Health Insurance Guide

• What is health insurance?
• How does health insurance work?
• What are the different kinds of health insurance?
  • Individual mediclaim policy
  • Floater Policy
  • Critical illness policy
  • Overseas mediclaim policy
  • Student medical insurance
  • Tax saver
• So, what kind of coverage can I get?
  • Accidental death benefit
  • Permanent and total disability cover
  • E opinion rider
  • Children's education allowance
• How much does health insurance cost?
  • The no of people to be covered
  • Amount of coverage needed
  • Age of the oldest family member who is proposed to be covered
  • Can I get tax benefits with health insurance?
• Are there any alternatives to health insurance?
  • Critical illness benefit
  • Hospital cash benefit
• Things to watch out for

What is Health Insurance ?

Health Insurance also known as Mediclaim in India provides you the cover against the medical care costs arising from disease or accidental injuries. Health insurance is a crucial financial product that every individual must have irrespective of their age. It allows you to focus on getting the best treatment without bothering about the financial costs of the same.  

Depending on the terms of the health insurance policy it covers all or part of the medical costs of treating the disease or injury including doctor's consultation charges, medicine and nursing costs.  Treatment can be sought in any recognized nursing home or hospital across India. This policy however usually does not cover routine medical expenses like outpatient care, and daily medicines.

Health insurance in India can be bought both as an individual or a family or as a group. Group Health Insurance is bought by either an employer or an association for its members. In this article we will be covering only health insurance for individuals.

 

How does health insurance work ?

To purchase health insurance, you need to pay an annual fee to the company for this coverage known as “premium. You choose the amount of coverage that you want, by paying a high or low premium. The higher the premium the more the coverage. Lets say, you choose a coverage of Rs 500,000 for the year. If during the course of the year,you incur some medical costs due to disease or injury – the insurance company will reimburse you up to the maximum of Rs. 500,000. This Rs. 500,000 can be used in one time or through multiple claims in one year. ”

This payout by the insurance company can be claimed in two ways :

1. After the charges have been paid by your upfront. Claimed as a reimbursement where in you bear the costs first and then file a claim to the insurance company and its paid back to you.
2. Cashless settlement – where if the treatment is sought in a hospital  which is associated with the insurance provider , the insurance company pays the hospital directly.

 

What are the Different Kinds of Health Insurance?

Individual Mediclaim Policy

This is the plain vanilla mediclaim or health insurance policy for an individual protecting this person from the expenses incurred due to disease or injury.

Floater Policy

A floater health insurance policy covers your entire family under one policy with one sum insured and one premium. It covers all the expenses as covered under mediclaim only the cover is now extended to the family instead of one person. This cover can be used by any member of the family any number of times. The advantage of this policy is that saves money by spreading the cover across family members.

Critical Illness Policy

Insurance companies define certain specified illness or diseases as “critical”. If you have a critical illness policy, then the insurance company will pay you a lump sum payment if you are diagnosed with a critical illness as defined by the insurance company.

Some of the diseases/conditions which are usually deemed critical are Cancer ,Heart Attack, Kidney Failure, Major Organ Transplant, Stroke,Paralysis and Heart Valve Replacement Surgery.

(For a more comprehensive list check with your insurer)

Unlike other general insurance policies, these policies come with multiple options in terms of sum assured and term of the policy. For example ICICI Lombard provides critical cover for 5 years for a Rs. 12,00,000 coverage. These policies are also available with disability coverage to ensure that you are also covered for loss of income during that critical period.

Overseas Mediclaim Policy

An Overseas Mediclaim Insurance policy provides cover for medical expenses incurred abroad for treatment of illness and diseases contracted or injury sustained during the insured period of overseas travel.  Anyone who is traveling abroad for business or pleasure or for educational purposes should have this policy.

Student Medical Insurance

Student Medical insurance covers the cost of health care while studying abroad. It is an essential requirement of many foreign universities for its overseas students. Students are generally advised to buy it in India as it is substantially cheaper than buying it abroad.

Tax Saver

This is a new class of insurance launched to take full advantage of the income tax benefit under section 80 D of the Income Tax Act 1961. The premium is fixed at Rs 15,000 for all plans. For Senior Citizens aged 65 and above, the premium is Rs. 20,000  This plans includes reimbursement of OPD expenses upto Rs. 10,000. This includes diagnostics tests, dental treatment and related expenses. This insurance is suitable for people who are looking to cover all their medical expenses in a tax free manner.

 

So what kind of coverage can I get ?

You can buy health insurance coverage both as an individual as well as for the family. It can also be bought by companies for their employees as a “group”. As mentioned above, here we will be concentrating only on health coverage for individuals and families.

Usually, health insurance coverage is available to individuals above the age of 3 months to a maximum age of 65 years. You can choose to cover your family in one floater policy or through multiple individual policies depending on your needs and the costs involved.

While deciding on your coverage, you may come across a term called “rider”.A rider  is a certain add on which gives you additional benefits. You will have to pay for the rider but usually the incremental costs are minimal. You cannot purchase a rider without first having a health insurance policy. Some of the riders commonly available with health insurance policies are :

a) Accidental Death Benefit

In case of death of the policy holder due to an accident within the policy period, the nominee (mentioned in the policy) is compensated with the sum that the policyholder was insured for.

b) Permanent and Total Disability Cover

This rider insures against the permanent and total loss of limbs or sight due to an accident. This compensation  is given as a lump sum benefit. It is payable only if the disablement results in inability of the policy holder to be gainfully employed.

c) E Opinion Rider

This rider covers the expenses of second opinion via e-consultation services for a patient based in India suffering from a serious illness. The policy holder can seek a second opinion from a doctor within network hospitals across the world. Qualified physicians from this network must give a written report which includes a diagnosis and treatment plan within 7 working days.

d)  Children's education allowance

A specific allowance is paid for payment of tuition fees and related costs so that your children's education is not affected during the period that you are indisposed.

(Please note that these riders may be insurer or plan specific and may not be available with all policies.)

 

How much does health insurance cost ?

To avail of the benefits of health insurance, you need to pay an yearly premium or the cost of insurance. There are some two year policies also available. This premium mainly depends on the following factors :

a)  The no of people  to be covered

Whether you are planning to cover just yourself, you and your spouse or include your children as well.

b) The amount of coverage needed

Insurance is usually available from Rs 50,000 to Rs 500,000 in multiples of Rs 25000 or Rs 50,000 depending on the insurer. You can choose the coverage that you need depending on your budget and your anticipated needs.

c) Age of the oldest family member who is proposed to be covered

The premium is determined by the relative health of the person who is seeking insurance – insurance keeps becoming expensive as you grow older. As older people are considered to be more vulnerable to illness.

d) Can I get any Tax Benefits with Health Insurance?

As per Section 80D, of the Income Tax Act  any amount of health insurance premium paid up to Rs. 15,000. Would be allowed as deduction from the total income for income tax calculation purposes.

A higher amount of up to Rs 20,000 is permitted for senior citizens.

 

Are there any alternatives to health insurance ?

Many life insurance companies have started offering riders with their life insurance policies which are specifically give you health related benefits. Some of these riders are outlined below:

a) Critical Illness Benefit

A health insurance policy is a reimbursement of the medical expenses whereas the Critical Illness rider as provided by most life insurance companies are benefit policies. Under a benefit policy on happening of an event, the insurance company pays the policyholder a lump sum amount regardless of the expenses incurred. Whether the client spends the amount received on the medical treatment or not rests on his or her own discretion. The catch lies in the structuring of the payouts and the base policy's status after claiming the bonus. Many plans reduce the sum assured or cancel the other riders after payout of the critical illness rider.

b) Hospital Cash Benefit

Unlike health insurance which gives a comprehensive cover, Hospital Cash Benefit usually reimburses only room charges, and does not cover all hospital expenses. A Major Surgical Illness rider provided by ICICI Pru gives a lumpsum of up to 50 per cent of the SA, depending on the degree of the ailment. This benefit can be received any number of times provided it does not exceed the maximum amount eligible and the illness has not been treated earlier. There is also no cashless settlement in the benefits provided by a Life Insurance provider.

 

Things to watch out for:

Health insurance will  not cover all the costs that you might incur for medical related reasons. But it will still go a long way in saving your money.

Even after buying health insurance it is essential that you set aside some part of your savings for health  related expenses as the product inherently has some limitations that one should be aware of when planning for the future.

• No coverage for routine medical expenses, checkups or medicines.

A minimum of a day's hospitalization is needed to claim health insurance. If you incur an expense that does not result in hospitalization (like a hairline fracture for instance), you cannot claim any compensation. Most policies also do not cover Out Patient care hence the routine expenses are also not covered.

• Limited coverage amount

Insurance companies usually have a limit of up to Rs 500,000 on their policies. So your compensation is limited to that amount. Modern medical care especially for critical diseases is very expensive and may not be covered by Rs 500,000 alone and you might need to foot the excess bill.

• Limited coverage for the elderly

Medical insurance is usually made available only up to a certain age limit (for most insurance companies this is 65 years). So you are above this age limit, you will not be given a fresh policy and on the same lines the existing policy will not be renewed after a certain age. Ironically, this is the age when individuals need financial assistance the most; although the Government and IRDA have encouraged the insurers to take out special policies for senior citizens it is yet to be implemented.

• Exclusions in policies might result in expenses for you

Medical insurance policies usually have exclusions. This means that they do not compensate the policy holder for certain illnesses/medical problems. If the policy holder is afflicted by any of these medical problems, he will have to pay for the expenses on his own. Expenditure on pregnancy and related ailments are not covered under individual health insurance policies.

• Need Protection against loss of income

Lastly, health insurance only covers the expenses that you might incur for treatment but it does not protect any loss of income due to injury or disease. It should ideally be complemented by disability insurance for total protection of your family.

Kumaravel said : 09/12/2009	hi this is kumar, i would like to open a new health insurance that covers all health issues and complete health check up for my Father and Mother, need Insurance that covers complete Health check up and its treatment.
monika said : 25/11/2009	Hi, i can get a better offer than health insurance. Health insurance u can use only when u get hospitalised
Kavita said : 17/11/2009	I would like to know if mediclaim insurance companies cover the problems by birth??
Surya Subramanian said : 04/10/2009	I am 24 years old, I have a Health insurance policy.Need to clarify what kind of dental problems can be covered for my family like dental implantation , filling etc.. My parents are above age 55years.send me details by mail.
Ravi gupta said : 19/08/2009	Buy any policy but before purchase know details on the website of that co. policy. ALWAYS
Prity said : 05/08/2009	I want to open a fresh Health Insurance Policy for my Father(Age55yrs) and Mother(Age 50 yrs). Plz guide me which is the best Insurance Company.
dinesh said : 13/07/2009	age-29, wife 29, need 1-2 lac cover and policy to cover pregancy related expenses too
Abdulla said : 15/04/2009	my son ,1.10 year old,has to undergo surgery for Hypospadias , a congenital disease in boys.He is added as my dependent in UHC. I want to know if i can claim for hospltalisation for his surgery?
paveen kumar said : 06/04/2009	respected sir/mam i want a health policy for me age 26
Anuj said : 02/04/2009	I am 29 years old, I want a policy in which dental expense should be covered for my family like dental implantation , filling etc.. My parents are above age 65years.Is there any plan then mail me
Julee said : 02/04/2009	my son ,1 year old,has to undergo surgery for Hypospadias , a congenital disease in boys.He is added as my dependent in UHC. I want to know if i can claim for hospltalisation for his surgery?
Raj said : 29/03/2009	Sir, I am 28 yr male,I am looking for a Health insurance policy for my wife (28 yrs) and son 3 months old ,I have seen few policies like Oriental,New India assurance,star health,Apollo Dkv ...I open with Indivual or Floater.Plz suggest which is the best company to take policy from.. Raj Bangalore
ranjeet said : 16/03/2009	iam 36 year old .my wife 30
Aditya Jain said : 10/03/2009	Dear Sir/Madam, I am working in a software company and have a group medical cover by a TPA. This year in Jan. I got suffered with HERPES ZOSTER. When I went to see the doctor in a hospital, he asked me get hospitalized as the disease was quite serious, and immediate hospitalization is required. After my five days hospitalization when I claim for my medical bills, now that TPA has rejected my claim saying that indoor hospitalization for current ailment is not justified
Nitin Zope said : 23/02/2009	Dear sir, i am 33 years old and my wife is 27 years and my kid 3 years old .my father 58 years and mother 54 years old i wanted a policy for cover all familly suggested me which policy i purches and i getting tax benifit also.
angelo said : 23/02/2009	i am looking for health policy for my father who is 63 yrs and my mother 58 yrs . so i want to know whther i can apply for which policy.
Sunanda Khatua said : 21/02/2009	My son aged 6 years suffers from a birth anomaly called as Hypospadias. He has already been operated once
venkatesh kumar said : 06/02/2009	I am 25. my father is 59 mother is 45. I have coverage of 1 lakh from group insur. policy provided by my employer. please suggest me a best policy.
R.K.Singh said : 03/02/2009	I am 39 yr old my wife is 29 yr and i have a child aged 2.5 yr.My mother is 57 yr old and heart patient( survive on pace maker).I am a railway employ and can avail medical facilities provided by railways through its own health services.i want a family floater health insurance scheme/mediclaim policy for family including me with critical illness cover. which policy suit to me on bare minimum premium.a lot of policy available in market and i am confused which policy should i buy.
jai said : 01/02/2009	my father 63, mom 58, wife 28 and baby 11 months old. advice me which one will be feasible policy for me. iam staying in abroad and wife in karnataka and parnets in kerala. can we claim it where ever we are? or individual policy is advicable for us?
gaurav bedi said : 22/01/2009	i would like to know wether could we take a mediclaim policy of any value or is it restricted to only 5 lacs. kinldy confirm it is urgent
Santhosh Kumar said : 10/01/2009	Pls. suggest me a good floater policy withw opd cover.
SG said : 06/01/2009	Santosh - which expert told you that mediclaim policy should be 7-8 times of your gross annual income. Mediclaim policy is to cover for the medical expenses of not usual nature.
santosh gupte said : 04/01/2009	Experts say that as per the thumb rule your mediclaim policy should be 7-8 times your gross income. So if one's income is 10lacks/annum, is it that he should take policy of 70-80lacks. Also let me know which insurance co. provides such policy and what would be the approximate premium.
sundaresan said : 24/11/2008	iam seventy three anmy wife is fifty eight what kd of policy should take do nt bother abouy thpremium
chandra said : 06/11/2008	i am 42, i want to cover policy my wife and two children below 10 yrs CHANDRA
Babu.J said : 05/11/2008	Please Suggest me mediclaim Insurance-Cum-Investment Policy for my Family Group Mediclaim Policy myself wife One child for Rs.4000/-Yearly
Gaje Singh Negi said : 30/10/2008	I am 27 year old my father 60years old my mother is 56 year old please give me detail about personal
anil jahagirdar said : 18/10/2008	my age 45 ,my wife 40, my mother63, my sons 12 and 8 kindly advise best for my whole family
s.n.burman said : 22/09/2008	my children are settled in the us.if i buy a health insurance product in india,can i get the benefits of this scheme in the us
Balasubramaniam K said : 09/09/2008	I am 30 yrs old, married (wife - 22yrs), a 3 month old child living with dependent parents (Father - 60 yrs, mother 50 yrs). Pls. suggest me a good floater policy with or without opd cover.
Yogesh Rathod said : 25/08/2008	We have just discovered that my wife is suffering from Mitral Regurgitation. I am having a mediclam polices which covers 1 lac. I have been taking the polices for last five years from the same company. I would like to known whether the above metioned dis. is cover under the mediclam policy
hirjhi nagda said : 22/08/2008	mentally retarded daughter. age 16 years. any company which will give her health insurance ?