Does health insurance jargon mystify you? Here's a simple explanation.
Rakesh Kaul, chief distribution officer, Edelweiss General Insurance, will answer your health insurance queries.
COVID-19 has led to increased awareness about the need to have a health insurance policy. It is encouraging to see more and more youngsters wanting to invest in a health policy to safeguard themselves and their families.
Health insurance is now beginning to be viewed as a protection tool rather than a tax saving instrument.
With digital now becoming a way of life, buying a health insurance policy has also become easy, simple and convenient.
Despite all this, why is health insurance penetration still so low?
In my view, one of the main challenges people face while buying a health insurance policy is the complicated terminology used.
The inability to comprehend such technical and confusing lingo often becomes a major hindrance between the intent to buy a policy and actually buying one.
To help you on your health insurance journey, we've simplified the top 10 key terms:
- Premium: The fixed annual amount an insured (the person taking the insurance) is required to pay the insurer (the insurance company providing the services) to avail the insurance coverage benefits, subject to the terms and conditions listed in the insurance policy (the legal contract between the insurer and the insured).
- Sum Insured: This is the maximum amount your health insurance provider will pay you in case of any eventuality. For eg, if the sum insured in your health policy is Rs 5 lakhs, and if your hospital bills works out to be Rs 8 lakhs, then the insurance provider will pay only the maximum amount (Rs 5 lakhs), while the remaining amount will have to be borne by you.
- Claim: This is the payment request made by the insured person to the insurance provider for payment of the medical expenses incurred.
- Waiting Period: This is the minimum period you will need to wait before your insurance provider starts paying you for any claims. The period is usually 30 days from the date on which the policy was issued.
Your health insurance policy also covers pre-existing illnesses; however, you might have to wait for 24 to 48 months before your health insurance provider starts paying you claims for any pre-existing conditions.
- Pre-existing Conditions: These are any ailments/diseases that you were diagnosed with or received treatment for 48 months before the first policy provided by your health insurance company. It is advisable to disclose any such existing ailment and ongoing medication, if any, to the insurer. Non-disclosure may result in rejection of the claim by the insurer.
- Co-payment: This is a fixed percentage that you will have to pay from your pocket for every claim made. For eg: For instance, if the co-pay in your health insurance policy is 15 per cent then, on every claim made, you will pay 15 per cent of the total amount claimed. The insurance provider will pay the rest.
- Deductible: This can easily be confused with co-pay.
While co-payment is a fixed percentage, deductible is the fixed amount you will need to pay from your pocket each time you claim.
For eg: If the deductible in your health policy is Rs 10,000 and if you make a claim for Rs 50,000, then your insurance provider will pay you Rs 40,000, ie, the amount after subtracting the deductible amount.
On the other hand, if your claim is less than your deductible, say Rs 5,000 in the example given, your health insurance provider will not pay you the claim.
- Portability: If you are not happy with your existing insurance company, then you can opt to change (port) your policy to another insurance provider; all the benefits of your existing policy will remain intact.
- Grace Period: Your policy needs to be renewed every year.
Insurance companies offer you extra 15 days (grace period) from the due date to pay the premium and renew the policy.
Failure to do so even after the grace period will result in the policy being discontinued and all your benefits lost.
It is therefore important to keep a note of your due date and renew on time.
- No Claim Bonus: You get rewarded for living healthy and not making any claims. For every year that you do not claim, your sum insured increases by a fixed percentage as per the policy for the same amount of premium.
Now that you have understood the most important terms in a health insurance policy, do look at factors such as age, medical history, income, medical inflation, lifestyle, etc, and make an informed and wise choice.
You can send your health insurance related queries to firstname.lastname@example.org (Subjectline: Ask Rakesh) and Rakesh Kaul will answer them.
Kaul is the founding member and chief distribution officer at Edelweiss General Insurance.
Feature Presentation: Ashish Narsale/Rediff.com