What is Health Insurance? & Types of Health Insurance
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Health insurance is a financial tool that provides financial coverage for medical expenses etc. A health insurance policy is a contract between the insurance company and an individual. The individual pays a premium to the insurer and the insurer offers financial protection against healthcare expenses to the individual in return.
Health insurance policy covers wide-ranging medical expenses like the cost of medicines, surgery, doctor's consultations, room rent, ambulance charges and more.
Types of Health Insurance
There are two basic types of health insurance:
1. Mediclaim Plans
Mediclaim or hospitalisation plans are the most basic type of health insurance policy plans. They cover the cost of treatment when you are admitted to the hospital. The payout is made on actual expenses incurred in the hospital by submitting original bills. Most of these plans cover the entire family up to a certain limit.
2. Critical Illness Insurance Plans
Critical Illness Insurance policy Plans cover specific life-threatening diseases etc. These diseases could require prolonged treatment or even change in lifestyle. Unlike hospitalisation plans, the payout is made on Critical Illness cover chosen by the customer and not on actual expenses incurred in the hospital. The cover gives the flexibility to use the monies for changing lifestyle and medicines. Also it's a substitute for income for the time you could not resume work due to illness. Payout under these plans are made on the diagnosis of the disease for which the original medical bills are not required.
Benefits of Health Insurance
Below are some benefits of health insurance policy plans:
Helps Deal With Rising Medical Costs
Medical inflation can make it challenging for you to cover healthcare expenses out of your pocket. Health insurance offers you access to necessary medical care without the financial burden of rising costs. You can rely on health insurance for pre and post-hospitalisation expenses, surgery, doctor's fees, diagnostic tests, prescription medications and more.
Critical Illness Cover
Apart from basic healthcare expenses, health insurance also covers critical illnesses, such as cancer, health diseases, kidney ailments and more. These illnesses can require long-term medical care and burden you with high costs. Health insurance can be suitable to deal with these expenses so you can focus on your treatment and recovery.
Easy Cashless Claims
Health insurance is a convenient tool that prioritises your well-being in your hour of need. You can avail of cashless claims without having to go through any lengthy claim procedures. The insurance company settles the bills with the hospital on your behalf. This streamlined process ensures you do not have to pay upfront and seek reimbursement later.
Added Protection
Health insurance offers additional financial protection with benefits like maternity and newborn baby cover, preventative health check-ups and more. It provides you with a sense of security and peace of mind with overall protection against multiple health expenses.
Why do you need Health Insurance now?
No one plans to fall ill or get hurt, but a serious illness can strike anyone at any time. The cost of treating the illness can cause severe financial strain on the savings you have accumulated over time. This means that you might have to compromise on providing your child the best quality education or defaulting on your home loan payments. Today, the cost of medical treatment is continuously rising.
For e.g., Herceptin, a cancer medicine costs approximately 1,10,000 for a vial of 440 mg. Depending on the weight, a patient usually requires 17-19 bottles for treatment over a year . That's 18 - 200k just for the medicine~. Then add hospitalisation costs, doctor consultation fees, chemotherapy costs, etc. and your overall expenses could exceed 250k. These costs which are already very high are increasing every year. Most smart people have taken necessary precautions to insure their health as soon as possible. Health insurance is a living benefit, where you would need monies at the time of dire need. One disease can drain out all the savings you have made for your children's education, marriage, for buying a house or even retirement. You would not want your family's dreams to get shattered just because of an illness, especially when you could have protected yourself financially. It is beneficial to take a health insurance policy when you are young and healthy . As you get older, not only does your premium increase, but you also stand a chance of being denied a health cover by the insurance company.
How to choose a good health insurance plan?
Anybody who has a health insurance policy will tell you that buying one is one of the smartest financial decisions by any earning individual. Now, that you have decided to buy a health insurance policy, you need to know how to select a good health insurance plan that will take care of all your needs. Here is a list of benefits any good health insurance plan should offer you:
Protection against a large number of critical illnesses
Flexibility to choose your health insurance cover
No increase in premiums during the policy term even if your health condition changes
Long insurance policy term that covers you even in your old age
Large hospital network for easy access to medical treatment
Should I buy a Mediclaim plan or a Critical Illness Insurance plan?
A Mediclaim plan will either reimburse all your hospitalisation expenses or settle the hospital bills via a cashless facility. With a Critical Illness Insurance plan, you will receive a lump-sum payout on the detection of a critical illness. You don't have to be hospitalised for the same. If you are unable to work because of the illness, then you can use the amount as a substitute for your monthly income. You can even use the money to cover expenses for doctor visits, medicine purchases, medical tests or any other expense that might arise during this time. That is why you need both – a Mediclaim plan to cover your hospitalisation expenses and a Critical Illness Insurance plan to cover your loss of income and other expenses that arise due to an illness.
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