What is Health Insurance?
Health insurance plans are policies that offer protection when the insured is ill or injured. Contractually, the insurer needs to pay for the medical expenses that arise out of hospitalisation, surgeries and other medical situations mentioned in the contract. This helps the insured get the best medical care without making a dent in savings.
What are the Types of Health Insurance?
- 01 Indemnity
- 02 Critical Illness
- 03 Top Up
- 04 Specific Plans
- 05 Travel
- 06 Personal Accident
- 08 Hospi Cash
An individual indemnity-based health insurance policy is one that reimburses the insured for the cost of medical expenses up to the sum insured in the policy. The insured is required to submit hospital bills with the details of expenses incurred during the stay.
A family floater health insurance plan is similar to individual health insurance plans, except it extends to and provides protection for the entire family. In case of multiple illnesses, the sum assured is divided between the family members to entertain multiple claims simultaneously.
For people above the age of 65, the senior citizen health insurance plan provides financial aid to cover medical treatments. They usually offer critical illness cover, cashless hospitalisation, pre-existing conditions cover and a higher sum assured, ensuring that they have the right coverage at the right time.
Critical illness cover can be offered as a rider or as a stand-alone plan. It provides a lump sum amount in the case that the insured is diagnosed with a critical illness like cancer, heart disease, paralysis, renal failure, etc. There usually is a 30 day wait before claiming for the first diagnosis.
A top-up individual health insurance policy is an indemnity policy that offers coverage to people with an existing health insurance policy. This allows them to claim medical expenses even after the sum insured has been exhausted. It includes mandatory deductibles and provides coverage only once the deductibles have been paid.
A top-up family health insurance policy is an indemnity policy that offers coverage to a family with an existing health insurance policy. This allows them to claim medical expenses even after the sum insured has been exhausted.
With a global increase in the number of people with heart diseases, health insurance plans catering to cardiac patients provide coverage for tests, treatments and other medical expenses.
Diabetes & Hypertension
Health insurance for those with diabetes and hypertension provides coverage for hospitalisation from the first day. Based on medical tests and health parameters such as BMI, blood pressure, HbA1c, cholesterol, etc. they even offer incentives.
These plans provide coverage for all medical treatment expenses that arise out of cancer, at any stage. A portion of the cover is received upon diagnosis of cancer at an early stage, waiving off all future premiums. If diagnosed at a later stage, the full cover amount is received with an additional income for a stipulated period of time.
Vector Borne Diseases
A fixed benefit health insurance policy, this usually pays a lump sum equal to the entire sum insured when a claim is made for hospitalisation for a minimum, continuous period of 72 hours when diagnosed with a vector borne disease. A vector borne disease is an infection transmitted by the bite of vectors such as mosquitoes and ticks.
International travel doesn’t always go as planned. While travelling overseas, we do all the meticulous and extensive planning. However, travel insurance is often an overlooked investment until the unforeseen happens. Instances like an accident/sickness, loss of travel documents, trip delays owing to bad weather which could lead to a missed flight connection etc. Especially hospitalisation due to sickness/accident abroad can turn out to be quite disturbing and at the same time very expensive. This is where travel insurance comes to the rescue. There are many travel plans available in the marketplace today.
- Single trip (Leisure) Plan: Designed for people planning holidays or leisure time abroad, be it solo or with family. It is useful for the travellers who usually travel once or twice a year.
- Multi-trip Plan: Meant for frequent travellers, to provide extended coverage (usually a year) so that the travellers don’t have to go through the entire process of availing insurance every time they travel.
- Students plan: Specially designed for students going abroad for further studies for an extended period up to 1 year. The coverage is renewable for the entire course duration. The plan usually cover study interruption, compassionate visits, sponsor protection etc.
- Senior Citizen plans: These plans are directed at senior citizens usually without medical tests.
A personal accident insurance covers you for an accident. Most insurance policies under life or health do not cover loss of life or loss of the ability to earn in the event of an accident. While personal accident policy offers coverage for the loss of life, loss of limbs, disablement, caused in commute or in workplace, and accidents of general nature.
A hospi-cash insurance plan is a daily cash plan that gives the insured a certain daily allowance for every day they are in the hospital. This amount is set when the policy is issued and will not be altered. This is a defined benefit plan.
What are the Benefits of Health Insurance in India?
Health insurance companies in India offer comprehensive coverage for medical costs, such as hospitalisation expenses, outpatient procedures, ambulance charges, domiciliary expenses, etc. These costs are rapidly rising, and therefore health insurance is essential to get the best medical care.
Protection against critical illnesses
Health insurance policies can come with a critical illness rider that offers coverage in the case of life-threatening or altering illnesses, such as renal failure, cardiovascular diseases, cancer, paralytic strokes and accidental dismemberment. If the insured is diagnosed with any of the ailments listed in the policy, they are eligible to receive a lump sum amount that can be utilised for treatment costs, daily expenditure, and other needs.
Health insurance policies offer cashless claim facilities at leading hospitals in India. This implies that the insurance company directly settles the hospital bill and the insured doesn’t need to chase the company to reimburse. To opt for this facility, the insured needs to be admitted to any of the network hospitals mentioned in the policy.
The premium paid is eligible for tax deductions under Section 80(D) of the Income Tax Act 1961.
- Health insurance purchased for the spouse, children and the insured, can avail up to Rs. 25,000 tax deduction.
- Health insurance that also includes parents below the age of 60, can avail up to an additional Rs. 25,000 tax deduction, making the total tax savings Rs. 50,000.
- Health insurance that includes parents above the age of 60, can avail total tax savings of Rs. 75,000.
- A further deduction of Rs. 5000 goes towards the payment of preventive health check ups for the insured, the parents, spouse and children.
With the predominance of a sedentary lifestyle, people have compromised their immunity considerably, making them more susceptible to contract deadly diseases that can be prevented with vaccines. Therefore the vaccination cover is essential for children and adults. Opting for a vaccination cover when purchasing health insurance ensures the timely administration of the vaccine. With a vaccination cover the insured is protected with the cover for medical expenses such as the cost of the vaccine. With healthcare costs rising, this rider offers financial security and health security, enabling the insured to avail the right treatment without denting the savings.
Surgery insurance or operation insurance is a type of health insurance plan that offers coverage for medical expenses incurred when undergoing a surgery. It includes the clost of the procedures that require hospitalisation as well as outpatient surgical procedures.
What is the Eligibility Criteria for a Health Insurance Plan?
The eligibility criteria for buying health insurance policies are as follows:
For a child health insurance policy, the minimum entry age is 16 days and can be purchased till the individual is 18 years of age.
For an adult, the entry age is 18 years.
If the individual is diagnosed with a certain ailment prior to purchasing the health insurance plan, they need to wait for the stipulated waiting period before making claims for that particular ailment.
Who Should Buy Health Insurance Policies?
With medical care becoming increasingly expensive, it is imperative for everyone and their loved ones to have health insurance. It is essential for the following people to have health insurance:
People in the age bracket of 25 to 65 years
People who want to protect themselves and their families in the time of a medical crisis.
People who want to maximise their tax savings
Resident Indian Nationals can avail of health insurance plans in India.
Why Buy Health Insurance at an Early Age?
When we are young, we seldom think about investing in a good health insurance plan while planning our financials. We often forget that because of our sedentary and stressful lifestyle our health is deteriorating at a much faster pace than ever before. Therefore, it is extremely important that for us to buy health insurance at a younger age when we are in the best of our health. There are many advantages of buying the health insurance at an early age:
- Much lower premium: The health insurance premium is directly proportionate to the health status and age of the insured. The healthier a person is lower the premium is. So, people in their twenties and thirties will pay much lower premium for much comprehensive health coverage due to their age and health status than the people in later stages of life. As you grow older your health condition deteriorates and the premium goes up.
- Minimal underwriting: Since, the younger population are supposed to be healthier and the chances of getting any immediate health issues are much less, the medical underwriting criteria are relaxed. Most of the times, it will be Straight Through Pass (STP) without any medical underwriting.
- Larger coverage when you need it: Most health insurance plans offer ‘No Claim Bonus’ where the sum insured increases every claim free year. This feature of the policy is especially beneficial to younger people who do not have claims at their young age. Because they don’t claim, their sum insured increases every year allowing for a much higher sum insured at a later stage of life when they could need it without any extra premium
- Waiting periods: Many health insurance plans have waiting periods before they can be covered under the policy. Since younger people are usually in a better state of health, the waiting periods are easily passed without claim during the initial years and have everything covered after the stipulated waiting period (usually 36/ 48 months) is over.
- Income Tax benefit: The premium paid for health insurance is deducted under section 80D from the income. Hence, it reduces the income tax liability for the insured.
Why Should You have an Individual Health Insurance in Spite of Having a Group Health Policy
It is advisable to opt for an individual health insurance policy even if you are covered by a group health policy. Here is why:
Coverage beyond employment
A group health policy, usually offered by employers or companies to their employees, valid only till employed or retired, post which the coverage is discontinued. The employee doesn’t have a health insurance till transitioning to the new job, where availing health insurance isn’t a guarantee. Therefore, it is recommended to have individual health insurance to offer coverage beyond employment, ensuring that savings aren’t touched to meet medical expenses.
Easy to customise
A group health policy usually depends upon the seniority and the salary bracket. Unlike Group health plan, Individual health policy provides coverage and benefits customized to your needs. Personal health plans can be easily customised by adding covers that are applicable to individual requirements and introducing co-payment options to lower the premium. The insured has the full control of the policy and therefore has all the information about the policy at all times.
No claim bonus
When covered under a group health policy, an individual loses out on the accumulated benefit that the insured has garnered over the years of employment. These benefits cannot be carry forwarded to the next job either. Nor can they be rewarded with a no claim bonus or a cumulative bonus benefit, which is made possible under an individual health insurance plan.
Post retirement coverage
With health insurance premium rising with age, it is difficult to avail an affordable health insurance plan post retirement. Insurance companies put entry age restrictions or do not cover illnesses once the insured is part of a certain age bracket. With older people being at higher risk for health hazards, the premiums are higher. Therefore, it is imperative to get individual health insurance at an early age.
Does Your Health Insurance Cover COVID‑19?
As per the IRDAI, there are two types of Covid-19 insurance policies.
This is a short indemnity-based policy which pays the sum assured for hospital expenses.
This is a benefit based policy that gives a lump sum payment which is equal to the sum assured, when the insured is diagnosed by a government approved testing lab and needs to be hospitalised for 72 hours.
What are the Health Insurance Plan Exclusions?
The terms and conditions of a health insurance plan should be read carefully to understand the exclusions. They may be as follows:
The coverage of critical illnesses and pre-existing ailments is subject to a stipulated waiting period. This will differ from company to company
Treatment done outside of India or by under-qualified medical professionals.
Pre-existing conditions for which the insured has symptoms, was diagnosed or received medical treatment for prior to the policy being issued.
Ailments caused or contributed by sexually transmitted diseases, AIDS or HIV.
Ailments caused by consuming alcohol, narcotics, non-prescription drugs, nuclear, biological or chemical contamination.
What are the Factors Affecting Health Insurance Premiums?
Smokers are prone to health diseases such as cancer, heart disease, respiratory ailments, etc. Therefore the premium for smokers is higher than for non-smokers.
People who consume alcohol frequently or have extreme drinking habits are prone to liver diseases, renal failure, high blood pressure and cognitive impairment. Therefore the premium for these people is higher than for those who don’t indulge in alcohol.
With the longevity of women being more than men, the premium rates for women is lower than that for men.
With age-related illnesses and therefore medical expenses increasing, beyond a certain age, individuals need to pay a higher premium.
Family history that includes diabetes, cancers, etc. can pass on these illnesses to the next generation. The predisposition of these diseases can affect health insurance premiums.
A dangerous working environment, such as working in a mine or at a construction site, increases the premium rates of a health insurance policy.
If the insured is diagnosed with an ailment such as high blood pressure, diabetes, cancer, etc. before the insurance is purchased, the premium rates will increase as the treatment of these diseases is factored in as well.
The validity duration is key in selecting the policy. A policy with a longer duration will have a lower premium. However, this may not be the case for a policy with a shorter tenure.
For a person with a high BMI, the premium rates are higher as they are most susceptible to serious illnesses such as cardiovascular diseases, diabetes, respiratory ailments, high blood pressure and cancer.
The residential location also plays a role in determining the policy premium. Locations known to lack health food options, poor climate conditions and unhealthy lifestyles, have a higher premium.