR 5 lakhs can be paid by the base health plan and the remaining amount of INR 3 lakhs would be paid by the super top-up health insurance plan.
Suppose, Karan hadn’t opted for a base health plan, he would have had to pay the deductible amount from his pocket, i.e. INR 5 lakhs. And only after the exhaustion of the mentioned deductible amount, the super top-up plan would have come for the rescue to cover the rest of the bill amount, i.e. INR 3 lakhs.
6 . Co-pay
When you have a health insurance policy, your insurance provider would pay off the expenses that are incurred during your treatment. But, if you are agreeing to pay out a particular percentage of your hospital bill then it is said to be co-pay. In such a case, the sum insured will remain the same but the insurance premium would be reduced.
For example, if you have a health insurance plan for INR 10 lakhs with 10% co-pay, then irrespective of the total claim amount, which could be said INR 50,000, you would still have to pay 10% of the claim, i.e. INR 5,000 and the rest 90%, i.e. INR 45,000 would be paid by the insurer minus the non-payable items like consumables.
The feature of co-payment is not a mandatory feature in all health insurance plans; however, it is a common feature in a health insurance policy that is meant for senior citizens. This would be helpful as the insurance premium becomes higher with the increase in the age group. So, the feature of co-payment would make the health insurance plan affordable.
Portability is defined as the right of a policyholder having an individual health insurance plan by which he can transfer the credit which he has earned for the pre-existing conditions and other exclusions in case of switching from one insurance provider to another or from one health insurance plan to another plan of the same insurance provider if the health insurance plan has been carried on without any break.
Usually, the portability request needs to be submitted a minimum of 45 days before the due date for the same to be processed.
So, if you have issues related to your existing health insurance plan with an insurance provider, then you might stop paying the renewal premium and purchase a fresh insurance policy. By this, you would lose some of your benefits such as the time-bound exclusions. Suppose, there is a waiting period of 2 years for providing coverage to a certain ailment; if you purchase a fresh health insurance plan in the 25th month i.e. just after 2 years then again you would have to wait for another 2 years for availing coverage for that specific illness. However, by porting your health insurance policy you can easily avoid this. This is the continuity benefit of a health insurance plan with a portability option.
8. Sub Limits
Some health insurance plans have specific limits set for specific expenses like room rent, ICU Charges, cost of surgery, etc. which is linked to the overall coverage or the sum insured of the policy. For example, the most common sub-limit is on room rent of 1% of the sum insured. So, if you have a health insurance plan of INR 10 lakhs, then you can get room rent limit upto 1% of INR 10 lakhs, i.e. INR 10,000 per night. Other associated costs would also be proportionately deducted at the time of claim payout. However, if you choose a room rent of more than INR 10,000 then the remaining part needs to be paid by you and the same would not be covered by your health insurance plan.
However, new-age health insurance plans do not have any room rent limit. In that case, as long as the total claim is less than the sum insured of the plan, the same would be approved irrespective of the room rent limit or the cost of surgery, etc.
Explained: Common Health Insurance Terminologies
So, these health insurance terms can be quite tricky and you must have complete knowledge about the terms for understanding them. You must get quite acquainted with these terms to have a proper understanding of the coverage provided by your health insurance plan so that you can purchase the right health insurance plan for yourself and your family.