Follow Us:

What is Health Insurance and How Does it Work in India?

Nobody expects to get sick or injured, but a serious illness can strike at any time. The cost of treatment compels you to make sacrifices on other expenses like your child’s education or mortgage payments. I

SNS | New Delhi |

Increasing medical costs have made it difficult for individuals to have a financially stable and secure future. Organizing cash for medical crises might be difficult as well. Health insurance coverage can help in this situation.

A health insurance policy is a contract with an insurance company that covers an insured person’s medical and surgical expenses. An individual can purchase such a policy against monthly or annual premium payments for a set period of time, depending on the terms of the insurance coverage. If an insured needs financial assistance for medical reasons during this time, the insurance provider reimburses or bears the costs.

Need of a Health Insurance Policy

Nobody expects to get sick or injured, but a serious illness can strike at any time. The cost of treatment compels you to make sacrifices on other expenses like your child’s education or mortgage payments. In 2016, the life expectancy at birth in India was 68.7 years (for males) and 70.2 years (for females). Non-communicable illnesses accounted for 61% of deaths in India in 2017. At present, ~700 million individuals suffer from hypertension and ~73 million from diabetes, and this number is only expected to rise.

But what do these statistics signify? 

It informs us about potential medical difficulties that individuals may experience in the future, as well as the associated treatment costs. NITI Aayog reported that by 2022, India’s healthcare market is predicted to be worth $372 billion , reflecting the country’s expected increase in medical costs. These astonishing figures, combined with escalating medical costs, highlight the value of health insurance coverage in India for a family’s financial well-being.

Benefits of Health Insurance Policy

  1. Medical costs are increasing, and lifestyle-related disorders are on the rise as well. In this instance, having health insurance protects you from unavoidable costs.
  2. Health Insurance provides comprehensive coverage for all expenses that may arise as a result of a medical emergency, all under one policy.
  3. Every health insurance company has a network of hospitals with which you may make cashless claims and receive other benefits. This simplifies the entire process of obtaining emergency medical care.
  4. If no claim has been made against the policy in the previous year, many policies offer a No Claim Bonus to the person insured the following year. If you have an excellent track record of no-claim incentives, some insurers will also provide you with a free health check-up.
  5. Most insurers offer a co-payment option, in which the insured pays a portion of the total expenses, and the insurance company covers the rest.
  6. Some insurance plans give the insured individual a lot of flexibility, such as lower premiums, the ability to vary the policy duration, the ability to change the insurance plan in response to a change in lifestyle, and so on.
  7. Under Section 80D of the Income Tax Act, 1961, premiums paid for health insurance policies are eligible for tax deductions as follows: –
Scenario Tax exemptions
Individual and parents – <60 years Rs.25,000 + 25,000
Individual – <60 years; Parents – >60 years                  Rs.25,000 + 50,000
Individual and parents – >60 years  Rs.50,000 + 50,000

Types Of Health Insurance Policies

  1. Individual Health Insurance – As the name implies, it covers a single person’s treatment costs. Each person would have their own sum insured amount under this scheme.
  2. Family Floater Health Insurance – With this plan, you can cover all of your family members under one policy, and everyone shares the sum insured. These plans are generally purchased by nuclear families since they are more economical. Senior citizens are not eligible for several plans since their medical demands are more complex.
  3. Senior Citizens Health Insurance– Designed to cover all medical expenses for people over the age of 60. Many senior citizen policies provide extra benefits like domiciliary hospitalisation and even some mental coverage.
  4. Critical Illness Insurance– Lifestyle-related disorders such as cancer, stroke, renal failure, and heart disease are on the rise, requiring significant medical expenses. This is why critical illness insurance policies were developed to cover extremely particular problems.
  5. Group Health Insurance– Companies offer such plans to their employees, with the employer paying the payment and clauses ensuring that the sum insured is refilled. These plans are reasonably priced, but they frequently only cover basic health conditions.
  6. Mediclaim Plans – The most basic sort of health insurance plan is a mediclaim. When you are admitted to the hospital, they cover your treatment. By submitting original bills, the compensation is based on real expenses incurred in the hospital.
  7. Top-Up Health Insurance – When you buy health insurance, the predicted treatment expenses can rise over time, even though your sum insured stays the same. In such cases, you can get a top-up for your existing policy, which raises the total sum insured that you can use in the event of an emergency.

How Does a Health Insurance Policy Work In India?

  1. Choose a health insurance coverage that assesses your needs based on your age, medical past, and other criteria.
  2. An insurance firm provides coverage in the form of an amount assured, which a policyholder receives in exchange for his or her premiums. Some insurance policies provide a daily allowance, which allows you to get daily hospital cash to cover your daily expenses for the number of days you’re in the hospital. You will be given a policy after the terms and conditions are finalized. There is an initial waiting period with each policy (a few weeks or a month). Let’s imagine you need surgery after the waiting time has passed.
  3. You have two options for claiming health insurance: cashless or reimbursement. The cashless system requires you to seek medical care exclusively in the insurance company’s network hospitals. However, as part of the reimbursement process, you must pay all hospital bills first, then submit the bills to the insurance company to have the funds transferred to your account. In either case, you won’t have to worry about burning a hole in your pocket to acquire the treatment you need.
  4. Renewal & Policy Lapse – The length of your health insurance policy is determined by the type of plan you choose. The policy will lapse if you fail to renew your health insurance policy. If your policy has lapsed, the insurer will grant you a 6-month grace period during which you must pay the unpaid premiums and reinstatement fees.

The Bottom Line

Analyze your insurance expectations and evaluate different insurance plans before purchasing a health insurance plan. You can cast a financial safety net with health insurance to shield yourself from financial difficulties in the event of a medical emergency. It is a wise investment that will ensure your financial security in the future. 


Author Bio

Mithlesh Singh is a writer who specialises in writing content on Insurance and Finance subjects.He is a Digital Marketing Consultant, Blogger, and Founder of Tech Preview.