What is Health Insurance?

Health insurance is a kind of insurance that takes care of expenses when medical needs arise. It ensures that you avail better treatment without worrying about the cost of treatment.

You can either avail cashless treatment at the hospital or medical centre mentioned in the list of empanelled hospitals with the insurance company or you can get the treatment done and pay the cost from your pocket and get it reimbursed later.

The insurance company provides coverage for the illnesses on the basis of the health insurance policy. Therefore the financial assistance is provided only for the medical conditions that are mentioned in the policy documentation. The health insurance generally covers pre and post hospitalization charges, medical expenditure during hospitalization.

Types of Health Insurance

Insurance companies offer two kinds of health insurance policies i.e. mediclaim policies and fixed benefit health insurance plans.

Mediclaim policies: Under this kind the insured is able to get the reimbursement of the amount spent during hospitalization. Reimbursement is made on the basis of hospital bills, health coverage limits and the terms and conditions mentioned in the policy.

Fixed benefit health insurance plan: This plan provides fixed amount irrespective of the actual expenditure made during hospitalization. It is also called as fixed payout plan. The plan offers financial assistance under two main heads- hospital room rent and operation costs. The fixed payout that is made to the insured is the sum of the amounts applicable under both the heads as well as it is made for each day of hospitalization.
Health insurance plans are also categorized on the basis of the coverage level also i.e. Individual health insurance, Family floater plan and Group health insurance. Individual health insurance: The plan provides health coverage to a single person. Hospitalization expenses and a number of surgeries are covered up to the sum insured amount chosen by the insured. The premium is charged as per the age and health status of the individual.

Family floater plan: This plan provides coverage to the family (individual, spouse and two children). The coverage is limited to the sum insured amount but it can be utilized by all family members for a number of times for multiple diseases.

Group health insurance: This kind of plan is availed by corporate and groups that provide health insurance to their employees and group members respectively. The coverage and sum insured is defined and customized as per the preferences of the group and so is the premium amount.

Health insurance plan are also categorized on the basis of type of coverage which can be listed as below:

Surgery & Critical illness plan: There are various illnesses enlisted under the critical illness head by each insurance company and this plan provides coverage for those illnesses only. The plan generally includes coverage for heart transplant, major organ transplant, coronary bypass surgery, angioplasty, kidney failure, paralysis etc. The plan provides for a fixed sum insured amount irrespective of the actual expense incurred.

Senior Citizen health insurance plan: The plan provides coverage exclusively to senior citizens for medical treatments of illnesses common in the age group and accidents that need hospitalization.

Maternity health insurance plan: The plan provides coverage to the expecting and bears the child-delivery costs and complications arising during that time. Some plans may include vaccinations to the new-born and other complications if mentioned in the policy.

Pre-existing disease coverage plan: The plan covers individual’s pre-existing diseases like diabetes, kidney failure or cancer but after certain waiting period.

Preventative healthcare plan: This plan provides for preventative health care so that the individual does not fall sick and is able to detect the illness in a timely manner. It provides concessions for health check-ups and consultation fees.
Personal accident cover: This plan provides for medical expenditure in lump sum for the hospitalization due to accidents with the potential of causing death or disability.

Benefits of buying health insurance

• You can avail cashless treatment without any compromises or get the expenses reimbursed later.

• Health insurance provides financial assistance to pay for hospitalization expenses, domiciliary treatment, day care treatment, pre and post hospitalization expenses and for the treatment of critical disease and pre-existing disease.

• It provides individual coverage, extended coverage to the family, group coverage as preferred.

• In case of family floater plan, single sum insured amount can be utilized by each family member multiple number of times till the sum insured amount exhausts.

• It provides ambulance charges up to a specific limit as defined in the policy.

• It provides concessions and discounts on consultation fees and preventative health-ups also.

• It provides health coverage as per the requirement, say maternity coverage to the expecting and new born and hospitalization coverage to senior citizens.

• You can extend the benefits of health insurance to your old age also by renewing it every year.

• The premium paid for the health insurance is exempted from tax u/s 80D.

• In case you do not want to continue with a particular health insurance company you can shift the existing policy to another one.

• You can buy health insurance online easily and conveniently. In fact online health plans come with discounted rates. Moreover, you can access information about the health plan online without involving any third party.

Points to be noted before buying health insurance

• Always prioritize and determine your needs before buying the health plan. Never buy it in haste. The sum insured amount should be sufficient and should take into account medical inflation and the kind of city you live in.

• Check the names of hospitals empanelled in the network of hospitals with the insurance company. At the time of emergency, the need is to rush to the nearest hospital.

• Read the fine print of the policy document. Be aware about the illnesses that your policy does not cover. Also there are some exclusions like diagnostic costs and medication costs, which are not covered by some of the insurers.

• Check for the sub-limits that is, the amount you need to pay out of your pocket in case of an emergency. Some companies put ceiling on their expenses due to which they curb to spend beyond certain limit.

• Do not avoid buying the health plan just because your employer provides cover for your entire family. You would miss the protection when you will leave the job.

• Buy health insurance when you are young. This will enable you to get good deals in terms of low premium and high coverage.

• Compare various health plans online before zeroing in with one.


Nobody is unaware about the ever rising exorbitant costs of medical expenses, health insurance offers financial support in uncertain medical requirements. Plan usually covers medical expenses during hospitalization along with pre and post hospitalization expenses depending on plan details. Different plan covers facilities differently like Sub Limits, Maternity Cover etc so it becomes more important to go in details while choosing a plan.

Individual Policy: This policy covers entire hospitalization, coverage details depend on the Sum Assured taken and premium paid.
Family Floater: This is an apt way to cover entire family under one umbrella policy with common Sum Assured.
Critical Illness Plan: Certain critical diseases related to hear, brain and other important internal organs are given due importance in plans. Many of them pay the Sum Assured on mere detection of such critical illnesses.
Mediclaim including OPD expenses: Certain plans include OPD expenses, consultation fees & other preventive measures prescribed by physicians as well.
Group Health Insurance for Corporate: An insurance plan that provides healthcare coverage to a select group of people. Group health insurance plans are one of the major benefits offered by many employers. These plans are generally uniform in nature, offering the same benefits to all employees or members of the group. Group health insurance plans usually cost less for participants than individual plans that offer the same benefits. This is because the risk is spread over the entire group, rather than one person. If the cost of premiums is borne by the insurer, then they are fully deductible, while any benefit received by group members is tax free.

Health insurance companies have a tie-up with a network of hospitals and medical centers. When the policyholder needs medical treatment, he can inform the insurance company and visit one of these hospitals to avail the treatment. A card provided by the insurance company or its TPA enables the policyholder to get the treatment without paying any cash. The insurance company settles the bill directly with the hospital.

Health insurance by your employer would provide you coverage only till the time you are employed with him. Also, the coverage is limited. It may not fulfill your every medical need and not cover your family as well. It is advisable to buy a separate health plan in order to get a comprehensive coverage on a constant basis.

Anybody in the age group of 3 months to 65 years can avail health insurance.

No your health insurance policy does not cover you when you are travelling abroad since it is limited to geographical area of the country.

Waiting period refers to the period when you cannot avail insurance services or protection if the expenditure is made on the treatment of disease that is mentioned in the list of diseases to be excluded during waiting period or pre-existing disease declared at the time of signing the policy. This period ranges from a few months to two years and varies from insurer to insurer. You can raise the claim only if hospitalization occurs due to accident.