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What Is Health Insurance?

Know about health insurance in India in detail.

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Health insurance is a type of insurance that covers medical expenses  incurred on an illnessor injury. These medical expenses include hospitalisation expenses, medicine cost and doctor/physician fees as well.

Health insurance aims to take care of your expenses in a time of medical crisis. To put it simply, the insured pays regular premiums to the insurance provider, and in return, they offer financial support to them. 

Why Do You Need Health Insurance? 

Never before has it been so important to take care of your health. The Coronavirus outbreak has made that abundantly clear for all of us. However, even before the global pandemic, there were several threats to our health present in the environment, because of which we need to understand what is health insurance. You might lead a healthy lifestyle, but unfortunately, a medical emergency can occur without warning.

In times of a health crisis, the financial burden can become immensely stressful. With the skyrocketing healthcare costs, it can be challenging to pay for them out of your savings. Therefore, it is essential to plan for medical emergencies.

A health insurance plan protects you from these overwhelming medical expenses. When you understand health insurance meaning and invest in a suitable health insurance plan, it ensures that your family is financially untroubled.  Make sure you are aware of various tips to consider before buying health insurance in India.

Benefits of Health Insurance 

There are several benefits to investing in a health insurance plan next to understanding health insurance meaning. Following are the benefits of health insurance plans in India:

  • Optimum Coverage
  • Cashless Claim Benefit
  • Additional Protection
  • Tax Benefits

Let’s discuss the above health insurance benefits in detail.

1. Optimum Coverage 

The principal reason to know what is health insurance and buy it is to create a financial shield for your future. There are several kinds of health insurance plans available to cater to specific requirements. It is crucial to understand your financial needs and choose a suitable policy.

A carefully selected plan will provide optimum coverage, including regular check-up expenses, ambulance expenses, hospitalization charges, alternative treatment, and more. Some policies also offer coverage for treatment at home under medical supervision as a part of domiciliary treatment. 

Make sure you understand health insurance meaning in various facets before you choose a plan.

2. Cashless Claim Benefit 

To make things easier, most insurance companies offer cashless treatment athospitals. The insurance providers have tie-ups with certain hospitals for such cases. It means that you do not have to pay medical bills directly when you avail of treatment in a network hospital.

What is health insurance
 - Max Life Insurance

A carefully selected plan will provide optimum coverage, including regular check-up expenses, ambulance expenses, hospitalization charges, alternative treatment, and more. Some policies also offer coverage for treatment at home under medical supervision as a part of domiciliary treatment. 

Make sure you understand health insurance meaning in various facets before you choose a plan.

2. Cashless Claim Benefit 

To make things easier, most insurance companies offer cashless treatment athospitals. The insurance providers have tie-ups with certain hospitals for such cases. It means that you do not have to pay medical bills directly when you avail of treatment in a network hospital.

 

What is health insurance - Max Life Insurance

The expenses are settled between the hospital and the insurance provider. In the case of an unforeseen medical emergency, cashless treatment can be incredibly helpful. 

3. Additional Protection 

Most employers provide health insurance for their employees. However, many people find it to be unsuitable to their specific requirements. It may also be affected by a change in employment. A health insurance policy of your choice will put your mind at ease. A plan that is customized to your requirements will offer better security and stability.

Furthermore, several riders can be attached to your existing plan and expand the scope of security. For example, the critical illnesses rider offers protection against life-threatening diseases such as cancer, heart attacks, kidney failure, and more.

4.Tax Benefits

One of the most significant benefits of investing in a health insurance plan is the tax benefits. Many people find it to be a substantial incentive behind opting for health policy. It is so because tax relief is a massive advantage for an individual’s ongoing expenses. 

Tax Benefits of Health Insurance 

If your annual income falls under the taxable category, health insurance can prove beneficial in more than one way. The government allows tax deductions for specific expenses that will help reduce your taxable income. A health insurance plan comes under the list of expenses eligible for tax deductions.

Under Section 80D of the Income Tax Act, you can claim a tax deduction of up to Rs. 25,000 for the self, spouse, or dependent children. If you have a health plan for your parents of less than 60 years of age, an additional deduction of up to Rs. 25,000 is applicable. In case the parents are above the age of 60, the deduction amount can be increased up to Rs. 50,000.

Tax Benefits of Health Insurance 

If your annual income falls under the taxable category, health insurance can prove beneficial in more than one way. The government allows tax deductions for specific expenses that will help reduce your taxable income. A health insurance plan comes under the list of expenses eligible for tax deductions.

Under Section 80D of the Income Tax Act, you can claim a tax deduction of up to Rs. 25,000 for the self, spouse, or dependent children. If you have a health plan for your parents of less than 60 years of age, an additional deduction of up to Rs. 25,000 is applicable. In case the parents are above the age of 60, the deduction amount can be increased up to Rs. 50,000.

 

In case both the taxpayer and the parent are above the age of 60, this section allows a maximum deduction up to Rs. 1 Lakh. There are also taxation reliefs for preventive health check-ups between Rs. 5,000 – Rs. 7,000 for the age brackets mentioned earlier.

You can avail of the tax benefits under Section 80D and Section 80C by adding a critical illness rider with a Max Life term plan, thereby serving as a health insurance plan. You can use an online calculator to pay the premium.

Also Read: Features & Benefits of Critical Illness Insurance

Types of Health Insurance 

Every individual has different requirements from their insurance plan, depending on their financial situation. Therefore, you must be exceptionally careful and thorough while investing in a health plan. 

It is a critical life decision that will impact your future significantly. Consequently, it is essential to understand the types of health insurance plans available today to provide optimum coverage for yourself and your loved ones.

There are two categories of health insurance policies.

1. Indemnity Plans

2. Defined-Benefit Plans

Indemnity Plans  

These are the traditional health insurance plans that offer coverage for your medical expenses up to the sum insured. Here are the plans that are included:

  • Mediclaim Insurance – This provides compensation for the hospitalization expenses that occur due to accidental stay or illnesses. It includes nursing charges, surgery expenses, oxygen, anesthesia, doctor’s fee, etc.
    • Individual Insurance – This is the most common type of health plan available. As the name suggests, it is meant for the insured individual only. The payable premium depends upon the insured individual’s age, medical history, and other relevant factors. You can add additional members to the plan by paying an extra premium.
  • Family Floater Insurance – It provides coverage for the entire family under a single premium amount. This amount is comparatively lesser than that of an individual health plan. For a family with no significant health issues, this option might be preferable. However, if there is a family member with severe health issues, they might require a sizable amount of the sum insured, which will leave other members with a lesser coverage amount.
  • Unit Linked Health Insurance – Commonly known as ULIPs, this plan is a combination of investment and insurance coverage. A portion of the premium amount is invested in mutual funds while the rest of it goes into securing insurance. The returns are subject to market performance.
  • Group Mediclaim – This is a popular choice among large and medium scale enterprises. It offers health coverage for the employees under a common plan. 

Definite-Benefit Plans  

These are the type of health plans that provide compensation for a lump sum amount when the insured is detected with an illness. Here are the plans included:

  • Critical Illness Plan – This plan offers a pre-determined amount of compensation upon detecting a critical illness regardless of pre or post-hospitalization charges. These critical illnesses majorly include life-threatening diseases such as cancer, multiple sclerosis, paralysis, kidney failure, stroke, paralysis, and more. 
  • Hospital Daily Cash Benefit Plan – Under this plan, a pre-set sum assured is offered as compensation for each day of hospitalization. These plans are available as standalone covers or riders.

What is health insurance- Max Life Insurance

Definite-Benefit Plans

These are the type of health plans that provide compensation for a lump sum amount when the insured is detected with an illness. Here are the plans included:

  • Critical Illness Plan – This plan offers a pre-determined amount of compensation upon detecting a critical illness regardless of pre or post-hospitalization charges. These critical illnesses majorly include life-threatening diseases such as cancer, multiple sclerosis, paralysis, kidney failure, stroke, paralysis, and more. 
  • Hospital Daily Cash Benefit Plan – Under this plan, a pre-set sum assured is offered as compensation for each day of hospitalization. These plans are available as standalone covers or riders.

 

  • Personal Accident Plan – This plan provides compensation in case of an accidental injury or demise. Some Plans also cover loss of income due to a temporary permanent disability rendering a person unfit to go back to work for a few days.

How to Choose Health Insurance Plan? 

While deciding to purchase a health insurance plan, there are certain things you must consider. Here’s how to choose a plan that provides maximum benefits:

  • You must choose the sum-insured precisely based on your age, marital status, and health condition. Inadequate coverage will defeat the purpose of a health plan and cause financial strain. It is often recommended to invest in a health plan at a younger age since the premium amount is comparatively lesser and waitig periods can be consumed during the early years when one is healthy 
  • When you purchase a health plan, there is a waiting period before the insured can claim the compensation. Since different plans have varying terms and conditions, make sure that your plan's waiting period is relatively lesser
  • Consider the claim-settlement ratio of the insurance provider as well
  • Make sure to look at the network list of hospitals
  • Strengthen your plan by adding relevant riders to it

Eligibility Criteria to Buy Health Insurance 

Principally, if you are an earning individual, it is highly recommended to invest in a health insurance plan. It is a significant financial decision that helps plan the future.

Insurance providers have specific eligibility criteria in place. Most often, this includes a medical screening of the person to be insured. It evaluates their health according to specific medical parameters to make a note of any underlying medical conditions. It enables the underwriter to arrive at a reasonable cost of the premium. It also helps in avoiding any future disputes over the insurance claim. 

Documents Required to Buy Health Insurance 

Different insurance providers require a different set of documents when buying health insurance. Here is a list of standard documents that are needed:

  • Age Proof – A voter ID Card, Pan Card, Aadhar Card, Passport, Driving License, or Birth Certificate.
  • Identity Proof – A Voter ID Card, Passport, Aadhar Card, or Driving License
  • Address Proof – Ration Card, Driving License, Passport, Rent agreement if applicable, PAN Card, Aadhaar Card and utility bills like electricity bill, telephone bill, etc.
  • Passport-size photographs (if demanded by the insurer)
  • Medical reports (if demanded by the insurer)
  • Proposal form duly filled in and signed

Frequently Asked Questions (FAQs)

Q. What is the right age to buy health insurance? 

A. There is no hard and fast rule, but it is often recommended to buy a health plan at a young age. It might help you escape the waiting period or higher premium charges due to pre-existing diseases. It is also beneficial for long-term financial planning.

Q. Is there a limit on the number of claims that I can avail in one year? 

A. No, there aren’t any limits on the number of claims. However, the claim amount cannot exceed the sum insured.

Q. What is a cumulative bonus? 

A. In case of no claims in a year, most insurance providers offer an increase in the sum insured up to a certain percentage as a part of a cumulative bonus.

Q. What can I do if I am dissatisfied with my health policy? 

A. In such a case, you can switch to an insurance provider who is more suitable to you. The IRDAI introduced this feature in 2011; however, it is essential to note that porting the policy is different from cancelling or not renewing it. 

Q. Do I have to pay from my pocket despite availing a cashless claim facility? 

A. Yes, certain charges are not reimbursable under the policy, such as administration/registration charges, visitor pass charges, special nursing charges, etc. 

ARN No : Aug21/Bg/26B

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