Health Insurance Explained: Meaning, Advantages, and Varieties

Health Insurance Explained: Meaning, Advantages, and Varieties

 Introduction

Healthcare expenses are increasing at a rate higher than medical inflation, making it essential for everyone to have a health insurance cover. This cover not only helps you save your emergency funds and provides financial security during medical emergencies but also supports you in dealing with rising medical costs.

### What is Health Insurance?

A health insurance policy is an assurance that provides immediate financial help in case of a medical emergency. It is a contract between a policyholder and an insurance company that covers medical expenses resulting from illness, injury, or accident. There are two ways an insurance company compensates for medical expenses: cashless treatment, where the policyholder doesn't have to pay anything to the network hospital as the insurance company pays the hospital directly, and reimbursement, where the policyholder settles their medical expenses first and later asks for reimbursement from the insurance company.

### Why Should I Have a Health Insurance Policy?

Purchasing a health insurance plan is essential for several reasons:

1. It facilitates superior medical treatment without worrying about high medical costs.

2. It offers specialized coverage for critical illnesses.

3. It covers road emergency ambulance costs.

4. It offers affordable premiums for youngsters.

5. It provides cashless claim benefits, allowing you to focus on your health instead of worrying about hefty medical bills.

6. It protects your savings during medical emergencies.

7. It provides tax benefits under Section 80D.

### Types of Health Insurance Policies

There are two main types of health insurance policies: individual or self health insurance plans and family floater health insurance plans.

1. **Individual or Self Health Insurance Plan**: This policy provides coverage and benefits only for the main policyholder. It covers no one else, making it suitable for individuals looking to maintain their own health.

2. **Family Floater Health Insurance Plan**: This policy provides sum insured coverage to the individual and their family members, such as spouses, dependent children, parents, and parent-in-laws. The sum assured coverage is shared by all members covered under the same plan.

### Factors to Consider Before Deciding on a Health Insurance Plan

When choosing a health insurance plan, consider the following factors:

1. Finding the right insurance company: Look for a company with a diverse range of plans, a wide network of hospitals, a high claim settlement ratio, and affordable premium rates.

2. Finding the right plan: Assess your coverage needs, customization options, premium amount, sub-limits, co-payment clause, and waiting period before selecting a plan.

3. How to find the right coverage amount: Consider factors such as your income, expenses, existing coverage, and the number of members to be insured when determining the optimal sum insured.

4. How to afford a health insurance policy: Health insurance plans are affordable, and insurers offer installment premium payment options to make them even more so.

5. Things to avoid while buying a health insurance policy: Avoid rushing into buying a policy, choosing insufficient coverage, hiding health-related details, relying solely on employer-provided medical coverage, ignoring terms and conditions of the policy document, and buying a policy just for tax savings.

### Conclusion

Health insurance is a crucial financial planning tool that provides financial security during medical emergencies. By understanding the benefits and types of health insurance policies, you can choose the right plan for your needs and budget.