Healthcare costs in India can be unpredictable, and medical treatments are getting more expensive every year. Despite this, a large part of the population still does not have financial protection for medical emergencies. In 2021, around 514 million people in India were covered under health insurance schemes, which is just 37% of the country's population. That means nearly 400 million people have no access to any kind of health insurance. Without coverage, many families struggle to afford proper medical care, often relying on savings or loans to pay hospital bills. In this article, we are taking a closer look at what health insurance is and how it works. Without waiting further, let's get started. 

Health Insurance Meaning

Health insurance is an agreement where you pay a fixed amount regularly, and in return, the insurance company helps cover your medical expenses. It reduces the financial burden of hospital bills, doctor visits, and treatments, making healthcare more affordable.

How Health Insurance Works

Understanding health insurance is not just about knowing what it covers. It is also important to know how it works so you can make the most of your policy.

The insurance company decides the cost of the plan based on factors like age, gender, medical history, current health conditions, and the type of coverage chosen. The policy becomes active once the premium is paid, and regular payments are required to keep it valid. Missing a payment can lead to the policy lapsing, which may cause problems when making a claim.

Once the policy is active, the insurer covers medical costs such as hospital stays, doctor consultations, prescription medicines, and nursing services. Depending on the plan, medical bills can either be reimbursed after payment or settled directly through a cashless facility at hospitals that are part of the insurer’s network.

Knowing what a health insurance plan covers is important, but it is just as necessary to understand its limitations. Every policy has exclusions, which means certain treatments or conditions may not be covered. Reading the terms carefully before choosing a plan helps avoid unexpected expenses later.

Why Do You Need Health Insurance Now?

Here’s why having health insurance now is a smart decision: 

1. Stay Ahead of Rising Medical Costs

   Healthcare is becoming more expensive every year. Whether it’s a minor procedure or a major surgery, medical bills can quickly add up. A health insurance policy covers your medical expenses, including hospital stays, treatments, and follow-up care, so you don’t have to worry about rising costs.

2. Get the Best Treatment Without Worrying About Expenses

   Health insurance gives you access to quality medical care without the stress of arranging money at the last minute. When you are unwell, the focus should be on recovery, not on how to pay for hospital bills. With the right policy, you can choose the best hospitals and treatments without financial pressure.

3. Cover Long-Term Treatment for Lifestyle Diseases

   Diseases like diabetes, heart conditions, and cancer have become more common due to changing lifestyles. These conditions often require long-term care, frequent doctor visits, and expensive treatments. Health insurance helps cover these ongoing medical costs, so you can manage your health without draining your savings.

4. Protect Your Savings from Unexpected Medical Bills

   Medical emergencies can be financially draining, especially if they come out of nowhere. Without insurance, a single hospital stay or surgery can take a big chunk out of your savings. A good health insurance plan ensures that your hard-earned money stays safe while your medical expenses are covered.

5. Use Cashless Hospitalisation for Hassle-Free Treatment

   Many insurance companies have tie-ups with hospitals where you can get treated without paying upfront. Instead of arranging cash during an emergency, you can use the cashless hospitalisation facility at network hospitals by simply raising a claim. This makes the process smoother for you and your family.

6. Save on Taxes While Securing Your Health

   Health insurance not only covers your medical costs but also helps you save money on taxes. The premium you pay qualifies for tax benefits under Section 80D of the Income Tax Act. This reduces your taxable income, giving you extra savings while ensuring you stay covered.

Types of Health Insurance Plans

There are various types of health insurance plans designed to meet different medical and financial needs. Understanding these options can help in choosing the right one based on personal or family requirements.

1. Individual Health Insurance Plan

   This plan is meant for a single person. It covers medical expenses like doctor consultations, hospital stays, surgeries, medicines, ambulance charges, and more. If you’re looking for a policy that focuses on your personal healthcare needs, this is the one to consider.

2. Family Health Insurance Plan

   A family health insurance plan covers multiple family members under one policy. This usually includes the policyholder, their spouse, children, and sometimes parents or in-laws. Instead of managing separate policies for each member, a single premium takes care of everyone’s medical needs. This makes it a convenient and cost-effective choice for families.

3. Critical Illness Insurance Plan

   This plan provides coverage for severe illnesses that require long-term treatment or major lifestyle adjustments. Unlike regular health insurance, it offers a lump sum payout when diagnosed with a covered illness. This money can be used for medical treatment, daily expenses, or any necessary lifestyle changes. Since these conditions can prevent a person from working, this payout also acts as financial support during recovery.

4. Senior Citizens Health Insurance Plan

   As people age, medical needs increase. A senior citizens health insurance plan is specifically designed for older adults, covering age-related conditions, pre-existing illnesses, and other treatments needed due to illness or accidents. This ensures that healthcare expenses do not become a financial burden in later years.

5. Mediclaim Plan

   Mediclaim, also known as a hospitalisation plan, is one of the most common types of health insurance. It covers the cost of medical treatment when a person is admitted to the hospital. The claim amount is based on the actual expenses incurred, and original hospital bills must be submitted for reimbursement. Some of these plans also extend coverage to the entire family within a set limit.

6. Personal Accident Insurance Plan

   Accidents can lead to unexpected medical costs. A personal accident insurance plan provides financial protection for expenses related to injuries caused by accidents. It covers ambulance charges, surgeries, medicines, and rehabilitation costs needed after an accident.

7. Maternity Health Insurance

   Pregnancy comes with many medical expenses, and maternity health insurance is designed to handle them. It covers prenatal and postnatal care, hospital delivery charges, and medical costs for the newborn baby. Many policies also offer cashless hospitalisation, ensuring that financial concerns do not add stress during pregnancy and childbirth.

Benefits of Health Insurance 

1. Support for Serious Illnesses

   Health insurance does more than just cover everyday medical expenses. It also helps with serious illnesses like cancer, heart disease, and kidney problems. These conditions often require long-term treatment, which can be expensive. Having health insurance means you don’t have to worry about these costs and can focus on getting the care you need.

2. Coverage for Existing Health Issues

   If you already have a medical condition like diabetes, high blood pressure, or thyroid problems, health insurance can still help. Many policies cover pre-existing conditions after a waiting period. This ensures you get financial support not just for future health concerns but also for the ones you already have.

3. Access to Better Hospitals and Treatment

   With health insurance, you can get treatment at a wide range of hospitals and medical centers that are partnered with your insurance provider. This means you don’t have to compromise on the quality of healthcare. When you need medical attention, you can visit a trusted hospital without worrying about high costs.

4. No Need to Pay Cash for Treatment

   Medical emergencies can be stressful, especially when it comes to arranging money for hospital bills. With a cashless claim option, your health insurance company settles the bill directly with the hospital. You don’t have to make any upfront payments or go through long reimbursement processes.

5. Financial Relief During Hospitalisation

   If you ever need to stay in a hospital for more than 24 hours, your health insurance will cover expenses like room charges, doctor consultations, medicines, and tests. This takes a huge financial burden off your shoulders and ensures you receive proper treatment without delays.

6. Medical Costs Before and After Hospitalisation

   Healthcare expenses don’t just start when you are admitted to a hospital. Many treatments require tests, doctor visits, and medicines before and after hospitalisation. A good health insurance plan takes care of these costs for a set number of days as mentioned in the policy.

7. Free Health Check-ups

   Many health insurance providers offer free health check-ups at regular intervals. These check-ups help you stay on top of your health and catch any potential issues early. The terms and conditions may vary depending on the policy, but this benefit encourages preventive care.

8. Tax Benefits on Your Insurance Plan

   Buying health insurance not only protects your finances during medical emergencies but also helps you save on taxes. You can get a tax deduction of up to ₹25,000 under Section 80D of the Income Tax Act. If you are 60 years or older, this limit increases to ₹50,000. If you also pay for your parents' health insurance, you can claim an additional deduction of up to ₹25,000 or ₹50,000 depending on their age.

What Does Health Insurance Cover?

Health insurance takes care of a wide range of medical expenses, helping you manage the cost of treatments without financial stress. Here’s what most plans in India cover:

1. Hospitalisation Costs

   If you need to be hospitalised for more than 24 hours due to an illness or injury, the insurance company covers the treatment expenses. This includes charges for your stay, medical procedures, and doctor fees.

2. Pre and Post-Hospitalisation Expenses

   Your insurance doesn’t just cover hospital stays. The cost of tests like blood work, X-rays, and other medical check-ups before admission is included. Even after discharge, follow-up consultations, medicines, and necessary check-ups for recovery are covered.

3. Daycare Procedures

   Not all treatments require a full day in the hospital. Some medical procedures, like cataract surgery, dialysis, and chemotherapy, can be done in a few hours. Health insurance covers these treatments, even if the hospitalisation is less than 24 hours.

4. Emergency Ambulance Charges

   Most health plans cover ambulance costs if you need emergency transportation to the hospital. The exact amount depends on the insurer, but this benefit ensures you get medical attention quickly when needed.

5. Maternity and Newborn Cover

   Pregnancy-related expenses, including delivery and postnatal care, are covered under many health insurance plans. Some policies also include newborn care, making it easier to manage medical costs during this important time.

6. Mental Healthcare Coverage

   Treatment for mental health conditions, such as depression, anxiety disorders, and schizophrenia, is now included in all health plans as per the Mental Healthcare Act, 2017. Insurers have been required to cover inpatient mental health treatment since October 2022.

7. Home Treatment Cover

   If a doctor advises you to receive medical care at home instead of a hospital, health insurance covers the cost. This is especially helpful for patients who need extended care but don’t require hospital admission.

8. AYUSH Treatments

   Many health insurance plans also cover alternative treatments, including Ayurveda, Yoga, Unani, Siddha, and Homeopathy (AYUSH). The reimbursement limit depends on the insurer, but it allows you to choose traditional treatments if preferred.

9. Pre-Existing Disease Cover

   If you have a health condition before buying insurance, such as diabetes or hypertension, expenses related to its treatment will be covered after a waiting period. The duration varies across insurers, so it’s important to check the policy details.

10. Preventive Health Check-Ups

    Regular health check-ups are also included in many plans, helping you keep track of your overall well-being. Insurers offer this benefit to encourage early detection of health issues before they become serious.

What is Not Covered in a Health Insurance Plan?

Health insurance helps with medical costs, but there are some expenses and situations that are usually not included in most plans. It’s important to know what these are so there are no surprises when filing a claim.

1. Waiting Period for New Policies

   For the first 30 days after buying a health insurance plan, most claims are not covered unless it’s an accidental emergency. This waiting period is meant to prevent misuse of the policy.

2. Pre-Existing Diseases

   If you have a medical condition before getting health insurance, the coverage for that condition comes with a waiting period. This can range from two to four years, depending on the insurer. Only after this period will the insurance cover treatment for the pre-existing disease.

3. Critical Illnesses

   If your policy includes coverage for serious illnesses like cancer, heart disease, or stroke, there is usually a 90-day waiting period before you can make a claim. This ensures that the insurance is used for future health concerns and not for existing conditions at the time of purchase.

4. Injuries from War, Terrorism, or Nuclear Activity

   Medical expenses resulting from war, acts of terrorism, or exposure to nuclear radiation are not covered. These situations are considered high-risk and fall outside the scope of regular health insurance policies.

5. Self-Inflicted Injuries

   If someone harms themselves intentionally, whether through self-inflicted injuries or suicide attempts, the medical costs are not covered under health insurance.

6. Terminal Illnesses and Similar Conditions

   Most health insurance plans do not cover terminal illnesses and certain severe medical conditions that require long-term care without the possibility of recovery. It is best to check with the insurer about specific exclusions.

7. Cosmetic and Hormone Replacement Surgeries

   Procedures like plastic surgery, botox, and other cosmetic treatments are not covered unless they are medically necessary due to an accident or surgery. Similarly, hormone replacement surgeries that are not required for serious medical conditions are also excluded.

8. Dental Treatments That Are Not Due to an Accident

   Regular dental check-ups, root canals, braces, and other non-accidental dental treatments are not covered. However, if dental surgery is needed due to an accident, the insurance may cover it.

9. Bed Rest and Rehabilitation

   If a doctor prescribes bed rest without hospitalisation or if you need rehabilitation services that are not directly related to an illness or injury, these expenses are not covered.

10. Diagnostic Tests

    Tests like MRIs, CT scans, and blood work are only covered if they are part of a hospitalisation or required for a specific covered treatment. Standalone diagnostic tests done for general health check-ups are not included.

11. Injuries from Adventure Sports

    If you get injured while participating in adventure sports like bungee jumping, skydiving, or scuba diving, health insurance will not cover the treatment costs. These activities are considered risky, and coverage is usually not provided unless you have a specialised policy.

How to Choose the Right Kind of Health Insurance? 

Picking the right health insurance can be tricky, but knowing what to look for makes it easier. Here’s what you should check before making a decision.

1. Sum Insured

   Make sure the policy covers medical expenses that match your needs. Hospital bills can be high, so choose a sum insured that gives enough financial support in case of an emergency.

2. Suits Your Budget

   The premium should be affordable, but don’t pick a policy just because it’s cheap. Look for one that balances cost with good coverage so you’re not left paying out of pocket when you need it most.

3. Scope of Coverage

   Check what the policy includes. Some plans cover hospitalisation, doctor visits, and medicines, while others also include daycare treatments, maternity benefits, and critical illnesses. Pick a plan that suits your health needs.

4. Policy Type

   Decide whether you need an individual policy or a family floater plan. If you have dependents, a family floater may be a better option since it covers everyone under one sum insured.

5. Waiting Period Clause

   Most policies have a waiting period for pre-existing diseases, maternity benefits, and certain treatments. If you need coverage for a specific condition, check how long you’ll have to wait before claiming.

6. Co-payment Clause

   Some plans require you to pay a part of the medical bill before the insurer covers the rest. If you don’t want to share the costs, look for a policy with no or low co-payment.

7. Room Rent Sub-limits

   Your policy may have a cap on room rent, which can affect hospital choices. If the rent exceeds the limit, you’ll have to pay the difference. Choosing a plan without sub-limits gives you more flexibility.

8. Network of Cashless Hospitals

   A good policy should offer cashless treatment at hospitals near you. Check the insurer’s network hospitals so you don’t have to pay upfront during an emergency.

9. Lifelong Renewability Option

   Health needs increase with age, so it’s best to have a policy that you can renew for life. This ensures continued coverage without worrying about buying a new plan later.

10. Premium Loading Factor

    Some insurers increase premiums based on age or past claims. Check if your policy has a loading clause so you’re not surprised by a sudden price hike.

11. Claim Settlement Ratio

    A higher claim settlement ratio means the insurer processes and pays claims more reliably. Choose a company with a strong track record to avoid delays or rejections when you need financial support.

Frequently Asked Questions (FAQs)

1. What is Health Insurance? 

   Health insurance helps cover medical expenses. It’s an agreement between you and an insurance company where, in exchange for a premium, the insurer pays for certain medical costs.

2. What types of Health Insurance are available?

   The most common types are: Individual, Family, Critical Illness, Senior Citizens, Personal Accident, Maternity Health Insurance Plan.

3. Why is Health Insurance important?

   Medical emergencies can happen anytime, and hospital bills can be expensive. Having health insurance prevents sudden medical costs from affecting your savings. It ensures access to quality treatment without financial stress.

4. What coverage options are available?

   Policies can start from ₹5,000 and go up to ₹50 lakh or more, depending on the plan. Most insurers offer coverage between ₹1 lakh to ₹5 lakh. Some policies last for a year, while others extend up to five years. There are options for individuals and family plans where the insured amount is shared.

5. What is a cashless facility?

   If your policy includes a cashless facility, you can get treated at a network hospital without paying upfront. The insurer settles the bill directly. However, any costs beyond the policy limits must be paid by you.

6. Are there tax benefits for Health Insurance?

   Yes. Under Section 80D of the Income Tax Act, you can claim tax deductions for health insurance premiums. The limit is ₹15,000 for yourself, spouse, and children, and ₹20,000 for senior citizens. An additional ₹15,000 is allowed for covering parents (₹20,000 if they are seniors).

7. What affects Health Insurance premiums?

   Your age, medical history, and past claims impact your premium. Older individuals or those with a history of illnesses generally pay higher premiums. No-claim years may get you discounts.

8. What does Health Insurance not cover?

   Most policies exclude pre-existing conditions for a set period, usually 48 months. Other common exclusions include dental treatments, vision care, pregnancy-related expenses, self-inflicted injuries, and certain diseases in the first year. Always check the policy document for details.

9. Is there a waiting period for claims?

   Yes. Most policies have a 30-day waiting period from the start date, except for accidents. Some treatments and pre-existing conditions have longer waiting periods.

10. What is a pre-existing condition?

    It’s any illness or condition you had before buying the policy. Most insurers won’t cover pre-existing conditions for the first 48 months of continuous coverage.

11. Can I renew my policy after it expires?

    Yes, but you must renew within the 15-day grace period to keep your benefits. If you miss this window, the policy lapses, and you lose renewal benefits.

12. Can I switch my policy to another insurer?

    Yes, thanks to IRDA guidelines. You can move your policy to another insurer without losing renewal benefits for pre-existing conditions. The coverage will match your previous sum insured, including bonuses.

13. What happens to coverage after filing a claim?

    If you make a claim, your remaining coverage for that year is reduced by the amount you used. For example, if your policy covers ₹5 lakh and you claim ₹2 lakh, your remaining coverage for that year is ₹3 lakh.

14. What does ‘Any One Illness’ mean?

    This refers to a continuous illness, including relapses, within a set period (usually 45 days).

15. How many claims can I make in a year?

    You can make multiple claims unless the policy sets a limit. However, the total payout cannot exceed the sum insured.

16. What is a Family Floater policy?

    A Family Floater plan covers the entire family under one sum insured. Any family member can use the coverage amount as needed. This is often more cost-effective than buying separate individual policies.