What is Health Insurance?
Health Insurance, also known as medical insurance is a form of insurance which covers the expenses incurred on medical treatment and hospitalisation. It covers the individual and family against any financial constraints arising from medical emergencies. In case of sudden hospitalisation, illness or accident, health insurance takes care of the expenses on medicines, oxygen, ambulance, blood, hospital room, various medical tests and almost all other costs involved. Thus, by insuring one’s health, he ensures that if he pays an amount of health insurance premium every year depending on the person’s age, then till a certain limit of medical expenses, he/ she would be covered by the insurance company and will not have to spend it from his own pocket.
Basically, since medical expenses are increasing every year, it becomes difficult for someone to suddenly pay about Rs. 2,00,000 to Rs. 3,00,000 towards medical emergencies. Since medical emergencies cannot be postponed or neglected, this unforeseen expense becomes inevitable if health insurance has not been availed. Thus by paying a nominal amount of premium of say Rs. 1,200 per annum, a 35 year old man can get covered till Rs. 1,00,000 of medical expenses per annum. Thus, a sudden expense of Rs. 1,00,000 may seem very high for the individual; however a nominal amount of Rs. 1,200 per annum, i.e. Rs. 100 per month may seem to be a very reasonable cost. This amount however, has to be paid every year; otherwise the cover ceases to exist.
Key Features and Benefits of a Health Insurance Policy
Over and above the basic benefit of health insurance (also called mediclaim) i.e. covering the unforeseen medical expenses, there are few other features and benefits in most of the products offered in the market. Some of them are listed below:
Family Floater Policies: Most health insurance plans give the flexibility of covering up to 4 members of the family under the same plan with a slightly higher premium than an individual health insurance policy. It gives the flexibility of choosing say 4 or 5 lakhs of cover for the entire family. If one member in the family is hospitalized and uses about Rs. 2 lakhs for his treatment, then the rest 3 lakhs can be availed by others. It is very unlikely that more than 1 or 2 members would require hospitalisation in the same year. Hence the family floater serves the purpose whoever in the family falls ill.
Hospitalisation Cash Benefits: This benefit entitles the customer to cash benefits for every completed day of hospitalisation, which helps him to take care of the increased financial burden incurred at the time of hospitalisation, such as loss of earnings away from work and other expenses.
Cashless facility: There is a network of hospitals tied up with each insurance company which accepts the insured’s medical identity card (issued by the insurance company) for providing cashless facility to the insured. Hence either part or entire expenses are covered by the policy and the individual doesn’t need to spend from his pocket.
Pre-hospitalisation and Post-hospitalisation benefits Some mediclaim policies provide for up to 60 to 90 days of pre-hospitalisation and post-hospitalisation benefits, i.e. the cost of medical tests, medicines, scans, etc. This is usually provided under maternity benefits and treatments which do not require hospitalisation.
Ambulance Charges In most cases the ambulance charges are taken up by the policy and the policy holder usually doesn’t have to bear the burden of the same.
Health check up Some health insurance policies have a facility of free health check-up for the well being of the individual if there is no claim made for certain number of years.
Cover for Pre-existing Diseases Some health insurance policies have a facility of covering pre-existing diseases after 3 or 4 years of continuously renewing the policy, i.e. if someone has diabetes, then after completion of 3 or 4 years of continuous renewal with the same insurer (depending on the plan offered and his age), any hospitalisation due to diabetes will also be covered.
No-Claim Bonus Some health insurance policies provide a no-claim bonus. If there has been no claim in the previous year, i.e. if the person covered has not availed any hospitalisation benefit, then a bonus is declared; either by reducing the premium or by increasing the sum assured by a certain percentage of the existing premium.
Tax Benefits of taking a Health Insurance Policy Under Section 80D of the Income Tax Act, income tax benefit is provided to the customer for the premium amount till a maximum of Rs. 15,000 for regular and Rs. 20,000 for senior citizen respectively.