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Types and Benefits of Health Insurance

Vrinda Mathur
Apr 27, 2023

Healthcare costs are rising faster than medical inflation, making it essential for everyone to have health insurance coverage that not only helps you save emergency funds and life savings in the event of a medical emergency affecting you or your loved ones but also helps you deal with rising medical costs.

To stay safe and secure, experts believe that a health insurance policy should be part of your financial planning and should be purchased when you are young and responsible. Investing in a health insurance plan at a young age provides numerous benefits such as increased insurance coverage, lower premium rates, no medical tests, and so on.

Here's a guide that explains everything about health insurance policies, factors affecting health insurance, the various types of health plans available, and much more.

What is Health Insurance?

A contract for health insurance is made between a company and a consumer. In exchange for a monthly premium, the company agrees to pay all or part of the insured person's healthcare costs.

The agreement is typically for one year, during which the insurer is responsible for paying specific expenses related to illness, injury, pregnancy, or preventative care. A health insurance policy covers medical expenses incurred as a result of an accident, illness, or injury. Individuals can obtain such a policy in exchange for monthly or annual premium payments for a set period of time.

During this time, if an insured is in an accident or is diagnosed with a serious illness, the insurance provider will cover the costs of treatment. Health insurance is a type of insurance that covers an insured person's medical and surgical expenses. It reimburses expenses incurred as a result of illness or injury or pays the insured individual's care provider directly.

Health insurance pays for an insured person's medical and surgical expenses. According to the terms of the insurance policy, either the insured pays out-of-pocket and is later reimbursed, or the insurance company reimburses costs directly.

When you purchase health insurance, you must pay a fixed premium amount in relation to the annual coverage that you receive. The health insurance company will cover your medical expenses up to the maximum coverage, which is the sum insured that you have chosen.

For example, if you have opted for Rs 10 lakh health insurance coverage and are admitted to the hospital with a bill of Rs 5 lakh, the insurer will pay the bills. However, because you have already used half of the sum insured, your coverage for the year will be reduced to Rs 5 lakh.

Also Read | 6 Largest Health Insurance Companies in the US

Why do you need Health Insurance?

Purchasing a health insurance plan is something that we all avoid until we realize how important it is. Before purchasing one, it is critical to understand the various benefits of a health insurance plan because medical emergencies can strike at any time and leave a large hole in your wallet. As a result, it is advisable to purchase a health insurance policy at a young age, where one can obtain comprehensive coverage at an affordable premium cost, as well as the benefit of tax deductions on premiums paid.

Health insurance provides people with much-needed financial support during medical emergencies, but it has been observed that medical care in our country remains largely an expensive affair to this day. According to various reports, India continues to have the world's lowest health insurance penetration. However, the government's emphasis on health schemes, new initiatives such as the Ayushman Bharat Yojana, and capital expenditure on healthcare may help to improve the situation.

There are numerous reasons to have a health insurance policy in place, and if you have a family to support, you can purchase family health insurance to cover your family's medical needs. Some of the major reasons why you need health insurance are:

Changing one's way of life:

There are numerous reasons to have a health insurance policy. The tectonic shift in our lifestyle has made us more prone to a wide range of health disorders. Commuting, hectic work schedules, bad eating habits, food quality, and rising pollution levels have increased the risk of developing health problems.

Rising medical costs:

Rising medical costs As a result, in the event of a medical emergency, consumers end up spending their savings, jeopardizing their future plans. According to reports, when it comes to dealing with health emergencies, Indians rely primarily on their own savings.

Income tax benefit:

Income tax benefit: Individuals under the age of 60 can claim a deduction of up to 25,000 for health insurance premiums paid for themselves, their spouse, or their children. If you buy health insurance for your parents aged 60 and up, you can deduct an additional $50,000.

This deduction will be available for payments made towards a senior citizen's annual premium on a health insurance policy, for a preventive health check-up, or for medical expenses incurred by every senior citizen.

Coverage of pre and post-hospitalization expenses:

Not only have mainstream medical costs risen in recent years, but so have the costs of OPD (outpatient department) expenses and diagnostic tests, making it even more important to purchase a health insurance policy. It is worth noting that medical policies not only cover hospitalization costs but also expenses for outpatient care and diagnostic tests before and after the policy's specified time period.

Additional advantages:

Under health insurance, one also receives benefits such as ambulance coverage, coverage for daycare surgeries, coverage for health check-ups, and vaccination expenses. Insurance companies now provide health insurance for Ayush treatment.

Types of Health Insurance

Every person is unique and has their own set of needs. A single health insurance product is insufficient to meet the unique needs of each individual. This is precisely where a variety of different types of health insurance plans are available. Let us look at what they are:

Types of Health Insurance

Personal Health Insurance:

Individual health insurance policies can be purchased to cover you, your spouse, your children, and your parents. These policies usually cover all types of medical expenses, such as hospitalization, daycare procedures, hospital room rent, and so on. Each member of an individual health insurance plan has their own sum insured amount. Assume you've purchased an individual policy with a sum insured for yourself, your spouse, and both of your parents.

Health Insurance for Family Floaters:

A family floater policy allows you to cover all of your family members under a single policy, and everyone shares the sum insured. Because the sum insured is shared, these plans are typically less expensive than individual plans. Assume you buy a family floater plan with a sum insured of INR 8 lakhs for you and your spouse. You can only make claims worth INR 8 lakhs in a single policy year. Your spouse may file claims totaling INR 6 lakhs, while you may file claims totaling INR 2 lakhs, or vice versa. Family floater plans are typically ideal for young nuclear families.

Senior Health Care Insurance:

These health plans have been created with the medical needs and requirements of senior citizens in mind. Most senior citizens' policies offer additional coverage, such as domiciliary hospitalization and even some psychiatric benefits. Because older people are more likely to have health problems, these policies may necessitate a full medical examination and may be more expensive than standard insurance policies.

Critical Illness Protection:

A number of lifestyle-related diseases are becoming more prevalent. Cancer, stroke, kidney failure, and cardiac diseases can be very expensive to treat and manage in the long run. This is why critical illness insurance policies were developed. They can be purchased as a rider or add-on to your existing health insurance plan, or as their own plan. These policies provide coverage for very specific issues and frequently pay out claims as a single lump sum payment following the diagnosis of a critical illness.

Group Medical Insurance:

Unlike individual and family floater policies, group health insurance plans can be purchased for a large number of people by a group manager. For example, an employer can buy group insurance for all of their employees, or a building secretary can buy such a plan for all of the building's residents. These plans are reasonably priced, but they frequently only cover fundamental health issues. Employers frequently purchase these plans as an added benefit for their employees.

Conclusion:

The most important factor that will guide your physical and mental well-being in the right direction is your health. When you require funds to pay for medical expenses, a health insurance plan will provide the necessary financial assistance.

To easily contact your insurer, process payments, and settle hospital medical bills, you must have a unique identity proof with all of the necessary details. A health care card in India is thus the most convenient and digitally efficient way to manage your insurance at the right time.

A health insurance policy is an assurance that provides immediate financial assistance in the event of a medical emergency. It is a contract between a policyholder and an insurance company that covers medical expenses incurred as a result of illness, injury, or an accident. If you have a health insurance policy, the insurance company will cover some or all of your medical expenses in exchange for a monthly payment known as a premium.

In the event of a medical emergency, a health insurance policy provides immediate financial assistance. It is a contract between a policyholder and an insurance company that provides coverage for medical expenses incurred as a result of illness, injury, or an accident. If you have health insurance, the insurance company will cover some or all of your medical expenses in exchange for a monthly premium payment.

Your health is your most valuable asset. However, medical conditions, whether minor or severe, do not provide advance notice. Huge medical bills can quickly deplete your savings and have a negative impact on your financial and mental well-being.

It can be difficult to arrange funds quickly in such circumstances. This is where health insurance comes in to help you get the best medical care possible. This is an insurance policy that will assist you in paying for your medical expenses. It pays for things like doctor visits, hospital stays, and prescription drugs.

Also Read | What are Different Types of Insurance?

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Types and Benefits of Health Insurance

What is Health Insurance?

Why do you need Health Insurance?

Changing one's way of life:

Rising medical costs:

Income tax benefit:

Coverage of pre and post-hospitalization expenses:

Additional advantages:

Types of Health Insurance

Personal Health Insurance:

Health Insurance for Family Floaters:

Senior Health Care Insurance:

Critical Illness Protection:

Group Medical Insurance:

Conclusion:

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