What is Health Insurance
‘Health Insurance’ is a type of insurance policy that essentially covers the medical expenses of the policy holder. A health insurance policy like other policies is a contract between an insurer and an individual / group in which the insurer agrees to provide specified health insurance cover at a particular “premium” subject to terms and conditions specified in the policy.
What a Health Insurance policy would normally cover?
A Health Insurance Policy would normally cover expenses reasonably and necessarily incurred under the following heads in respect of each insured person subject to overall ceiling of sum insured (for all claims during one policy period).
- Room, Boarding expenses
- Nursing expenses
- Fees of surgeon, anesthetist, physician, consultants, specialists
- Anesthesia, blood, oxygen, operation theater charges, surgical appliances, medicines, drugs, diagnostic materials, X- ray, Dialysis, chemotherapy, Radio therapy, cost of pace maker, Artificial limbs, cost or organs and similar expenses
Why is Health Insurance Important?
Each of us is exposed to various health hazards and a medical emergency can strike anyone of us without any prior warning. Healthcare is getting increasingly expensive, with technological advances, new procedures and more effective medicines. Buying health insurance protects us from the sudden, unexpected costs of hospitalization (or other covered health events, like critical illnesses) which would otherwise make a major dent into household savings or even lead to indebtedness.
Mediclaim policies are Indemnity Policies which cover hospitalization expenses of an individual. The policy duration is generally of 1 year subject to yearly renewal thereafter on payment of the premium. The payout from these policies will be lower of the two values- sum insured or the actual expenses.
Note: The Insurance Companies offer cashless (at their approved hospital networks) as well as reimbursement facilities (if treated in a hospital outside the insurer’s network or the insurer does not offer cashless facilities). If the insurer is offering cashless facility, then one needs to pay just the amount which is in excess of the amount being covered. But in case of reimbursement, one needs to pay first and then claim reimbursement from the Insurance Company. Health Insurance policies may offer Cumulative Bonus wherein for every claim free year; the Sum Insured is increased by a certain percentage at the time of renewal subject to a maximum percentage (generally 50%). In case of a claim, CB will be reduced by 10% at the next renewal.
Mediclaim Policies can be of two types:
- Individual Health Policy :This policy covers each of the insured members separately.
Advantages of Individual Health Policy
- The Individual medical insurance Policy is excellent for families comprising aged members where the health risk is more.
- Generally no age restrictionis imposed on the maximum age for the members for renewal.
- One can avail the benefits of Loading and Discounts until the policy lapses.
Disadvantages of Individual Health Policy
- The Policy is expensive for the families with low health risk.
- Family Floater Health Insurance Policy :
Advantages of Family Floater Health Insurance Policy:
- It is less expensive than Individual Policy (taken for the entire family).
- It is suitable for younger families with members having low health risk.
- Another benefit is that family members gets a greater claim amount compared to what they might have received on an individual medical cover.