What is Health Insurance? Meaning & Types

Health insurance is medical coverage provided by an insurance company that looks after the financial expenses arising from medical issues. It helps you cover expenditures, including consultation fees with the doctor, surgery expenses, hospitalization costs, expenses for medication, etc. As an insured person, you will either have to pay the bills out of your pocket, which your insurer will reimburse later, or the insurer will directly settle all expenses with the hospital.

Good health is essential to living a carefree and fulfilling life. While everyone wants to live a healthy life, medical emergencies can happen to anyone at any time. No matter how fit you are, one thing you can never predict is health issues and illnesses. Health issues can become huge bills and burn a hole in your pocket. However, under such circumstances, one thing proves highly beneficial: health insurance plans!

What is Health Insurance?

No matter how careful you are, falling ill is inevitable. Therefore, it is advised to be prepared for unexpected medical emergencies. Instead of stressing over medical expenses, you should focus on investing in a health insurance plan that will ensure financial stability during medical emergencies.

Let us consider an example - a person suffering from a critical illness has to be on extensive prescription of medication. Each medicine may cost in the range of thousands. Assuming the treatment can last from months to years, these expenses alone can amount to a large sum of money. In addition, there are tests, consultation fees, hospital fees, etc. Thus, one illness alone can drain your entire savings. Therefore, it is best to buy health insurance as early as possible. That way, you ensure the well-being and comfort of your family and yourself in the long run.

Types of Health Insurance Plans

The availability of different insurance plans makes selecting one that suits your needs convenient. Here are some of the most popular types of health insurance in India:

Individual Health Insurance

As the name suggests, it covers an individual’s medical expenses. It is ideal if you want personalized coverage for yourself and your family.

Family Floater

A single policy that covers your entire family, including spouse, children, and sometimes parents. It is cost-effective and convenient.

Senior Citizen Health Insurance

Tailored for senior citizens, this policy addresses health concerns for individuals above the age of 60.

Group Health Insurance

Employers offer this benefit to their employees. It is an excellent employee benefit and often includes maternity and dental coverage.

Critical Illness Insurance

Specialized plan that covers life-threatening diseases like cancer, heart attacks, and organ transplants. It provides a lump sum amount to cover treatment costs.

Accidental Insurance

Covers financial expenses that occur during any accidental event resulting in partial or full disability of the policyholder

Health Insurance Benefits

The benefits of health insurance makes it a must-have for anyone looking for a medical emergency backup. The advantages are endless; however, the most important ones include:

Cashless Treatment

Having healthcare insurance offers cashless treatment at the network hospitals of the insurance company. You can also avail reimbursement from the insurance company if you are getting treated at a hospital of your choice instead of a network hospital.

Tax Benefits

As per the Income Tax Act (ITA) 1961, Section 80D offers tax benefits for premiums paid for health insurance policies. The maximum deduction, for instance, is ₹25,000 if you only pay insurance premiums for yourself and your partner.

Comprehensive Coverage

A health plan makes you eligible for several coverage benefits, including hospitalization and medicine costs, diagnostic bills, treatments and surgeries.

Peace of Mind

It is one of the most satisfactory benefits of a health insurance plan. Assurance of a secured future makes it a must-have option. It also brings the benefit of having a steady financial reserve to tackle uncertainties.

Eligibility Criteria for Obtaining a Health Insurance

Getting health insurance is beneficial for everyone. It is better to have it at a younger and healthier age; the older you get, your premium amount increases. Mentioned below are some of the eligibility criteria for applying for a health insurance plan:

Age

The minimum age for kids to get health insurance is between 16 to 18 years. For adults, it ranges from 18 to 65 years. In some cases, it may even go up to 70 years or beyond, depending on the insurer and plan you choose.

Income

Some health insurance plans have income-based eligibility criteria. It can be crucial for government-sponsored health schemes or plans designed for individuals and families with limited sources of income.

Medical History

Insurance companies often ask for your medical history when you apply for a health policy. Pre-existing medical conditions may affect your eligibility or premium rates. Some insurers may provide coverage for pre-existing conditions after a waiting period.

How to Choose a Health Insurance Plan?

Choosing a health insurance plan can feel overwhelming, but it’s one of the most important decisions you can make for your financial well-being and peace of mind. Let us see some key points to consider when picking a health insurance plan that fits your needs.

Check the Sum Insured

First things first: the sum insured. This is the maximum amount your insurance company will pay in the event of a claim. Think of it as your financial safety net. Choosing a sum insured that aligns with your healthcare needs is crucial. Consider factors like age, health condition, family size, and the cost of healthcare in your city. If you’re young and healthy, you might be tempted to opt for a lower sum insured to save on premiums. But remember, medical costs are rising, and unexpected illnesses or accidents can lead to hefty bills. It’s wise to strike a balance between affordability and adequate coverage.

Scout the Network Hospitals

Network hospitals are those that have a tie-up with your insurance company for cashless treatment. This means you can get treated without paying out of pocket (up to the sum insured). When evaluating a health insurance plan, check if your preferred hospitals and doctors are included in the insurer’s network. Having a comprehensive list of network hospitals nearby can be a lifesaver during emergencies. It’s also a good idea to check the reputation and quality of these hospitals. After all, you want to ensure you’re getting the best possible care when you need it the most.

Check the Fine Print

Insurance documents can be lengthy and filled with jargon, but taking the time to read the fine print is essential. Pay attention to terms and conditions, waiting periods for pre-existing diseases, and sub-limits on specific treatments. Waiting periods can range from a few months to a couple of years for certain conditions, so it’s important to know what’s covered and when. Sub-limits may apply to specific treatments or room rents, which can limit the amount you’re reimbursed. Understanding these details will help you avoid surprises and make informed decisions.

Look for Additional Benefits

Who doesn’t love a little extra? Many health insurance plans offer additional benefits that can enhance your coverage. These might include coverage for maternity expenses, annual health check-ups, wellness programs, or discounts on health services. Some insurers also offer a no-claim bonus, which increases your sum insured if you don’t make any claims during the policy year. These added perks can make a big difference in your overall healthcare experience, so keep an eye out for them when comparing plans.

Examine the Exclusions and Other Clauses

Every insurance policy comes with exclusions, specific situations or conditions that are not covered. Common exclusions include cosmetic procedures, fertility treatments, and certain chronic conditions. Make sure you understand these exclusions to avoid any misunderstandings later. Additionally, be aware of other clauses, such as co-payment, where you agree to pay a portion of the claim amount. Understanding these clauses will help you gauge the actual coverage you’ll receive and prevent any potential pitfalls.

Difference Between a Mediclaim Plan or a Critical Illness Insurance Plan?

When you’re trying to figure out the best way to protect yourself financially in case of medical emergencies, it often comes down to choosing between a Mediclaim plan and a Critical Illness Insurance plan. Both have their unique benefits and drawbacks, so understanding the differences between them can help you make the right decision for your needs.

Type of Payout

Mediclaim policies are typically reimbursement-based plans. This means they cover the actual expenses incurred during hospitalization. You submit the bills to the insurer, and they reimburse you up to the sum insured limit. Some policies also offer cashless facilities, where the insurance company directly settles the bill with the hospital.

Critical illness plans operate on a lump sum payout basis. If you’re diagnosed with any of the specified critical illnesses listed in the policy, the insurer provides a lump sum amount. This payout is not dependent on actual medical expenses incurred; instead, it’s a predefined amount agreed upon when the policy was purchased. This flexibility allows you to use the money for any purpose, such as medical treatment, household expenses, or even travel for treatment.

What’s Covered

Mediclaim policies generally cover hospitalization expenses due to accidents or illnesses. This includes room rent, surgery costs, doctor’s fees, and diagnostic test charges. However, they do not cover OPD (Outpatient Department) expenses, pre-existing conditions until after a waiting period, or specific exclusions like cosmetic surgeries or experimental treatments.

These policies cover life-threatening diseases, such as cancer, heart attack, stroke, kidney failure, and other major conditions listed in the policy. Once diagnosed with any of these critical illnesses, the policyholder receives a lump sum payout, which can be used for treatment or any other needs. It’s important to note that critical illness plans do not cover general hospitalizations or non-critical illnesses.

What’s Better?

Those looking for coverage of hospitalization expenses for a wide range of illnesses and accidents. It also provides coverage for various hospital expenses, offers a cashless facility, and covers multiple claims within the policy year up to the sum insured limit.

Individuals seeking financial support specifically for major illnesses that can lead to significant financial burdens. It also provides a lump sum that can be used for treatment, recovery expenses, and other financial needs beyond hospitalization costs.

Making the Choice

When choosing between a Mediclaim plan and a Critical Illness Insurance plan, consider your health risks, family history, and financial situation. If you’re worried about everyday medical expenses or hospital visits, a Mediclaim policy might suit you better. On the other hand, if you’re concerned about the financial impact of a major illness, a Critical Illness plan provides more comprehensive financial security.

FAQs on Health Insurance

1

What is the difference between health insurance and medical insurance?

Health Insurance: Health insurance is a broad term that covers a range of policies, including Mediclaim and Critical Illness Insurance. Depending on the policy, it can cover hospitalization, doctor visits, medication, and preventative care.

Medical Insurance: Medical insurance, often referred to as Mediclaim, specifically covers hospitalization expenses due to illness or injury, usually up to a certain limit and requires hospitalization for claims.

2

How does a cashless health insurance plan work?

In a cashless health insurance plan, the insurance company directly settles the medical bills with the hospital. The insured can avail of treatment at network hospitals without making upfront payments, except for non-covered expenses or co-payments.

3

Can I have more than one health insurance policy?

Yes, you can have multiple health insurance policies. In case of a claim, you can choose to use one or both policies to cover the expenses, subject to the terms and conditions of each policy.

4

Is it possible to switch health insurance providers?

Yes, you can switch health insurance providers through a process called porting. You can transfer your existing policy to a new insurer without losing accumulated benefits like the no-claim bonus or waiting periods for pre-existing conditions, subject to certain conditions.

5

Are there any health insurance plans specifically for pre-existing conditions?

Some health insurance plans cover pre-existing conditions after a waiting period, typically 2 to 4 years. Specialized plans may offer coverage for specific pre-existing conditions but may come with higher premiums or waiting periods.

6

Can senior citizens get health insurance?

Yes, there are health insurance plans specifically designed for senior citizens. These plans cater to the healthcare needs of older adults, often with coverage for chronic conditions, pre-existing illnesses, and other age-related medical needs, though premiums might be higher.

7

What is a no-claim bonus in health insurance?

A no-claim bonus is a reward given by insurers for not making any claims during a policy year. It usually takes the form of a discount on the premium for the following year or an increase in the sum insured at no extra cost.

Suggested Readings

1. Family Floater Health Insurance

2.What is the Waiting Period in Health Insurance?