What is Health Insurance?

Health insurance is a financial tool that enables coverage for medical expenses. To understand health insurance's meaning, think of it as an agreement/contract between an individual and a health insurance company. The insurance company offers financial protection for the policyholder against medical costs, in return for a premium paid by him/her under this system.

To get a picture of what is health insurance, you should look into the types of costs that it covers. These include prescription drugs, hospitalisation, surgery, doctor visits, ambulance rides, and more.

Types of Health Insurance

Here is a closer look at the various types of health insurance plans available today, including those covering critical illnesses and mediclaim plans, among others.

Mediclaim Plans

There are different types of health insurance plans that you can choose from. The commonest type of health insurance plan is a mediclaim policy. Here, whenever you are admitted to a hospital for treatment, you have to furnish the original bills of the same, and the payment is based on the actual costs that you incur. The majority of these plans offer coverage for the entire family to a certain extent.

Critical Illness Insurance Plans

Critical illness insurance plans cover various life-threatening or fatal illnesses. These illnesses may need either protracted medical care or perhaps a major lifestyle adjustment. In contrast to hospitalisation plans, the payout is based on the customer's selected critical illness coverage rather than on actual hospital costs.

This coverage allows policyholders to spend the money on prescription changes and lifestyle adjustments. It also serves as a cash substitute for the period when an illness prevents them from returning to work. Under these plans, payments are given based on the diagnosis of the disease; the original medical records are not needed.

Benefits of Health Insurance

Here’s looking at a few advantages of health insurance that you should know more about. These include everything from cashless claim benefits to additional protection.

Optimum Coverage

One of the biggest advantages of a health insurance plan is optimum coverage. It covers costs related to health checkups, treatments, hospitalisation, ambulance rides, alternative therapies, and more. Some insurance plans may also cover treatment received at home under medical supervision as a part of domiciliary care.

Cashless Claim Benefit

Whenever you need funds for urgent medical treatments, health insurance can be a useful instrument that puts your well-being first. Policyholders can make cashless claims, and they do not have to go through drawn-out claim procedures. The insurance provider pays the hospital's bills on your behalf, and you do not have to worry about paying everything up front and then running around for reimbursements. This is a more convenient system as far as health insurance claim reimbursements are concerned.

Additional Protection

While most companies offer group health insurance to their employees, it is often insufficient to meet the coverage requirements of the entire family, particularly because of rising healthcare costs. However, choosing an additional health insurance plan gives you that extra layer of protection. You will also not have to worry about losing basic health coverage in case you leave/change your job. It will be a smarter move to get an additional plan tailored to your specific needs to enable more security and stability in your life.

Tax Benefits

Tax benefits are among the biggest advantages of purchasing health insurance plans. You are entitled to a tax deduction of up to Rs. 25,000 for yourself, your spouse, and your dependent children under Section 80D of the Income Tax Act. This can increase to Rs. 50,000 in the case of senior citizens.

Why do you need Health Insurance now?

A health insurance policy covers you against medical costs, emergencies, sudden treatments, and hospitalisation. Hence, the earlier you opt for it, the better for you since you will get comparatively higher coverage for a lower premium amount (younger applicants are deemed to have lower risks of illnesses). Older applicants are vulnerable to lifestyle diseases, while insurance companies often charge sky-high premiums for basic coverage in these scenarios. Sometimes, they do not offer health coverage in case of higher risks of certain diseases (ascertained through medical checkups).

Hence, if you do not want your hard-earned money to be wiped out because of medical costs, choose health insurance right away without any delays. This will also give you higher mental peace, knowing that your family members are covered in case of any medical emergency.

How to choose a good health insurance plan?

When determining the sum insured, you must carefully consider your age, marital situation, and health. Inadequate coverage will make a health plan useless and drain your finances. Purchasing a health plan at an earlier age is always recommended since the premiums are lower, and waiting periods can be used up throughout the plan’s early years. An online calculator can be used while choosing a plan, helping you compare multiple policies offered by various insurers before deciding.

Always check the insurer's reputation and claim settlement ratio (the percentage of claims settled to the number of claims received) before making a final choice, as well as policy inclusions/exclusions, riders and add-ons, premium amounts, and so on.

Eligibility Criteria to Buy Health Insurance

First and foremost, investing in a health insurance plan is strongly advised if you are a professionally employed and earning individual. It is a big financial choice that contributes to future planning.

Insurance companies have set special requirements for eligibility in most cases. This typically entails a medical examination of the applicant in some cases, where his/her medical condition and parameters are assessed to help insurance underwriters determine fair premium amounts. It also helps prevent disagreements regarding insurance claims in the future. Otherwise, you will need basic KYC details (age, address, and identity proof) along with proof of income while applying for health insurance.

FAQ on Health Insurance

What is the Right Age to Take Health Insurance?

Although there isn't a hard-and-fast rule, purchasing a health plan at a young age is always recommended. You can get the benefits of lower premiums for a relatively higher coverage amount if you are young.

Why should I buy health insurance?

Health insurance can be a godsend in times of crisis. It helps you cover the costs of medical emergencies and treatments without depleting your hard-earned savings and investments.

How will health insurance pay for my emergency medical expenses?

If it is a network hospital, then your actual medical costs are paid by the insurance company. You can enjoy the benefits of making cashless claims without having to pay anything yourself. In case it is not a network hospital, then you will have to pay all the bills yourself first and then get them reimbursed by the insurer.

Will I be allowed to buy more than one health insurance plan?

A policyholder may purchase multiple health insurance plans. However, you cannot submit claims for the same costs to more than one insurance company.

Will I be allowed to cover my family under my health insurance plan?

Under a family health insurance/floater plan, you can cover your family members, including your spouse, parents, brothers, sisters, siblings, and children. You can even cover other living relatives, such as your in-laws, nieces, and nephews.