Articles 133 views May 14, 2020

The importance of health insurance is felt more now given the massive havoc that the COVID-19 pandemic has created in India and elsewhere. The Insurance Regulatory Development Authority of India (IRDAI) has asked health insurers to provide a cover for COVID-19, besides other ailments, given the number of sicks it has created across the country.

Health Insurance

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By paying for the expensive medical treatment at a wide range of hospitals, Health Insurance becomes Faayde Ki Baat, a campaign run by the General Insurance Council, in every sense of the word. All you need to do is pay an affordable premium and enjoy the health cover. The Hindi slogan that you see also holds true for other general insurance products.

Why Should You Go for Health Insurance?

Will you be able to pay hefty hospital bills if you don’t have the savings to do so? Even if you have savings, will it be worth using the same when health insurance can do on your behalf? That tells you how important health insurance can be to you.

Health insurance gives you the cover for hospitalization expenses including the purchase price of the medical equipment. But does it cover only the hospitalization expenses? No! You can get the cover for pre- and post-hospitalization expenses too. Day-care surgeries and preventive health check-ups are also included in this insurance.

The treatment can be done cashless at any of the network hospitals that the insurer may have across locations. All you need to do is present the health insurance card to the concerned official at the hospital. While subscribing to the health insurance policy, you get a kit that you can check to find out the list of network hospitals.

In case of an emergency hospitalization at a hospital other than the network hospital, you can go for reimbursement of expenses incurred on the medical treatment. You need to inform your insurer within 24 hours of the hospitalization so that the reimbursement claim can be settled successfully. So, after the medical treatment is done, you should submit a proof of the hospitalization and the expenses incurred to the insurer, which will then reimburse the amount to your bank account.

What is Sum Assured on Health Insurance?

It is the amount upto which you can get the cover by a health insurance policy.

Types of Health Insurance

Individual Insurance

As the name suggests, this insurance plan is for a single individual who will need to pay the premium to get the cover upto the sum assured.

Family Floater Insurance

If you want to cover the healthcare expenditure of your entire family with a single insurance plan, you should look for family floater insurance. What the health insurance company does is split the sum assured equally among the family members. The health of every individual would be of paramount importance for you. Keeping that in mind, the total sum assured should be much higher so that the split amount does not come down too much in numbers.

Critical Illness Insurance

In case you are diagnosed with critical illnesses such as heart attack, kidney failure, cancer, paralysis, etc, having critical illness insurance will help you overcome the crisis. The sum assured is pre-defined and you need to survive for a particular period after being diagnosed with ailments mentioned above to claim the benefits.

Senior Citizen Health Insurance

Health insurance companies provide cover for ailments caused to people aged above 60 years. This insurance covers the expenses incurred during hospitalization as well as before and after hospitalization. It also offers coverage for day-care procedures, OPD expenses, etc.

You also get a rider of personal accident cover with health insurance. So, if you are disabled or die due to an accident, a health insurance company will pay for the hospitalization. In case the unfortunate incident causes loss of income, the insured will receive a fixed monetary benefit.

Important Terminologies Related to Health Insurance Policy

Pre-existing Diseases – It is possible for you to have diseases before taking a health insurance policy. Such ailments are called pre-existing diseases in this insurance.

Waiting Period – This is related to pre-existing diseases mentioned above. The waiting period is a clause that health insurers keep in the agreement and it means the time for which you need to wait to get the cover for pre-existing diseases. It can be around 2-4 years from taking the insurance policy. The exact period can vary across insurers.

Day-care Procedures – These are procedures that require hospitalization for less than 24 hours. Such procedures include chemotherapy, dialysis, radiation, cataract, etc.

Domiciliary Hospitalization – Sometimes your conditions don’t permit you to be admitted to a hospital. In that case, domiciliary hospitalization comes to your rescue! Your home becomes a hospital and the expenses incurred during this treatment are to be borne by the insurance provider.

No-claim Bonus – It’s a rider that you get on not claiming in a year. If you don’t claim in a year, you can be rewarded with a no-claim bonus which could translate into an increase in the sum assured or a decrease in the premium amount. If you have to choose between the two, go for the first one as the increased cover amount will only help you deal with healthcare expenses better. Given that healthcare costs are only going to rise further, an increased sum assured will make sense.

Third-party Administrators – Claim settlement can be done by the in-house claim settlement department of the insurer or the insurer hires a third-party administrator (TPA) for the same. A TPA can help process your health insurance claims using your hospital bills and documents. But TPAs can’t be held liable if your claim is rejected or accepted by the insurer.

What is Included and What is not in a Health Insurance Policy?

Before subscribing to health insurance, don’t forget to check the inclusions and exclusions of a health insurance policy. We have listed down the inclusions and exclusions.

Inclusions

  • Hospitalization expenses
  • Pre-and post-hospitalization expenses
  • Day-care procedures
  • Domiciliary treatment
  • Preventive health check-ups
  • Ambulance charges
  • Maternity expenses
  • Donor expenses

Exclusions

  • Injuries caused due to war, terrorism, nuclear activity or suicide attempt
  • Terminal illness such as AIDS
  • Hormone Replacement
  • Change of Sex
  • Dental Surgery
  • Eye Surgery
  • Plastic/Cosmetic Surgery

Note – The list of inclusions and exclusions can vary from the actual depending upon the policy of the insurer. Before subscribing to the policy, ensure there are maximum inclusions so that you can be rest assured of your healthcare expenses.

Health Insurance Also Offers You a Slew of Tax Benefits

Paying health insurance premiums qualifies you for tax benefits under Section 80D of the Income Tax Act. Insurance of self, spouse and dependent children can let you avail tax deductions upto INR 25,000. If your parents are aged below 60 years, an additional tax deduction of INR 25,000 is allowed. In case your parents are above 60 years, the additional deduction amount will go up to INR 50,000. In case both the individual and his/her parents for which the insurance cover is applicable are aged above 60 years, the total deduction that can be claimed is INR 1 lakh.

Even expenses incurred on preventive health check-ups can qualify for tax concessions. The Income Tax Act allows a tax deduction upto INR 5,000 on payments made towards preventive health check-up.

Health insurance also offers a provision for single premium payments. A lump-sum premium is payable and remains valid for more than a year. The tax concession will be made equal to the fraction amount. How does the fraction amount arrive? Well, to calculate the same, you need to divide the lump sum by the number of years for which the policy will be there. The maximum deduction is, however, capped to INR 25,000/50,000 as the case may be.

How to Choose a Health Insurance Policy?

When you have multiple health insurance options at your disposal, it becomes imperative for you to compare offers in terms of sum assured, the premium payable, inclusions & exclusions, riders, and much more. This will help you zero in on the policy that meets your needs the best way.

Other General Insurance Products

Apart from Health Insurance, there are some other general insurance products that you can look for. These include vehicle insurance and home insurance. In case your vehicle meets an accident and gets damaged in the process, vehicle insurance can help you deal with the financial losses caused to you. There are two cashless and reimbursement claims, which work the same way as in health insurance. For cashless claims, you need to get your car repaired at any of the network garages. When it comes to reimbursement, you need to spend first and then get it recovered by submitting the expense details. Home insurance gives you a cover for damages occurring to your home against fire, strike riot, earthquake, etc. Not only the home, but even the damages to garages placed inside the home premise can be covered with such insurance.