Health Insurance

What is health insurance? Health Insurance is required to ensure coverage

for expenses incurred in possible medical
treatment. Depending on the policy specifics
this could cover- Consultation fees, Operating
Charges, Medicine costs, Diagnostic Tests
charges, Hospitalization charges etc

Why health insurance?

I f you thought an apple a day will keep the doctor
away, think again. It may have held true in the past,
but today, with changing lifestyles, food habits and,
therefore, nature of diseases, it would be foolhardy
to count your health insurance costs in the price of
apples. You may have not realised it yet, but
insurance companies have.

1. Individual health plan

Types of health insurance? 2. Family floater plan
3. Senior Citizens’ plan
4. Critical illness plan,
5. Daily hospital cash and
6. Unit-linked health plan (ULHP).
What To Look For Before buying any health insurance plan, check
the following

• What is covered? See the ‘inclusions’

section in the policy document closely for
this
• What is excluded from the cover in the first
year, till the second year and for the entire
term?
• Till what age is renewal allowed?
• From when is the claim on pre-existing
diseases allowed?
• Are sub-limits of different services
sufficient?
• Which hospitals are empanelled? Which of
these are near your residence?
• What additional/optional benefits are
provided?
• What are their costs?
• What is the procedure for a claim?
• Compare features and prices of at least
three insurers before choosing one. Favour
the cashless route

How They Work Individual health, family floater and senior

citizens’ plans
In case of a claim, expenses incurred are
reimbursed. The remaining amount can be claimed
during the year. In case of no claim, 5% or 10% of
the sum insured is given as no-claim bonus.

Critical illness plan

In case of a claim, the entire sum insured is paid on
diagnosis of the specified illness. No-claim bonus is
 paid only by few plans.

Daily hospital cash (DHC) plan

Expense benefit is paid on per day basis after
hospitalisation (most plans mandate at least 48
hours of hospitalisation). The pre-decided daily
benefit amount is paid in full, irrespective of the
actual expenses. For example, a person buys a
DHC plan with a limit of Rs 2,000 per day. He gets
hospitalised for 7 days and the total bill is Rs
35,000. He would be reimbursed Rs 14,000
(2,000x7). If the bill is Rs 8,000, he would still be
reimbursed Rs 14,000.
The Roadmap Step I Get Started
Individual health plan. If you are single, buy this
basic plan, which offers wide coverage with
minimum restrictions. The amount of cover would
depend on the age, lifestyle and choice of
hospitals. Go for as much as you can afford.
Family floater plan. Buy or enhance your cover
when you have a family. Double the amount of
what you would have paid for an individual plan.
Try to continue with the earlier insurer.
Senior citizens’ plan. Acquire this plan as soon as
you cross the threshold age.

Sep II Get critical cover

Critical illness plan. Buy this plan as the second

level of protection to meet higher financial
contingencies. The treatment of critical illnesses is
generally expensive, so do take adequate cover.

Step III Add special covers

Specific plans. Your final level of protection could
be in the form of specific plans, such as a cancer
plan or a diabetes plan.

Step IV Go for cash benefit plans

Daily hospital cash. This is needed to meet any
incidental hospital expenses.

Largely, an individual health insurance plan (IHIP),

Individual Plans or ‘mediclaim’, would cover expenses if you are
hospitalised for at least 24 hours. These plans are
indemnity policies, that is, they reimburse the actual
expenses incurred up to the amount of the cover
that you buy. Some of the expenses that are
covered are room rent, doctor’s fees, anaesthetist’s
fees, cost of blood and oxygen, and operation
theatre charges.
Family Floater Plans This is a fairly new entrant in the health insurance
firmament. It takes advantage of the fact that the
possibility of all members of a family falling ill at the
same time or within the same year is low. Under a
family floater (FF) health plan, the entire sum
insured can be availed by any or all members and
is not restricted to one individual only as is the case
in an individual health plan.

Let’s look at an example. Say, a family of four has

individual covers of Rs 1 lakh each. If the cost of
treating one person crosses Rs 1 lakh, then the rest
has to be borne by the family out of its own money.

Who are all covered under Family Floater [FF]
plans?
Daily Hospital Cash Plans
Some other vital points:
Source: Outlook Money, www.apnainsurance.com and www.Bimainsurance.com
J.Lakshmiprakash
If, however, the entire family is insured for Rs 4
lakh through a floater policy, then any of the
members will be covered for that amount in any
year. To the extent of the annual cover, any
number of members can avail the money.
FF can be bought by an individual, who becomes
the proposer, along with spouse, dependent
children up to 25 years, or unmarried, divorced or
widowed daughter, and dependant parents. Even a
parent-in-law can be covered.
As treatment moves away from home and towards
hospitals, insurers have started offering daily
hospital cash (DHC) plans. You can buy maximum
daily covers of anything between Rs 500 and Rs
5,000. The premium would depend on the age and
amount. For stay in intensive care units, the
amount is automatically doubled. There is usually a
cap on the number of days of claim per year.
Preexisting diseases
When buying a health policy, it is important to keep
an eye on what it does not cover, or exclusions in
industry parlance. No policy covers a ‘pre-existing
disease’, that is, those that are there at the time of
the commencement of the policy even if they are
not known. Typically, they also don’t cover
complications arising out of such diseases.
Nowadays, many health plans have started
covering even pre-existing ailments, but only after a
specified period provided the policy is continuously
renewed with the same insurer without any claims.
While most exclusions are standard among
insurers, it pays to take a closer look and buy the
most comprehensive cover available
Waiting Period
All health plans have a ‘waiting period’, usually a
month, before you can make a claim. Any disease
or illness contracted within a month of buying the
plan is excluded, though accidental claims are
allowed from day one. Insurers settle claims either
through third party administrators (TPA), an
intermediary between the insured and the insurer,
or in-house. Today, cashless settlement of claims is
the norm and the insured does not have to pay out
of his pocket
Renewal of policy
Renewal of the policy on time is very important for
health covers. Not only does it qualify you for the
no-claim bonus (NCB), but after a certain period,
could start covering your existing ailments. For
every no-claim year, most plans add up to 5 per
cent of the sum insured as cumulative bonus. If
there is a claim in a policy with cumulative bonus,
usually 10 per cent of the sum insured is reduced
from the earned bonus. Renew your policy a month
before the due date to stop it from lapsing.
Manager, Business Development