by The importance of a health insurance policy cannot be ignored, especially in India where the burden of out-of-pocket healthcare expenses remains significantly high. Health insurance acts as a financial cushion that ensures access to the best healthcare facilities without depleting one’s savings. The reasons for its necessity are manifold –
Ø Access to quality healthcare
Health insurance opens the door to a broad network of hospitals and healthcare providers. This access means policyholders can receive treatment from reputable and specialised medical facilities without the stress of handling the expenses out-of-pocket. Insurance companies negotiate with hospitals to provide the best care for their clients, ensuring that policyholders receive quality treatment promptly.
Ø Rising medical costs
The healthcare landscape in India is marked by a steady increase in medical expenses, attributable to advancements in medical technology, inflation, and the rising cost of pharmaceuticals. Health insurance policies assist in alleviating such financial difficulties by covering a considerable percentage of hospitalisation expenditures, doctor consultation charges, and occasionally post-hospitalisation fees such as periodic follow-up visits and medicines. This assistance assures that individual can afford high-quality healthcare treatment without depleting their financial resources.
Ø Protection from crucial diseases
Critical illness insurance policy is a kind of health policy that just covers life-threatening illnesses involving cancer, strokes, and heart attacks. Unlike regular health insurance coverage, which reimburses medical expenses, critical illness insurance pays a flat amount on the diagnosis of a covered illness. This amount can be utilised to pay for healthcare treatment, debt repayment, recovery assistance or any income loss caused by a decline in earnings. This monetary cushion is essential for assisting families in maintaining their lifestyle during tough times.
Ø Coverage for pre and post-hospitalisation
Health insurance plans typically extend their coverage to include expenses incurred before and after hospitalisation. Pre-hospitalisation coverage might include costs for diagnostics and consultations, while post-hospitalisation coverage can help with recovery treatments and medications. This comprehensive coverage alleviates the financial strain on families, covering a spectrum of healthcare expenses beyond just hospital stays.
Ø Tax benefits
Under Section 80D, individuals can claim deductions for premiums paid on health insurance. This provision offers a dual benefit: financial protection and tax savings. It encourages taxpayers to invest in health insurance by reducing their taxable income, thereby offering a financial incentive to secure health coverage.
Ø Mental peace
Beyond the tangible financial benefits, health insurance provides invaluable peace of mind. Knowing that you and your loved ones are financially protected against unexpected medical emergencies allows for greater financial planning and security. This psychological comfort is perhaps the most profound benefit of health insurance.
Financial aspects of health insurance policy
Ø Sum insured
The sum insured is the maximum amount that an insurance company will pay in the event of a claim within a policy year. It is crucial to choose a sum insured that is sufficient to cover potential medical expenses, keeping in mind the rising costs of healthcare services. An inadequate sum insured might result in significant out-of-pocket expenses in the event of a major medical issue.
Ø Premiums
Premiums are the cost of keeping the health insurance policy active. They vary based on the insurance plan, the coverage it offers, the age of the insured, and their health conditions. Premiums can be paid monthly, quarterly, or annually, and their calculation considers the risk factors associated with providing health coverage to the insured.
Ø Cashless treatment
Cashless treatment facilities allow the insured to receive medical care without directly handling the payment. The insurance company settles the bills with the hospital within the network, simplifying the process for the policyholder. This feature is particularly beneficial during emergencies by reducing the administrative burden on the insured or their families.
Ø Critical illness cover
This cover is designed to offer financial protection against specified severe illnesses. The lump sum provided can be used at the discretion of the insured, offering flexibility during a challenging period. Understanding the specific diseases covered and the policy’s terms is vital to ensure it meets the individual’s needs.
Ø Waiting period
Health insurance policies typically include a waiting period for pre-existing conditions and specific ailments, during which claims related to these conditions are not covered. Awareness of these periods is essential for financial planning, ensuring that individuals are not caught off-guard by uncovered medical expenses.
Ø Deductibles
Deductibles are the amount the insured must pay before the insurance coverage begins. Choosing a policy with a higher deductible can lower the premium cost, but it means the insured will have to pay more out-of-pocket before the insurance benefits kick in. It’s a strategic financial decision that balances premium savings against potential claim costs.
Ø Co-payment
A co-payment clause requires the insured to pay a part of the claim amount. Opting for a policy with a co-payment might reduce the premium cost but will increase the financial responsibility of the insured when a claim is made. This option should be considered carefully, weighing the potential savings against the risk of higher out-of-pocket expenses.
Ø NCB or no-claim bonus
The NCB is an incentive for not filing any claims throughout the policy year. It often takes the form of a discount on the following year’s premium or an increase in the total covered at no additional expense. This incentive encourages policyholders to live a healthy lifestyle and use preventative healthcare procedures.
Ø Exclusions
Health insurance policies have exclusions that state which ailments and treatments are not covered. Being aware of these limitations helps policyholders prevent surprises during claims and prepares them for potential unforeseen expenditures.
Ø Policy renewal
Understanding the insurance renewal procedure, including any changes to terms, coverage, or prices, is critical. Continuous coverage with no lapses guarantees that policyholders are protected and may make use of features such as NCB and pre-existing condition coverage after the first waiting period.
Ø Portability
Portability allows policyholders to switch insurers without losing the credit gained for pre-existing conditions and waiting periods. This feature ensures that individuals can seek better coverage or service without being penalised for changing insurance providers.
Ø Tax benefits
The Section 80D tax deduction for health insurance premiums provides a financial incentive to continue coverage. It decreases the policyholder’s taxable income, offering immediate financial relief in addition to health insurance benefits.
Ø Protection against inflation
A few plans have a provision for inflation protection, which enhances the money covered yearly to keep up with inflation. This assures that the coverage is sufficient across time, shielding the insured against monetary depletion and growing healthcare expenses.
Ø Claims process
Knowing the claim process, involving required evidence as well as timeframes for making a claim is essential for getting timely financial help. Going through the claim process efficiently can assist in alleviating administrative and financial issues during medical exigencies.
Ending note
Buying health insurance policy coverage is more than a financial choice, it is a measure towards assuring a safe and healthy future for yourself and your family. The complexities of health insurance policy from comprehending the terms to choosing the apt coverage, underline the significance of careful study as well as financial preparation.
