Health Insurance
Health insurance is a financial tool that provides financial coverage for
medical expenses. 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 covers wide-ranging medical expenses like the cost of
medicines, surgery, doctor's consultations, room rent, ambulance charges,
and more.
Why do we 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 with 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 - 20 lakh just for the
medicine~. Then add hospitalisation costs, doctor consultation fees,
chemotherapy costs, etc. and your overall expenses could exceed 25
lakh. These costs which are already very high are increasing every year.
Why does Health Care cost so much?
The high rising costs of health care are attributable to many factors,
including:
The use of sophisticated, expensive technologies.
Duplication of tests and sometimes duplication of technologies.
Increase in variety and frequency of treatments, including allegedly
unnecessary tests.
Increasing the number and longevity of elderly people.
Regulations that result in cost shifting rather than cost reduction.
The increasing number of accidents and crimes that require
emergency medical services.
Limited competition and restrictive work rules in the health care
delivery system.
Labour intensiveness and rapid average earnings growth for health
care professionals and executives.
Using more expensive medical care than necessary, such as going
to an emergency room with a bad cold.
Build in Inflation in the health care delivery system (14% per year
medical inflation)
Rising cost of raw materials.
Increasing medical tourism eg, Medical treatment for severe
conditions including organ transplants and cancer.
Covid 19 pandemic.
Variation in cost per patient.
Commonly Covered Expenses in Health Insurance Policies
Health insurance policies cover a wide range of medical expenses to
ensure financial security in times of medical emergencies. Below are the
commonly included expenses:
1. Hospitalization Expenses
Covers the cost of room rent, ICU charges, nursing fees, and other
expenses related to hospital admission.
May include expenses for general and private rooms, depending on
the policy.
2. Doctor’s Consultations
Includes fees for general physician consultations and specialist
doctor visits.
Covers routine health check-ups and diagnosis-based consultations.
3. Medicines and Diagnostic Tests
Covers the cost of prescribed medications required during
hospitalization or treatment.
Includes expenses for diagnostic tests such as blood tests, MRIs, CT
scans, ultrasounds, and X-rays.
4. Surgery Expenses
Covers expenses for both minor and major surgical procedures.
Includes surgeon’s fees, operation theatre charges, anesthesia, and
post-surgery recovery care.
5. Ambulance Charges
Provides reimbursement for emergency ambulance services.
Some policies cover both road and air ambulance expenses in
critical cases.
6. Pre and Post-Hospitalization Expenses
Covers medical expenses incurred before hospitalization, such as
diagnostic tests and doctor consultations.
Includes post-hospitalization expenses like follow-up visits,
prescribed medications, and rehabilitation therapies.
7. Day Care Procedures
Covers treatments that do not require a 24-hour hospital stay, such
as dialysis, chemotherapy, cataract surgery, and minor surgeries.
8. Critical Illness Coverage
Some policies offer financial protection against life-threatening
diseases such as cancer, stroke, heart disease, kidney failure, and
organ transplants.
Provides a lump sum amount or reimbursement for hospitalization
and treatment expenses.
9. Maternity and Newborn Cover
Covers maternity-related expenses, including prenatal care,
hospitalization during delivery, and postnatal care.
Some policies extend coverage to newborn baby care and
vaccinations.
10. Mental Health Coverage
Includes expenses for mental health disorders such as depression,
anxiety, schizophrenia, and bipolar disorder.
Covers therapy sessions, psychiatric consultations, and prescribed
medications.
11. Air Ambulance Cover
Some policies include coverage for air ambulance services for
medical emergencies requiring immediate transportation.
Typically applicable for remote locations or critical health conditions.
12. Tax Benefits
Under Section 80D of the Income Tax Act, premiums paid towards
health insurance are eligible for tax deductions.
Additional tax benefits for policies covering senior citizens and
dependents.
How to Choose the Right Kind of Health Insurance For Yourself?
There are several health insurance plans available in the Indian market,
which makes it confusing to buy a policy best suited to your financial and
medical requirements. Below are some factors to consider to ensure you
select the right product:
Right Coverage
The coverage of a health insurance plan must align with the health needs.
If someone has pre-existing illnesses or a history of poor health in your
family, it is advised to get a higher coverage that can cover all your
potential medical expenses.
Additionally, the coverage must also be adequate to deal with rising
medical costs in the long run.
Suits Your Budget
The higher the coverage, the higher the health insurance premium.
Therefore, one must analyse his/her requirements and assess whether the
premium fits your budget or not.
Individual Plans or Family Plans
Individual plans cover a single person whereas a family plan covers
multiple people in the family. You can assess your needs and those of
your family members to determine whether you need a separate health
policy for each person or a combined plan for all.
Lifetime Renewability
Lifetime renewability enables you to renew your plan when it matures and
enjoy uninterrupted financial protection for a long time. This feature
eliminates the process of purchasing a new health policy every few
years. Therefore, it can help if you buy a plan with a lifetime renewability
option.
Preferred Hospital Coverage
It is important to check if the health insurance plan includes your
preferred hospital in their network of hospitals. This can help you access
speedy and suitable medical attention at your convenience.
High Claim Settlement Ratio
Claim settlement ratio is the percentage of claims that an insurer has
settled in a given period out of the total claims received. It is
recommended to go for a company which has a high claim settlement
ratio. This helps ensure that your claim will be settled in your time of
need.
Disability Insurance
Disability insurance, as the name implies, is a sort of insurance that pays
out if a policyholder is unable to work and earn an income due to a
disability. In case of an accident or disease, such a policy can protect you
financially if you become disabled as a result of it. It can replace a portion
of the income if the insured individual is unable to work due to their
condition. The disability insurance plan will also cover any medical bills
you may incur as a result of the therapy, depending on the policy terms.
What Disease Disability Insurance Covers
A weekly benefit is provided as compensation for lost income
due to short-term impairments up to the policy period when the
benefits are payable.
In the event of a disability caused by an accident, the insured will
get a certain percent of the sum covered, depending on the
accidental disability insurance terms.
A disability insurance policy may also provide a premium waiver as
part of the basic coverage.
Some of the conditions recognized as a disability under disability
insurance include blindness, low-vision, leprosy, hearing
impairment, mental illnesses and more.