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Wednesday, 17 October 2012

Importance of Health Insurance

     The need for having a health policy is a very important one and yours truly got a dose of it himself when he was whisked into a hospital for a week with acute viral fever. A chronic disease, disability or serious injury to you or your family members can set you back by a packet and disturb your peace of mind. Rest easy with Health Insurance


     Hospital bills for very small to considerably large ailments are a pain. It’s difficult to meet such costs on our own without burning a hole in our savings. Also, with medical costs escalating, some even compromise on quality healthcare, because of affordability. It is then that the importance of health insurance comes into the picture. Health Insurance provides us with the ability to afford better healthcare facilities for ourselves and our loved ones.
What’s more, you can also enjoy tax benefits.

Under Section 80D:

     Investments made towards medical insurance premium paid qualifies for deduction under section 80D from your income up to a defined limit.

  Understanding the concept of health insurance

     Health Insurance in India, popularly known as Mediclaim, is nothing but an Insurance which covers expenses related to necessary Hospitalization due to a Sickness or an Accidental Injury. A standard mediclaim covers comprehensive costs of Hospitalization, which include:

•Investigation costs before the hospitalization like Medical Tests, Doctor Fees,

•It includes cost for ambulance

•All costs while in the hospital which include room charges, surgery charges, diagnostic tests etc.

•Costs incurred post hospitalization for complete recovery, for example follow up doctor visits, diagnostic tests, medicines connected to the Hospitalization.

No insurance means financial burden for an individual

     For individuals and families that are not having mediclaim or little, any hospitalization means spending money from their pocket to pay the hospital. With the current medical costs in India and worldwide rising year after year, this can set you back big time. In a country like India where you still boast of joint families and support to elderly parents, the probability of hospitalization each year is more. If you keep paying from your pocket each year, then essentially you have lost the plot of making money. Being uninsured is a dumb move to make.

Benefits of a health insurance plan

     Due to skyrocketing inflation, quality healthcare, hospitalisation is becoming very expensive. Large hospitalisations which cost lakhs of rupees can seriously burn a very big hole in one’s savings or worse, burden one with huge debt. Health Insurance plans help in spreading such a risk to larger no. of people, and hence bring the costs down per person.

How does a health insurance works?

     Health Insurance is generally an annual Insurance policy, renewable every year. The policy covers Hospitalisation due to Sickness and Accidental Injury, subject to certain exclusions and waiting periods, which are explicitly mentioned in the policy wordings. You can claim Health Insurance in 2 ways – Cashless or Reimbursement.

•Cashless – Every Insurance Company has a network of Hospitals where they have a direct billing arrangement. In such cases Insurance Companies directly pay the admissible claim amount to the hospital. When the insured person is admitted in a Network Hospital, he/she or his/her relative would need to just submit his/her cashless card to the hospital billing desk, who will process cashless admission for the patient, subject to approval by the Insurance Company. In such cases, the Insured person will have to pay only expenses which are not covered under the Health Insurance Policy.

•Reimbursement – In case you happen to be admitted in a Hospital which is not in the network of your Insurance Company, you will have to make all payments on your own to the Hospital, and then submit these original papers along with the Claim Form to the Insurance Company for reimbursement.

Tips while buying the right insurance plans

•One needs to understand that there is no perfect plan. Understand your needs well, plan for the long term, and go for the closest suitable plan. Don’t wait for that perfect plan with everything covered to arrive and risk delaying your coverage.

•Remember, you are buying an insurance for your old age. With health care inflation at 20%, do not go for a small sum insured of Rs. 1 lakh, if you can afford more. A premium of around 25% of your monthly salary is surely affordable.

•Demand the policy wordings (where all terms and conditions of the policy are mentioned) of the product you are going to buy. Before you sign the dotted line.

•Do not solely depend on health insurance from your employer. Employer sponsored coverage is changing every year according to claims experience and budgets of your employer. You may suddenly find yourself or your family with very low or no coverage. It is becoming more and more difficult to get insurance for people above 45 years or people who have an ailment or health condition like diabetes/thyroid/hypertension etc.

•Check the maximum renewal ceasing age of the policy. This is the age when your policy will discontinue. Today, there are policies available which can be renewed for lifetime. Go for lifetime renewable policies.

•Ensure you spend time in finalising a good health insurance advisor, who would provide you unbiased advice across all leading insurance cos., as well as assist you for renewals and claims in the long term.

  1. Diseases already in existence at the time of buying insurance.
  2. During the first year,  treatment for cataract, benign prostatic hypertrophy, hysterectomy for menorrhagia or fibromyoma, hernia, hydrocele, congenital internal disease, fistula in anus, piles, sinusitis and related disorders.
  3. Any dental treatment or surgery of a corrective or cosmetic nature, unless it requires hospitalisation and is carried out under general anaesthesia and is necessitated by illness or accidental injury.
  4. Treatment of obesity and any other weight control programs.
  5. Vaccination, cosmetic treatments (including complications attributable to cosmetic treatments), experimental, investigative or unproven procedures or treatments, devices and pharmacological regimens of any description.
  6. Voluntary medical termination of pregnancy, pregnancy, child birth or their consequences, including changes in chronic conditions as a result of pregnancy.
  7. Naturopathy treatment.
  8. Injury while taking part in hazardous activities, including adventure sports, or as a member of the defence services and security entities.
  9. Charges incurred in connection with the provision or fitting of hearing aids, spectacles or contact lenses.
  10. Alcohol, drugs, HIV, AIDS and all related medical conditions.

Top 5 FAQs on health insurance

1.What is Family Floater?

     Family Floater is a very cost effective product, that covers an entire family under one policy and one fixed cover. This fixed cover is shared with the family members, i.e. if Vermas, a family of three buys a Family Floater Mediclaim of 3 lakhs, the full family covered can make claims of upto Rs. 3 lakh in a year, subject to other terms and conditions in the policy. In most policies Self, Spouse, and Kids are covered in a family floater policy. On the other hand, Individual Mediclaim is a product where each member is covered under a separate coverage. Taking individual policies turns out to be more expensive than Family floater. If you are a young couple, Family floater would be a better choice.

2.What is Pre-existing Diseases?

     Pre-existing Ailments or Diseases are Symptoms, Diagnosed Ailments, or any existing or past health condition which exist at the time of applying for Mediclaim Policy. When you apply for a Mediclaim, please ensure you provide a detailed medical background about your family. Ailments which already exist, are generally covered by Mediclaim after 4 years. In a recent trend, most Insurance companies now have started putting permanent exclusions for Pre-existing diseases in the policy.

3.Is Maternity Covered in health insurance?

     No, Maternity and expenses related to Maternity are not covered under Standard Mediclaim. There are some policies which provide Maternity cover after an initial waiting period of 2 to 4 years.

4.What is TPA?

    TPA is 24X7 outsourced agency of the Insurance Company, which keeps records of the policies issued by the Insurance Company, including people covered, benefits and exclusions. The TPA maintains the network of hospitals for the Insurance Company and provides the Cashless Card to the Insured Persons. TPAs process all claims including Cashless and Reimbursement claims on behalf of the Insurance Company.

5.Will Cashless Card provide Emergency Service?

    No, Cashless Card is not like a Credit card which can be swiped at the Hospital and you don’t have to make any payments. The authorization of Cashless between the Insurance Company/TPA and the Hospital normally takes 5-8 hours, and hence cannot be depended on for Emergencies. In emergency cases, Hospitals may demand a deposit to admit the Insured patient. Always have a Credit Card with a good balance handy for such exigencies.


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