What is Health Insurance: Its Meaning, Benefits, and Importance

What is Health Insurance's Importance for People? 

Every year, healthcare costs and hospitalisation expenditures are increasing rapidly and it is essential to purchase a health insurance policy at the right time to ensure that you can tackle the sudden medical emergencies arising due to illness and ailments. 

Health insurance offers financial stability and acts as a protective shield that covers unexpected medical expenses and saves you during health-related problems. It acts as a contract between the insurance company and the policyholder that provides coverage for medical expenses incurred during illness and injury. This guide will delve into the meaning of health insurance along with its benefits, types, and features.

What is Health Insurance in Simple Words?

Health insurance refers to a coverage type that is used to pay for medical costs during hospitalisation. Policyholders or the insured can pay regular premiums, and in return, you can get financial protection against high healthcare costs based on the insurance plan you choose.

What is a health insurance policy?

A health insurance policy promotes access to required healthcare services and contributes to overall well-being. It covers a diverse range of services, such as,

• Hospital stays
• Preventive care
• Doctor visits
• Emergency services
• Prescription medications, and much more.

Also, there are different types of health insurance plans like individual plans purchased through the marketplace, government programs like Medicaid and Medicare, employer-sponsored plans, etc. 

Taking into account the compensation for medical expenses, there are two primary methods used by the health insurance providers:

• Cashless claims - The insurance company will pay the hospital directly; the policyholder does not need to pay the network hospital.
• Reimbursement claims - The policyholder must pay initially for the medical expenses and request reimbursement from the insurer.

Types of Health Insurance

In India, there are several kinds of health insurance. Let’s discuss the types of health insurance. 

1. Individual Health Insurance : This type of health insurance offers insurance coverage for the medical expenses of a single person. 
2. Family Floater Health Insurance : This type of health insurance offers insurance coverage for multiple family members, like spouse, children, and parents. 
3. Senior Citizen Health Insurance : Senior Citizen Health Insurance is particularly designed for individuals above a certain age, mostly with provisions for pre-existing conditions. 
4. Critical Illness Insurance :  This type of Health Insurance offers net financial security by covering the expenses incurred for treating serious illnesses such as cancer, heart disease, etc. 
5. Maternity Health Insurance : Maternity Health Insurance offers coverage for the medical expenses associated with maternity, like pregnancy and childbirth. 
6. Group Health Insurance : This type of health insurance is given to employees by their employers to cover the medical expenses of the entire employee group.  
7. Top-Up Health Insurance :  Top-Up Health Insurance offers additional medical coverage to people with an existing health insurance plan or an employer mediclaim plan. 
8. Mediclaim Policy : This is a basic type of health insurance that offers coverage for hospitalization expenses.

Features of Health Insurance

In general, health insurance has the following features :

1. Hospitalization Coverage : The medical expenses incurred during hospitalization, like room rent,  surgery, doctor’s fees, and nursing charges, are covered by health insurance. 
2. Pre & Post-Hospitalization : Based on the policy you choose, the expenses incurred before and after hospitalization, like diagnostic tests, consultations, and follow-up treatments, are covered for a particular duration.
3. Cashless Treatment : Several insurers provide cashless treatment options at network hospitals(seen in the list of network hospitals of your insurance company), permitting health insurance policyholders to get health care without the need to pay bills upfront. This means that the insurer(insurance company) settles the bill directly with the hospital. 
4. Ambulance Charges : Many health insurance plans offer coverage for emergency ambulance services, such as transportation expenses to the nearest hospital. 
5. Lifetime Renewability : Many health insurance plans provide a lifetime renewal option, permitting their insurance policyholders to continue the insurance coverage without any age restrictions and offering financial safety in old age.
6. No-Claim Bonus (NCB) : When no claims are made in a policy year, then the insurance company provides a bonus in the way of an increased sum insured or a premium discount for the next renewal. 
7. Critical Illness Cover : Some plans provide extra coverage for critical illnesses like cancer and heart disease by offering a lump sum cost to manage treatment expenses and financial needs. 
8. Tax Benefits : Below Section 80D of the Income Tax Act, insurance policyholders can get tax benefits on premiums paid for themselves, spouses, children, and dependent parents. But this deduction limit differs as per age. 
9. AYUSH Treatment : Alternative treatments like Ayurveda, Yoga, Siddha, Unani, and Homeopathy (AYUSH) are covered in many policies. Thus, it offers diverse healthcare options beyond allopathic treatments.
10. Maternity & Newborn Cover  :  A few plans have maternity benefits, like delivery expenses, newborn medical costs,  and prenatal and postnatal care. But it depends on the health insurance plan you choose. 

Who needs health insurance?

Nowadays, there exists several threats to our health and it is highly essential to understand the importance of buying a health insurance policy. As a matter of fact, medicare inflation is more and experts suggest that young individuals should be responsible to buy health insurance at an early age. 

Here are some key groups who benefit from having a medical insurance plan:

• Individuals with Chronic Conditions - Those who have ongoing health issues and need coverage for regular medications and treatments.
• Young Adults - Those who opt for coverage to protect against unprecedented health crises as they transition to independence.
• Families - Parents seek health insurance to ensure their children have access to preventive treatments and care.
• Working People - Employers offer health insurance as part of benefits, which is essential for financial security.
• Self-Employed Individuals - Without employer-provided insurance, they will be protected from high medical expenses.

Health insurance provides access to care, financial security, and peace of mind for a wide range of people.

In India, health insurance is crucial for financial security, allowing individuals and families to access best quality healthcare without the fear of crippling medical expenses or reducing savings.

What is Health Insurance's positive impact happening in India?

Health offers financial protection through handling medical costs, preventing debt, protecting savings, and dealing with medical inflation. It provides access to quality healthcare, early disease detection and prevention, and it helps concentrate on recovery.

Coverage for Hospitalization expenses, critical illness expenses coverage, coverage for pre and post-hospitalization costs, cashless treatment options, family protection against debt, and tax advantages are some of the advantages provided by Health Insurance plans.

Taking a personal insurance policy for your health will help offer financial security against medical expenses, like hospitalisation, ambulance expenses, surgeries, medications, and other healthcare services.

Why do you need Health Insurance in India?

One prominent thing that you can use while a serious issue strikes is the health insurance coverage. The financial strain of treating the illness appears to be a tedious issue.

Hence, taking a precautionary decision of insuring one’s health is a wise idea and must-have for getting hassle-free medical treatment and handling the health care expenditures.

Here are a few points to consider for the necessity of a health insurance policy in India:

1. Increased medical costs - In today’s healthcare market, the cost of a medical procedure is sharply increasing and makes basic treatments expensive for common people. Health insurance can manage the expenses and reduce financial burdens.
2. Provides financial coverage - Medical expenses can be an arising issue in the absence of a health insurance policy. A medical insurance plan can minimise your out-of-the-pocket expenses, thereby helping to protect your financial savings.
3. Avail cashless facilities - Insurance providers have collaboration with major hospitals and if you avail medical treatment at any of these network hospitals, your treatment can be cashless.

What is the Waiting period in health insurance?

A waiting period in health insurance is a specified time frame during which specific coverage or benefits are unavailable to the insured. It prevents individuals from enrolling only when they need immediate care, helping maintain overall costs. Waiting periods can vary, typically ranging from a few months to a year, and may apply to general coverage or specific pre-existing conditions. 

During this time, insured individuals may be unable to claim benefits for specific treatments. Understanding waiting periods is essential for managing expectations and financial planning when choosing a health insurance plan.

Different types of Health Insurance Policies

There are different types of medical insurance available to cater for the diverse requirements of individuals. It covers a comprehensive range of medical expenditures and promotes access to necessary healthcare services. Here are some of the specific types of health insurance plans in India:

1. Individual Health Insurance - This type of medical insurance plan covers the specific needs of an individual.
2. Family Health Insurance - It offers collective coverage for the entire family under a single plan.
3. Senior Citizen Health Insurance - This health insurance is catered to the diverse health requirements of senior citizens.
4. Critical Illness Insurance - It covers specific life-threatening diseases and severe illnesses that require lifestyle changes and prolonged treatment.
5. Group Health Insurance - In this plan, the sum assured benefits and coverage are shared among all members of a group.
6. Personal Accident Insurance - This offers financial protection against health issues arising out of accidents.

Terms in Health Insurance: An Overview

• Copay/Copayment - A copay or copayment in health insurance is a fixed percentage or amount of the medical bill/ expenses that the insured pays at the time of service.
• No Claim Bonus - A financial reward that the insurance company offers to the policyholder for not claiming during a policy year and maintaining good health.
• Health Insurance Policy - An agreement between an insurer and an individual that provides medical expense coverage during an emergency.
• Deductible - The proportion of the hospitalisation or medical expenses that you pay out of your pocket before making an insurance claim.
• Aggregate Deductible - The total amount that a group of individuals must collectively meet before the insurance starts the coverage.
• Restoration of Cover - A benefit that helps the current health insurance policy’s sum insured to be restored up to the maximum limit as soon as it gets exhausted after a claim.
• Family Floater Health Insurance - A customised health coverage that extends to multiple members of a family.
• Third-Party Administrator (TPA) - An individual or a company that manages health insurance policies and claims on behalf of an insurance company.
• Sum Insured - It is the maximum amount that an insurance company pays for covered medical expenses under the particular policy.
• OPD - Outpatient Department, or OPD, is a medical coverage incurred outside of the hospital, such as doctor visits for medical diagnosis and treatment. 
• Top-Up Health Insurance - An indemnity policy that provides additional coverage beyond the existing policy’s threshold limit.
• Cumulative Bonus - A reward is given to policyholders for not making any claims in a policy year.
• PED - Pre-existing disease or PED is a long-term or chronic medical condition that an individual has at the time of purchasing the policy.
• Cashless Health Insurance - The insurance company will directly coordinate with the hospital and settles the bill based on the person’s policy coverage. 
• Super Top-Up Health Insurance - An additional policy that provides extra coverage beyond a base health insurance plan once the deductible is met.

Key Benefits of Health Insurance

Health insurance plays an essential role in maintaining an individual’s financial and physical well-being. Here are some of the key benefits of purchasing a health insurance policy:

• Safety from medical inflation : As the cost of healthcare services rises, a health insurance policy provides adequate medical treatment coverage.
• Protects from lifestyle diseases :The necessity for a health insurance plan is increasing in India because of the diseases caused by a sedentary lifestyle.
• Pre- and post-hospitalisation : If you have health insurance, you can get coverage for the medical expenses incurred at the hospital.
• Free health check-ups  : Avail proper preventive medical check-ups on time every year with a health insurance policy.
• Cashless treatment  : Get hassle-free medical treatment under any network hospital you choose from and enjoy cashless services!
• Tax Savings : Premiums paid towards health insurance policies are eligible for tax deductions under Section 80D of the Income Tax Act, 1961.

 
How to Choose a Health Insurance Plan?
 

There are certain things you must consider before buying a health insurance policy. It is essential to choose the right health plan before making a decision that will better suit your medical and financial requirements. Here are some simple ways that you can look out for:

• Consider your health status and check for high-sum insured options
• Familiarise yourself with the different types of health policies
• Compare premiums and deductibles along with copayments and coinsurance
• Look for additional benefits and evaluate the claim process
• Read reviews and seek expert advice from professionals

Health Insurance vs. Medical Insurance: Understanding the Differences

Many ask, What is medical insurance and how does it differ from health insurance? Though similar, these two terms have key distinctions.

1. Definition

• Medical Insurance: Provides financial coverage for hospitalization due to accidents or specific illnesses.
• Health Insurance: Offers broader coverage, including hospitalization, OPD consultations, preventive care, and critical illness benefits.

2. Coverage Scope

• Medical Insurance: Covers only hospitalization and medical treatment costs.
• Health Insurance: Includes pre- and post-hospitalization, diagnostics, and even wellness programs.

3. Additional Benefits

• Medical Insurance: Usually provides fixed compensation per illness or injury.
• Health Insurance: Offers cashless claims, maternity benefits, and mental health coverage.
  
   

How does Health Insurance Work?

Health insurance works by providing financial coverage for medical expenses in exchange for regular premium payments. The policyholder pays the premium based on the factors, such as, lifestyle habits, health history, age, etc. 

One can choose a cashless hospitalisation or reimbursement of the medical expenses incurred. You should visit the network hospital to avail yourself of the treatment if it’s a cashless claim. The insurer will pay the hospital/medical bills directly to the hospital. For reimbursement claims, you will have to pay the hospital bills first and submit the relevant documents to the insurer to get the spent amount. 

With low-cost, affordable, and best-quality health insurance plans, as well as efficient customer service, Star Health Insurance still stands as a reputed organization on the list of health insurance companies in India. As per the number of network hospitals, Star Health is the number 1 health insurance company in India.