What is Health Insurance, and How to Buy & Claim Health Insurance?

What is Health Insurance?

Health Insurance in the layman term is that product which covers medical expenses in the event of hospitalization. God forbid, if someone is hospitalized due to any disease, the insurance company on the behalf of policyholder will pay off all the medical bills. The policyholder needs not to pay anything from the pocket, except, if the medicals bills are beyond insured amount.

Why Health Insurance is required?

In the past one decade health insurance has taken the world by storm. Everyone is taking so much about health insurance. But the question is why we need a health insurance product which was hardly in existence few decades back. In fact, most of our parents even don’t know about this or may have never heared of this term. However, the millennial, are realizing the importance of this and buying health insurance product at very early in their life.

Let us see some of the reasons of acceptance of this product.

1) Inflation– In India, Inflation is measured in CPI (Consumer Price Index) and it remains around 4-6% depending upon the economic condition of the country. However, the healthcare inflation is increasing at a rate of 15%, which is double the country’s total inflation.

Isn’t it a worry sign?

The inflation of 15% means in every ~5 years, the medical expenses will become double. Do we think our salary will grow with this rate or are there any investment product in India, which with guarantee, can give us this much return to counter this inflation. The answer is ‘No’.

2) Life style and poor quality of food
The computer is a single source of all the inventions, and technology innovations that have happened in the 21st century which has made life of the human beings simple. However, it has come with caveat. That is, it has taken the toll on health of its users. The continuous use of computer without much physical exercises has made all of us unhealthy, leading to various diseases very early in the life of millennial. Moreover, the quality of food has also deteriorated in the past few decades which have exaggerated the health issues among the population. Combining these factors, the health condition is surely getting poorer day by day. This means probability of getting hospitalized has increased manifolds in the past decades.

So, if someone does not have a health insurance policy to cover medical expenses, then the probability of losing large chunk of savings in case of hospitalization is very high.

When to Buy Health Insurance?

It is always advisable to buy health insurance policy as early as possible in your life. In our point of view, as soon as someone is passing out from the college and getting job, one should get health insurance, to get free from the medical expenses headache in future and enjoy the life. Moreover, with age, the premium of the health insurance gets increased.

How to buy Health Insurance?

There are many companies in the market which offer health insurance products. One can choose the plan, amount to be insured, premium to be paid, benefits required in the policy etc. There are many policies in the market which offers health insurance in the denomination of 3L, 5L, 10L, 25L, 1Cr etc. Some of the popular companies offering health insurance are, HDFC ERGO, Max Bupa, Star-Health, Religare Health, ICICI, Adiya Birla, etc.

Important terms to check before buying any health Insurance?

a) No Co-Pay
Co-Pay is the amount one need to pay every time when claim is made.
For Example: The policyholder has purchased has 20% Co-Pay health policy and if god forbid, policyholder gets hospitalized and medical bill comes at Rs. 2 Lakh , then insurance company will pay only 1.60 Lakh, rest 40k (20% of the bill) to be paid by policyholder.

So, before buying any health insurance policy, one should always check that there should not be any Co-Pay. It has to be “Zero”.

b) No Sub-Room Limit
Every hospital has different class of rooms similar to what we see in hotels. Every class of room varies in rent you pay to use on daily basis. The Normal ward would cost you less, but VIP ward or ICU ward would charge you more. Therefore, your health insurance policy, should not have fixed daily limit on room that you can use if you get hospitalized.

For Example: The policyholder has purchased a health insurance policy which has room rent limit of say 5k per day. If god forbid, policyholder gets hospitalized, and admitted in the room which has room rent of 10k per day. And suppose policyholder has remained in the hospital for 5 days. The total room rent is 50k for 5 days, but, the health insurance company will pay only 25k and rest 25k policyholder need to pay from his/her own pocket.

So, before buying any health insurance policy, one should always check that there should not be any specified limit on room rent.

c) No Sub-Limit on specified disease 
Before purchasing a health insurance policy, one should always check whether the policy has any limit on specified disease.

For Example: If god forbid, policyholder hospitalized for a particular disease, and total medical bill comes at Rs. 3 Lakh. Policyholder has submitted the claim to the insurance company; however, company has paid only 2 Lakh. The reason they quote is that the disease because of which policyholder hospitalized has limit of only 2 lakh.

So, before buying any health insurance policy, one should always check that there should not be any specified limit on specified disease.

d) Pre-Existing disease period
Pre-existing disease period means, every policy has period of say 2 or 3 years before they can provide insurance coverage to pre-existing diseases. Pre-existing disease means, the disease from with which policyholder is suffering before the purchase of policy.

So, shorter this period, better for the policyholder.

e) No- Claim bonus
If policyholder don’t claim any insurance for one year, next year no-claim bonus added in the policy and insurance cover gets increased. This no-claim bonus varies between 10-50%.

For Example: Policyholder has taken a policy of 5 lakh and it has 50% no-claim bonus. If the policyholder does not claim insurance for one year, next year, the limit will be enhanced to 7.5 lakh and next year again if policyholder does not claim, then it will increase to 10 Lakh. Maximum it can go 100% of initial insurance amount i.e. 5 Lakh in our case.
So, it is always better to see how much no-claim Bonus Company is offering before buying any health insurance policy.

How to claim?

Claim process works in two way i.e. Cash-less and Reimbursement.
Every health insurance company has specified list of empanelled hospitals where policyholder can go in case of health emergency and he/she does not have to pay anything to the hospital if the medical bill is under policy insurance limit. This process is called cash-less.

However, let us suppose, you are in health emergency and gets hospitalized in the hospital other than the empanelment. In that case, policyholder has to pay the medical bill from his/her pocket and later on reimburse the same from the health insurance company.

TPA (Third Party Administrator) is the important person in getting claim.

Every health insurance company has TPA at the hospitals. A Third Party Administrator is a body that processes insurance claims admissible under the mediclaim policy. In general, these administrators are independent but can also act as an entity belonging to the insurer/s. These bodies are licensed by Insurance Regulatory IRDAI.

Role of TPA

A TPA is responsible to expedite the claim as soon as it is intimated by the insured. TPA basically checks all the documents submitted in favor of the claim. It can ask for as much information as is needed to cross verify the details. The settlement of the claim will either be on cashless or on a reimbursement basis.
Whichever be the case, a TPA will be liable to check for all documents. In the case of Cashless, the TPA can collect the documents from the hospital. In other cases, the TPA can ask for the supporting papers and bills from the policyholder.

Hope you have understood the basic concept of Health Insurance and if you need any assistance in buying the health insurance plans for family or looking to find best medical insurance, feel free to contact us at info@investorzone.in or Whatsapp at 8700044209.

(Author is POSP for Life-Insurance and General-Insurance in India as recognized by IRDA)

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