Health Insurance 101
A comprehensive guide to understanding health insurance in India
What is Health Insurance?
Health insurance is a type of coverage that pays for medical and surgical expenses incurred by the insured. It can either reimburse the insured for expenses incurred from illness or injury, or pay the care provider directly. Understanding how health insurance works is essential for making informed decisions about your healthcare coverage.
What is Sum Insured?
The sum insured is the maximum amount your insurance company will pay for your medical expenses during a policy year. For example, if you have a sum insured of Rs. 5 lakhs, your insurer will cover medical costs up to that amount.
Factors to consider when choosing sum insured:
- Your age and health condition
- City of residence (metro cities have higher healthcare costs)
- Family medical history
- Inflation in healthcare costs
Types of Health Insurance Plans
| Plan Type | Best For | Key Features |
|---|---|---|
| Individual | Young professionals, singles | Covers one person, lower premium |
| Family Floater | Families | Single sum insured shared by all members |
| Senior Citizen | People above 60 | Higher sum insured, specialized coverage |
| Critical Illness | High-risk individuals | Lump sum payout on diagnosis |
| Top-up Plans | Existing policyholders | Additional coverage at lower cost |
Understanding Waiting Periods
Most health insurance policies have waiting periods before certain benefits become available:
1. Initial Waiting Period
- Duration: 30 days
- Applies to: All claims except accidents
- Purpose: Prevents immediate claims after purchase
2. Pre-existing Disease Waiting Period
- Duration: 2-4 years
- Applies to: Conditions you had before buying the policy
- Examples: Diabetes, hypertension, thyroid disorders
3. Specific Disease Waiting Period
- Duration: 1-2 years
- Applies to: Certain listed illnesses
- Examples: Hernia, cataracts, joint replacements, kidney stones
What is Cashless Treatment?
Cashless treatment allows you to get medical care at network hospitals without paying upfront. The insurance company settles the bill directly with the hospital.
How to Avail Cashless Treatment:
Planned Hospitalization
- Inform insurer 48-72 hours in advance
- Get pre-authorization approval
- Carry your health card and ID
Emergency Hospitalization
- Get admitted to a network hospital
- Inform insurer within 24 hours
- Hospital coordinates with insurer
Key Terms You Should Know
| Term | Definition |
|---|---|
| Premium | Amount you pay regularly to keep your policy active |
| Deductible | Amount you pay from your pocket before insurance kicks in |
| Co-payment | Fixed percentage of claim you must pay yourself (e.g., 10-20%) |
| Sub-limits | Caps on specific expenses like room rent or treatments |
| No Claim Bonus | Discount or increased sum insured for claim-free years |
| Restoration | Refills your sum insured if exhausted during the policy year |
What Does Health Insurance Cover?
Typically Covered
- Hospitalization expenses - Room charges, doctor fees, medicines, diagnostic tests
- Pre-hospitalization - Expenses 30-60 days before admission
- Post-hospitalization - Expenses 60-180 days after discharge
- Day care procedures - Treatments not requiring 24-hour hospitalization
- Ambulance charges - Usually up to Rs. 2,000-5,000
- Organ donor expenses - Medical costs for the donor
- AYUSH treatments - Ayurveda, Yoga, Unani, Siddha, Homeopathy (in many policies)
Typically Not Covered
- Cosmetic or plastic surgery
- Dental treatments (unless due to accident)
- Self-inflicted injuries
- Treatments related to alcohol or drug abuse
- Outpatient consultations
- Vitamins and supplements
- Spectacles and contact lenses
- Infertility treatments (in most policies)
How to Choose the Right Health Insurance
Step 1: Assess Your Needs
- Consider your age, lifestyle, and family medical history
- Factor in the healthcare costs in your city
- Think about future needs (family planning, aging parents)
Step 2: Compare Policies
- Coverage: What is included and excluded?
- Network hospitals: Are good hospitals in your area covered?
- Claim settlement ratio: Higher is better (aim for 90%+)
- Premium: Balance cost with coverage quality
Step 3: Read the Fine Print
- Check sub-limits on room rent and specific treatments
- Understand co-payment requirements
- Review waiting periods for pre-existing conditions
- Look for restoration and no-claim bonus benefits
The Importance of Disclosure
Always disclose your complete medical history when buying health insurance.
Why Disclosure Matters:
- Non-disclosure can lead to claim rejection
- Misrepresentation can result in policy cancellation
- Even minor conditions should be declared
- Honest disclosure ensures smooth claim settlement
What to Disclose:
- All past and current medical conditions
- Ongoing medications
- Previous surgeries or hospitalizations
- Family medical history (if asked)
Claim Settlement Process
Cashless Claims
- Hospitalization needed
- Get admitted to network hospital
- Show health card at hospital desk
- Hospital sends pre-auth request to insurer
- Insurer approves (usually within 2-4 hours)
- Treatment provided
- Insurer settles bill directly with hospital
- Pay only non-covered expenses (if any)
Reimbursement Claims
- Pay the hospital bills yourself
- Collect all original documents (bills, reports, discharge summary)
- Fill the claim form
- Submit to insurer within 15-30 days of discharge
- Insurer verifies and processes claim
- Reimbursement credited to your account (usually 7-15 days)
Tax Benefits of Health Insurance
Health insurance premiums qualify for tax deduction under Section 80D of the Income Tax Act.
| Category | Maximum Deduction |
|---|---|
| Self, spouse, and children (below 60) | Rs. 25,000 |
| Self, spouse, and children (senior citizen) | Rs. 50,000 |
| Parents (below 60) | Rs. 25,000 |
| Parents (senior citizen) | Rs. 50,000 |
| Maximum total deduction | Rs. 1,00,000 |
Note: Preventive health check-up expenses up to Rs. 5,000 are included within these limits.
When Should You Buy Health Insurance?
The Best Time is NOW
Benefits of buying early:
- Lower premiums when young and healthy
- Start building waiting period credits early
- Better coverage options available
- No last-minute rush when health issues arise
Do not wait for:
- A health scare
- Getting older
- Pre-existing conditions to develop
- Premium hikes
Quick Checklist Before Buying
- Assessed my healthcare needs and budget
- Compared at least 3-4 policies
- Checked claim settlement ratio of the insurer
- Verified network hospitals in my area
- Read all exclusions and sub-limits
- Understood waiting periods
- Ready to disclose complete medical history
- Confirmed tax benefits eligibility
Conclusion
Health insurance is not just an expense - it is an investment in your family's financial security. Medical emergencies can happen to anyone, and the cost of quality healthcare continues to rise. A good health insurance policy ensures that you receive the best treatment without depleting your savings.
Take the time to understand your options, compare policies carefully, and choose coverage that fits your needs. Remember, the best health insurance is one that you buy before you need it.
This article is for educational purposes only. Please consult with a qualified insurance advisor for personalized recommendations.
