You may consider health insurance as another unnecessary expense, but one major medical bill is all it takes to burn your entire savings and awareness regarding the same is essential. Medical expenses have been skyrocketing in recent times. As inflation affects good healthcare facilities, preparing for any severe illnesses in advance is always recommended.
At a small monthly expense, you can be assured of quality medical services without any financial burden at the time of requirement. One should opt for health insurance early, when no severe diseases come into the picture, as the premium amounts are more affordable.
A cover of Rs 10 Lakhs for Adults and Rs 5Lakhs for children is considered sufficient in a health insurance policy. The amount of health insurance you opt for is the base cover amount.
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Types of Health Insurance: Which one should you buy?
Two significant types of health insurance plans are offered by companies, namely, Individual and Family Floater. Family Floater plans are suitable for two or more family members, whereas individual plans only cover a single individual in the insurance policy. Let’s have a closer look at the two types of policies in detail:
Individual Plan
As the name suggests, individual plans only cover a single person, i.e., the policyholder. The base cover of the insurance policy is entirely for a single person, which can be used as per requirement. However, the Family Floater plan serves the purpose of most users like us.
Family Floater Plan
This type of health insurance policy covers a family of two or more members. It provides a shared coverage of the base cover amount to the members individually as per requirement. For example, if your Family Floater policy for four family members has a cover of 10 Lakhs, each member has an individual cover of 10 Lakhs divided by four, i.e. 2.5 Lakhs.
The base cover in a Family Floater plan is transferable between family members in case of requirement, and the amount is adjusted accordingly.
It is important to note that Family Floater Plans calculate premiums based on the eldest family member added to the policy, which often leads to high premium amounts. Thus, you should plan accordingly and buy separate policies for similar age groups of family members, helping you save the premium amount.
Tax Benefits in Health Insurance: What Deductions to Claim?
You can avail tax benefits on buying health insurance. Thus, a small part of your insurance expense is compensated through a deduction in your Income Tax return. Claiming a deduction under Section 80D in your ITR is an essential step.
While filing your ITR for the particular financial year, head to the “Deductions” section and select “Section 80D” from the available options. People are offered different deduction amounts, calculated as per their yearly income.
This government policy encourages individuals to buy health insurance policies for a secure future.
Factors Influencing Health Insurance Policies: What Terms to be aware of?
Every health insurance policy offers different conditions for claim settlement. Awareness of these helps you get the best possible policy and increases the chances of a hassle-free claim when needed. Let’s take a look at some popular terms you should know when buying health insurance:
Disease-specific Sublimits
Sublimits are boundaries in your insurance policy, which depend on the kind of treatment you are using your policy for. Different policies have different sub-limits based on diseases. If your base cover amount is Rs 10 Lakh and the insurance company has a sub-limit of Rs 3 Lakh on heart-related surgeries, you cannot claim your total base cover amount for such treatment.
Here’s a catch: the average cost of heart surgeries is much higher than this amount in metro cities. Thus, in this case, the policyholder will pay all the amount after Rs 3 Lakh. Ideally, your insurance policy should not have any disease-specific sub-limits, which prevents you from using the entire claim amount and ultimately draining your savings.
It is important to note that policies with sub-limits usually have less premium than those without, making them attractive but less practical in the long run.
Co-Payment
Co-payment of medical bills is another misleading term used by health insurance companies. As the name suggests, the company puts the condition of a specific percentage of medical expenses to be paid by the policyholder.
A policy with a co-payment condition asks you to pay a specific percentage of the total expense.
For example, a 30% co-pay is mentioned on the policy document for a medical expense of Rs 10Lakhs. In that case, 30% of the amount, i.e. Rs 3 Lakhs, has to be paid by the policyholder and the remaining amount of Rs 7Lakhs is paid by the insurance company.
The co-payment scheme does not provide complete reliability for the policy buyer. If you’re required to pay a significant percentage of the medical bills even after paying premiums regularly, the purpose of the health insurance policy is defeated.
No Claim Bonus
No claim bonus refers to the increase in your base cover amount by the insurance company if you do not make any claims for a particular time. Companies increase the cover amount over time if no claims are made to reward the customer. Thus, your health insurance policy, which has a cover amount of Rs 10 Lakhs in the first year, may increase to Rs 15 Lakhs in the second and so on till a specified limit.
Pre and Post Hospitalisation and Health Check-up Expenses
Nearly all Health Insurance policies cover pre and post-hospitalisation expenses, including transportation, ambulance use, diagnostic tests and medicines. Annual free health check-up is also offered by many companies, through which you can avail of a zero-cost full-body health check-up and maintain its records as proof of your medical history. You can use this facility by visiting any partner hospital or contacting the company’s customer service to learn about the process. Know about finding the best insurance policy as per your preferences.
Top Up vs Super Top Up: Which one should you buy?
Top-up and Super Top-up act as an add-on to your health insurance policy when your annual base cover amount is exhausted. Both of these have a deductible amount, which is the minimum amount spent on medical bills throughout a year, leading to activate of them. For example, if your total cover amount of Rs 10 Lakh is exhausted, these add-on policies get activated and cover the extra amount spent on medical expenses.
The significant difference between top-up and super top-up is that top-up is only helpful in case one single medical bill crosses the deductible amount, whereas, in the case of super top-up, the deductible amount can be crossed in more than one medical bill throughout the policy period. It is important to note that the deductible amount of any of these add-on policies should equal the base cover amount of your primary health insurance policy.
Conclusion
Some health insurance policies only offer treatments in their partner hospitals; such conditions in the policy can cause unwanted stress at the time of claiming the base-cover amount and can even lead to claim rejection.
The policy document mentions the waiting period, which refers to the time before you cannot file any claim. This must be addressed, as different companies have different illness-specific waiting periods.
Also read about the top ten hidden conditions of health insurance you should know when buying a policy and know about finding the best policy as per your needs. Know about the benefits and common mistakes people make when choosing a policy.
Thus, all the points highlighted above are essential to choose the best health insurance policy. It is essential to be aware of several terms discussed above to avoid rejection at the time of claim and to ensure a hassle-free process!
While understanding the importance of health insurance and making the right choices to secure your future, it’s also crucial to develop habits that lead to wealth accumulation and success. One inspiring read is about the five habits that millionaires follow and how to build them. This article doesn’t just outline the habits that can potentially lead to financial success but also dives into practical ways to incorporate these habits into your life. Whether it’s about prioritizing your health, making the most out of your day, or diversifying your income, these insights can guide you towards making smarter life and financial decisions.
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