Benefits of Health Insurance

Benefits of Health Insurance – Here’s Why You Must Buy It

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Healthcare in India, especially the private sector, is utterly expensive. The medical costs are constantly rising, and ordinary citizens can’t meet the medical expenses without suffering financial losses. Access to good quality healthcare is not possible without spending a significant amount of money. 

The importance of health insurance can be understood in the light of the above-mentioned scenario. Health insurance provides a cover to the policyholder against financial losses, and it meets the medical expenses arising as a result of any serious illness or accident requiring hospitalization. A health insurance policy covers hospitalization charges, medical tests, medicine costs, doctor’s fees, and many more. 

Many benefits of health insurance illustrate the need to opt for a good health insurance policy. Some of the major benefits have been listed here.

Comprehensive Health Coverage

Health insurance policies usually cover a wide spectrum of expenses associated with medical treatment. This helps get the best possible treatment without burning a hole in the pocket or borrowing money from lenders. Thus, comprehensive coverage is one of the major benefits of health insurance in India.

In-Hospitalization Expenses

In-hospitalization Expenses Are Covered by a Health Insurance Policy

In-hospitalization expenses are the basic expenses covered by any good health insurance policy. In-hospitalization expenses are paid up by the insurer, provided the insured person spends at least 24 hours in a hospital to treat an illness or injury. When we talk about in-hospitalization expenses, we refer to room rent, boarding and nursing expenses, the cost incurred on medicines, etc. ICU and ICCU rooms are for patients requiring specialized care and naturally cost more than standard rooms. A health insurance policy covers both ICU and ICCU charges as well. Depending upon the insurer, there may or may not be a cap on room rent.

Pre and Post-hospitalization Expenses

Health Insurance Covers Pre and Post-hospitalization Expenses

Pre and post-hospitalization expenses are manifold and are no less than In-hospitalization expenses. Hence, a health insurance policy covers these expenses as well. The policy covers expenses incurred before hospitalization, such as X-rays, blood tests, and other diagnostic tests. The insurer also pays up Post-hospitalisation expenses such as medicines and preventive check-ups. Thus, health insurance is not limited to just hospital expenses.

Daycare Expenses

Health Insurance Covers Daycare Expenses

Daycare expenses also come under the ambit of health insurance. Daycare treatments are those which do not need hospitalization for even 24 hours. These include eye surgeries such as cataract operation, dialysis, chemotherapy, radiotherapy, and many more. A health insurance policy covers a certain number of daycare treatments, and the daycare procedures covered are specified in the policy document. Coverage of daycare procedures takes care of hefty medical bills, which the patient has to pay without spending even a day at the hospital.

Ambulance Charges

Health Insurance Covers Ambulance Charges

Most health insurance policies cover ambulance charges incurred to transfer the patient to the hospital. However, there is a limit on ambulance charges covered by any health insurance policy, and the capped amount differs from insurer to insurer.

Domiciliary Hospitalization Expenses

Health Insurance Covers Domiciliary Hospitalization Expenses

Domiciliary hospitalization expenses are the expenses incurred for treating an illness at home instead of the hospital on the advice of a medical practitioner. Most health insurance policies cover domiciliary hospitalization expenses, and terms and conditions for such coverage are specified in the policy document.

Maternity Cover

Health Insurance Includes Maternity Cover

Health insurance policies also allow for the inclusion of maternity cover. Maternity cover pays for the expenses incurred during pregnancy and delivery, and expenses incurred for the care of the baby are also covered. Maternity Benefits of health insurance are available as add-ons and are applicable for 2 kids only.

Non-allopathic Treatments

Many health insurance plans provide coverage for AYUSH treatments as well, apart from allopathic treatments. These include costs for availing Ayurveda, Unani, Siddha, and Homeopathy treatments. However, a specific cap is put on the amount to be paid by the insurer.

Mental Health Cover

Health Insurance Includes Mental Health Cover

Nowadays, many health insurance plans are providing coverage for mental health as well. These policies cover the expenses incurred to treat any mental illness such as depression, schizophrenia, etc. This facility is an indication that Insurers are understanding the importance of health insurance in mental health.

Cashless Treatment 

Cashless claim service is one of the most important benefits of health insurance. Cashless treatment works based on network hospitals. Insurance companies have tie-ups with many hospitals, which are called network hospitals. The insured availing treatment at a network hospital of his/her insurer is not required to pay money to the hospital, and the hospital settles the bill with the insurer. All the insured needs to do is show the cashless card issued by the insurer to the hospital authorities. However, it is necessary to remember that a cashless facility can be availed only if you get treatment in a network hospital of your insurer. Otherwise, you need to settle the bill yourself and get reimbursement from your insurer. Thus, the more networked hospitals in your vicinity, the better the health insurance policy. 

Health Insurance Portability

Portability is one of the most advantageous features of health insurance. Portability means you can transfer your existing health insurance policy to another health insurance provider. This facility provides the policyholder complete freedom to choose another insurer if the services rendered by the current insurer are not satisfactory. Portability protects the customers against bad services by insurers by keeping the option to migrate wide open.

No Claim Bonus 

No Claim Bonus or Cumulative Bonus figures prominently among benefits of health insurance. This is a bonus awarded to a policyholder for not raising a claim during the coverage year. NCB or Cumulative Bonus can be a discount on the premium or an increase in the sum assured depending upon the insurance provider. The increase in sum assured is usually 5-50%, while the discount on the premium can be more than 15%. NCB is offered on both individual and family health insurance plans. The cumulative bonus is not affected if you port your health insurance plan. 

Tax Benefits

Saving taxes matters very much to the citizens of India. Hence tax deductions also rank as one of the major benefits of health insurance in India. The government encourages citizens to buy health insurance policies, and to this end, tax deductions are provided on premiums of health insurance policies. The legal basis of getting Tax benefits of health insurance is Section 80D of the Income Tax Act, 1961.

A look at the features of health insurance policies regarding tax deductions reveals some facts regarding the maximum tax deductions that the policyholders can enjoy. The maximum Tax benefits of health insurance depend upon the type of policy. If you have purchased a policy for yourself and your spouse and children, the maximum tax deductions range between Rs. 25,000 and Rs. 50,000. If the policy includes your parents, senior citizens, then the tax deduction is up to Rs. 75,000. Health insurance tax benefits can reach up to Rs 1 lakh if the policyholder and their parents and other family members are all senior citizens.

Deduction Available Under Section 80D

ScenarioPremium Paid (Rs)Deduction Under 80D (Rs)
Self, Family, ChildrenParents
Individuals and Parents Below 60 Years25,00025,00050,000
Individual and Family Below 60 Years but Parents Above 60 Years25,00050,00075,000
Both Individual, Family, and Parents Above 60 Years50,00050,0001,00,000
Members of HUF25,00025,00025,000
Non-Resident Individual25,00025,00025,000

Preventive health check-ups reinforce the Tax benefits of health insurance. This implies that if you opt for preventive health check-ups for yourself or your parents or other dependents, your health insurance policy allows an extra deduction of Rs. 5000 from your income tax liability.

Irrespective of indemnity-based plans or fixed benefit plans, health insurance tax benefits are available to all policyholders under 80D. 

Lifetime Renewability 

Lifetime renewability is one of the newest Benefits of health insurance in India. The insurance Regulatory Development Authority of India or IRDAI has directed insurers to include lifetime renewability benefits in their health insurance plans. Lifetime renewability has removed the age limit barrier to renewing policies. Policyholders can now renew their health insurance policies without bothering about age limits. Insurers are also offering senior citizens health insurance plans without age limits. 

Diverse Options

Options to choose from multiple plans rank as one of the important benefits of health insurance. The insurers offer the following types of health insurance plans.

Individual Health Insurance Policy

Individual Health Insurance Policy

The individual health insurance policy covers the medical expenses of an individual. Only one individual is insured for a certain amount. An individual policy needs to be purchased for each member to cover a family, such as a spouse, children, and parents. Each covered member has an individual assured amount.

Also, Read: Difference Between Group Insurance & Individual Health Insurance – Everything You Need to Know

Family Floater Health Insurance Policy

Family Floater Health Insurance Policy

Family floater health insurance policy, covers all the members of a family. A single policy applies to all the members of the family. The sum insured under health insurance plans for families floats between the family members, hence the name floater. Premiums of family health insurance plans are lower as compared to individual health insurance policies. The drawback of health insurance plans for families is that if one family member uses up the entire assured amount, the rest are left without coverage for the rest of the policy period.

Also, Read: 15 Factors that Could Affect Your Family Health Insurance Plans

Group Health Insurance Plans

Group Health Insurance Plans

Group health insurance plans are meant to cover the employees of any organization. The employer purchases this policy to provide health benefits to the employees. The policy can also cover the family members of the employees depending upon the plan. Maternity, daycare, and OPD can also be covered under group health insurance plans.

Also, Read: Does Group Health Insurance Cover Pre-Existing Conditions?

Personal Accident Insurance Plan

Personal Accident Insurance Plan

A personal accident insurance plan covers the cost of hospitalization and other treatment costs for injuries suffered due to an accident. In addition to the basic benefits, a personal accident insurance policy can also cover loss of income in case of partial or permanent disability and pay a sum insured to the nominee in the event of death of the insured.

Senior Citizens Health Insurance

Senior Citizens Health Insurance

Senior citizens can easily avail benefits of health insurance in India due to the senior citizen plans offered by health insurance providers. These plans are designed for people aged 60 and above. Coverage is provided for pre and post-hospitalization and medical treatment for illness or accident. Health check-ups may or may not be needed when purchasing the policy, depending upon the insurer.

Also, Read: Finding the Right Senior Citizen Health Insurance for Your Parents

Critical Illness Health Insurance

Critical Illness Health Insurance

Critical illness health insurance enables the insured to meet the very high expenses associated with treatments of critical health problems. These include but are not limited to heart attack, paralysis, stroke, cancer, and kidney failure. A lump sum as per the assured amount is paid to the insured on diagnosing a critical disease.

Short and Long-Term Health Insurance Plans

Short and Long-Term Health Insurance Plans

Insurers offer both short and long-term health insurance plans. Short-term plans can last from a few months to 1 year, and long-term health insurance plans have a duration of 2-3 years or even more depending upon the particular plan. Evaluating the features of health insurance plans of both types helps decide which is the best one for you as per your requirements and budget.

Coverage for COVID-19 Treatment

Coverage for COVID-19 Treatment

COVID-19 pandemic has put a lot of stress on the people’s finances, and people who got infected had to shell out a lot of money for its treatment. Health insurance providers have now included COVID-19 in their existing health insurance plans. People can also avail of specific benefits of health insurance in India concerning COVID 19 by purchasing any of the two standard health insurance plans designed especially for COVID-19 treatment, namely Corona Kavach and Corona Rakahak.

Corona Rakshak Policy

Corona Rakshak policy provides for the payment of a lump sum on hospitalization for treatment of COVID-19. At least 72 hours of hospitalization is required. Medical expenses incurred post-diagnosis of COVID-19 are covered. The sum insured can be between Rs. 50,000 to Rs. 2,50,000.

Corona Kavach Policy

Corona Kavach policy covers the cost of treatment of COVID-19 in a hospital or home. AYUSH treatment expenses are also covered under this plan. In addition, the costs of masks, gloves, ventilators, oxygen cylinders, and PPE kits are also covered. The insured sum ranges from Rs. 50,000 to as much as Rs. 500,000.

COVID-19 health insurance plans have a minimum of 3 ½ months and a maximum of 9 ½ months.

Also, Read: What Should I Add to My Post Covid Diet Plan?

Financial Security 

Financial security is the mainstay of the importance of health insurance. Accidents and illnesses are unpredictable, and exorbitant rates of medical treatment can deplete your savings in no time. Health insurance acts as a shield for your savings and keeps you financially secure in the event of a major health problem. 

“Your health is a long-range investment that will pay off when you need it most.

Bryant McGill

How to Get the Right Health Insurance Policy?

The features of a health insurance policy that should be assessed to get a good deal as per your needs have been mentioned here.

Sum Insured

The sum insured should be enough to cover your medical expenses. The cost of medical treatment is high, so the sum insured should not be below. The minimum amount should be Rs. 10 lakhs, while the maximum can be Rs. 1 crore. In the case of health insurance plans for family or senior citizen plans, the more the amount, the better.

Additional Coverage

Check the features of health insurance plans to determine their scope for coverage. Depending upon your requirements, decide whether you need additional benefits such as critical illness cover, maternity benefits, daily cash allowance, etc. Select a plan accordingly.

Family and Individuals

The insurers offer both health insurance plans for families and individuals. There are many factors which govern your requirements, and marital status is an important factor. Married couples with children usually opt for health insurance plans for families as they cover the children and old parents. However, couples without a family usually opt for individual health insurance. Health insurance plans for families are suitable for healthy families as a single policy is enough to meet the health requirements of each member. But if any family member requires frequent medical treatment, then an individually customized plan is necessary.

Sub-Limits

The importance of health insurance is diminished if the policy has high sub-limits concerning coverage. For example, a sub-limit on daily room rent will cap the amount that the policy shall pay for daily room rent, and the additional amount would have to be paid by you. Thus, a policy having minimum or no sub-limit is desirable.

Co-Payment

Look for the presence of a co-payment clause among the features of the health insurance policy. The co-payment clause binds the insured to pay a certain percentage of the claim amount from his/her own pockets, and the percentage can be 10% or above. The premium amount decreases due to this clause but purchases such a policy only if you can afford to pay the said amount without any financial loss.

Cashless Treatment

Cashless treatment is one of the main features which underline the Importance of health insurance because the insured person is not required to pay anything to the hospital for availing treatment. To this end, check the networked hospitals of the insurer. The higher the number of networked hospitals near your residence, the better is the policy for you.

Policy Premium

The policy’s premium loading factor means the insurer can charge an extra premium if it deems you to be in the risk-prone category. This is especially true for senior citizens. An insurer can also charge claim loading, which requires you to pay a part of the claim amount from your pocket. Choosing a policy free of premium and claim loading is recommended.

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