Health Insurance | Types and benefits of buying them

About a year ago, I came to know a close friend’s mother got diagnosed with cancer. He asked me today if I can find someone interested in buying their land on the outskirts of the city. Even though he comes from a financially good background, this came out as a surprise for me since I expected him to have members of his family covered with health insurance.

The smallest of procedures nowadays cost upward of a few lakhs. In this type of scenario, health insurance plays a game-changer. If you are not aware of the benefits, I hope by the end of the article, you will come to know why health insurance is an absolute necessity in these times.

WHAT IS HEALTH INSURANCE?

Health Insurance is an assurance that a policyholder with insurance policy will be reimbursed with all the medical expenses involved in his treatment, hospitalization, or surgery as per agreed terms. A health insurance policy provides coverage for all the expenses incurred in the future medical treatment of a user. 

A health insurance policy is a mutual agreement made between a policyholder and the company providing insurance that agrees to guarantee payment for any medical treatment which leads to hospitalization basis the terms and conditions. It is important to note that some benefits are only usable post completion of 2 years with the insurer. So it is advised to buy the policy even if you are healthy, and not wait for the body to get any ailment, which reduces the cover and increases the premium drastically.

Importance of Buying Health Insurance

You might think why would I need medical insurance? Because even the healthiest person can get ill and require medical treatment. The Covid-19 situation might arise where hospitals would allow people who can pay for their overpriced treatment packages. Sickness and accidents do not come with a notice. In these cases, if you are not financially prepared then what will you do?

In a recent landmark judgment, it has been conveyed to the insurance companies that if a person pays for the premium for 8 years continuously with the insurer, then under ‘no’ circumstances can the payout be denied to the insured party.

After eight-year moratorium all health insurance claims to be paid, says IRDAI

In a recent survey, it was observed that 99% of the people are not financially ready to deal with expensive medical treatment. Avoiding this cost for medical treatment is not an option. No matter what consequence happens, you always try to give yourself and your family the best treatment possible.

In this time of anxiety, you can feel a bit relaxed if someone else pays your bills and doesn’t ask for money later. This is what a health insurance company does. You pay a premium in good times, so when the bad times come, insurance companies can cover the expenses for you, for a very nominal yearly premium amount. Health insurance provides financial comfort to insurance in the hour of need.

Health insurance offers tremendous financial support to the insurance holder. It does not depend on the degree of your injury or sickness, usually, all treatments are covered in the insurance plan. 

Buying health insurance is not only useful during medical emergencies but also helps in tax saving. The amount you pay for your premium is tax-deductible, i.e you pay no tax on the amount you pay for insurance. Basically, the actual cost of insurance costs you 20-30% less than the premium you pay.

Types of Health Insurance Plan

There are many types of health insurance that a company provides. You can select the health plans as per the needs and requirements. 

I am listing some types of health insurance from which a person can select from as per his needs and requirements.

1. Individual health plan: This is a special type of health insurance designed for individuals who are unmarried or only earning members of the family. The health insurance policy of an individual covers in-hospitalization expenses, pre and post hospitalization expenses, and expenses related to the day-care procedures. 
2. Family floater health plan: For someone who is married, this is an ideal health plan. It covers the medical expenses of the entire family. Some plans also allow the inclusion of parents and in-laws. Under this policy, more than one member of the family can take advantage of the policy. The total sum assured and premium paid is shared between multiple insured. Eg if you take insurance of 10 lacs, then either you or your wife/husband/children can utilize the same cover rather than individually buying policies for everyone which increases the cost 2-3 times.
3. Senior citizen health plan: This is a special health plan designed for a senior citizen as per their needs and requirements. With the growing age, the cost of the illness expenses increases and so this plan provides maximum health aid. There is also an umbrella plan where the expense of a spouse is also included. This plan ensures proper payment of health bills even when you don’t have a regular income.
4. Critical illness plan: This is a unique plan constructed for covering the expenses of illness of special nature. It helps in paying huge bills if a critical illness likes heart-attack, kidney failure, etc. is being diagnosed. This is taken as an add on benefit to the base health plan.
5. Accidental plan: It is an unavoidable situation. And thus, this plan helps in providing aid against accidental injury. Accident injuries can adversely affect the earning and so this plan works as a helping hand in dealing with such a situation. 
6. Maternity plan: This plan covers the expenses incurred while giving birth to a baby. This plan can also be an inbuilt plan of the primary health plan. Various policies have different payout policies, and you should ask your insurer specifically about 
   1. how much payout is done during the pregnancy?
   2. is the newborn covered?
   3. after how many years of premium payment, maternity benefits are applied?
   4. which rooms are allowed to be taken during pregnancy?

Selecting an Ideal Health Insurance Policy

Every health insurance policy providing company is not the same. So are their benefits and premium. Premium differs from individual to individual and company to company basis various factors involved which need to be examined before buying an insurance policy. Comparing the quotes online is the simplest and easiest way of getting a policy with maximum returns with the lowest premium.

The factors affecting policy premium are listed below:

1. Medical history
2. Body Mass Index
3. Age
4. Gender
5. Marital Status
6. Profession
7. Location of residence

As a customer, you should also see the payout rate of the insurance company before buying their policies. The payout rate is the percentage of claims processed by the company when its customers asked for it. A good company will have a payout rate of 98% and above.

Health policy is effective for medical problems occurring after the purchase of the policy. At a young age, the body is less prone to diseases. But as you cross 30 years of age, various diseases such as diabetes, hypertension, blood pressure, heart problems, and many more problems frequently occur. These problems increase the premium to be paid for the policy. Therefore, it is recommended to purchase sooner than later.

Secondly, there are certain medical problems that have waiting periods such as maternity benefits, which require some time before taking advantage of the policy. If the policy is purchased at a younger age, you can buy them easily without worrying about the waiting period. Insurance companies also reserve the right to reject any policy application if they think the person is vulnerable to more diseases. This happens majorly at older ages.

There are also age brackets for calculating the premium of an individual. If you jump from one age group to another, there is a change in policy premium which differs in different insurance companies. For example, some companies increase the premium when a teenager jumps to adulthood as there are many hormonal changes in the body. Similarly, after the age of 45 years, the body is prone to various diseases such as diabetes and BP. In these cases, the policy premium is increased every year.

(Source: securenow.in)

An ideal policy is one that gives you maximum cover and also saves your tax. Also, it must suit your health and insurance needs. The following are some pointers that should be considered while selecting and an insurance policy.

1. Savings: – Health insurance is a kind of investment that a person makes for his future. Two companies can calculate the different premiums for a similar type of policy. Therefore comparing the insurance policy helps in ensuring maximum saving with minimum premium paid.
2. Benefits and features: – The prime most of selecting an appropriate policy is ensuring maximum benefits and returns. It is necessary to read the features of the policy carefully before selecting it. Always select a policy that gives the best value to money. An ace policy provides maternity cover, pre and post hospitalization expenses, critical illness cover, etc. While selecting the policy, it must be ensured that the policy provides the best features.
3. Waiting period: – This is an important point that affects the selection procedure of the policy. If a policyholder is suffering from a medical condition then many policies offer a waiting period of 3-4 years for covering pre-existing expenses. Also, in case the prices of these expenses arise during the waiting period then companies don’t consider that as well. However, some companies offer no waiting period. Thus, reading and comparing insurance quotes with plans ensures fruitful selection.

Companies Offering Health Insurance

Health insurance is an investment that a person makes for himself and his family. It reduces the future burden that a family might face because of heavy hospital bills. A small investment works like a wonder.

But it is necessary to read the terms of inclusion and exclusion while selecting valid health insurance. Numerous companies offer great health insurance plans. But selecting one that suits your needs and requirements is a tricky job. 

It is necessary to read the terms carefully. We are listing some of the best health insurance companies that offer great plans that are beneficial and helpful in reducing future health burdens.

Some of the top companies offering health insurance are listed below:

How to Ensure Maximum Returns?

For maximum returns, choose a policy that gives the best no claim bonus. Do not buy policies that also say they would return X amount of money after Y years. They already factor in their costs in the premium which becomes unnecessarily large for you to pay. For investments, you can read our article on how to become rich by investing in mutual funds.

You can save up to 25,000 rupees tax on buying the right policy. This tax is saved according to income tax act 1961, under section 80D. In addition to this, you can also save tax if you pay the premium of your parents or other dependables. Another return from health insurance is no claim bonus which you get if you don’t make any claim from the insurance company for a year.  

Why not LIC?

Life Insurance Corporation of India is the most popular insurance and investment company that is owned by the government of India. It was founded in 1956 and is primarily known for its life insurance plans. LIC also launched the Jeevan Arogya health Insurance plan that covers medical benefits when you fall sick. Recognized by LIC, this health insurance plan has many advantages but on the other hand, there are certain limitations in this plan. 

1. This policy is quite expensive as compared to other health insurance companies. 
2. Secondly, LIC’s Jeevan Arogya Health Insurance plan does not offer a cashless facility i.e. you have to pay the bill for your treatment and LIC will pay you back the expenses. This feature is very common nowadays. Everyone seeks for a cashless facility which is not present in this plan. 
3. Lastly, LIC does not offer pre and post-hospitalization expenses.

If we compare all these limitations with other health insurance companies, then it outweighs the benefit offered by LIC. But the decision lies totally up to you. If you still think LIC is better than you can buy this policy as its unique features offer coverage to parents-in-law as well.

Final Verdict

The insurance sector is growing vastly over a decade. Health insurance is a helping hand that can become a great relief in the hour of need. No one can remain fit and sickness-free forever. There are many insurance companies available in the market to buy a healthcare plan. Choose your plan according to your need and how much premium you can pay. Numerous websites are available to choose and compare different health insurance plans. Grab a deal for you and your family and tackle the financial problems by paying a small sum of money. We recommend having at least 10 lacs cover, which will cost around 8-15 thousand INR per year if you are in the age bracket of 25-35 years. This is a small amount for such a big insurance assurance. 

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