Health Insurance – A Complete Guide
One of the side effects of technological advancements is the rise of lifestyle diseases. On the other side, advancements in medical research have also made many of the diseases curable and treatable. However, the cost of the medical treatment will definitely burn a hole in your pocket. The solution for this is to buy Health Insurance cover for you and all your family members.
What is Health Insurance?
Health insurance is an agreement in which the insurer gives you a guarantee to compensate for all the medical expenses, in case you fall sick or meet with an accident that requires your hospitalization.
The medical expenses which you submit to your insurer requesting compensation are known as a Claim.
The insurance company can compensate you either by the cashless facility or by reimbursement.
A cashless facility means that your insurer will directly pay the hospitalization bills to the hospital. This facility is given if you get treated in the hospitals your insurer has tied up with, also known as network hospitals.
Your insurer will reimburse the cost of hospitalization to you in case you get treated at hospitals that they don’t have tie-up with, also known as non-network hospitals.
There are around 30 health insurance companies in India. They are all regulated by the Insurance Regulatory and Development Authority of India.
Why having health insurance is important?
“Health is not valued until sickness comes” – Thomas Fuller
The cost of health care is continuously rising. It makes financial sense for you to have health insurance as it would reimburse the costs of your medical and hospitalization costs, and will not burn your pockets.
Once you take a health cover, you can keep it active throughout your life. It means that your medical expenses will not dent your finances at any time in your life or your dependents’ lives.
The cost of paying a premium is insignificant as compared to the umpteen benefits you derive by having sufficient health insurance in place for you and your family members.
Learn more about Health Insurance Riders
Types of Health Insurance in India
A wide range of health insurance policies is available catering to different health insurance needs of the people.
- Individual health policy – It is a policy that provides health coverage for one person only i.e. the insured. The entire sum insured can be utilized by the insured person.
- Family floater – It is a policy that provides cover for you and your family members. The Sum Insured is a collective cover that can be utilized by any of those insured by the policy. Usually, a maximum of 4 adults and 2 children are allowed to be covered by a single policy.
- Group Health Insurance – This policy offers health cover to a group of people, along with their family members. A group can mean an organization, housing societies, business groups, etc., in which many people are registered as members. The premium is paid by the group and not by the individual members.
- Critical Illness Insurance – It is a type of insurance that pays you a lump sum equal to the sum insured, in case you are diagnosed with any serious ailments such as cancer, heart disease, stroke, etc.
- Top Up and Super Top Up health insurance – These are a type of health insurance which provide coverage over and above a threshold limit known as the Deductible. The deductible is a part of your hospitalization expenses that have to be borne by you or paid through another health policy. All the expenses above this deductible will be borne by these policies. In Top Up policy, the deductible limit is applicable for each and every case of hospitalization. In Super Top Up policy, the deductible limit is applicable for a policy year and not for every case of hospitalization.
- Senior Citizen policies – These health insurance plans are specially for senior citizens. They are usually available as individual plans.
- Disease-Specific policies – These health policies cover specific illnesses such as heart ailments, cancer, etc. The cover is given only if you are hospitalized for that particular health condition only. This is beneficial for those who have a family history of such illnesses.
Also read about difference between Co-pay and Deductible
Tax benefits on health insurance
To promote people to take health cover, the government provides a tax deduction for the premium paid for health insurance. The tax exemption can be claimed under Section 80D of the Income Tax Act.
Tax deduction under Section 80D can be claimed for health insurance premiums paid by individuals for
- Self
- Spouse & Children
- Parents
It can also be claimed by Hindu Undivided Family (HUF).
There are provisions to claim additional deductions for parents who are senior citizens.
| Case | Self, spouse, and dependent children | Parents | Total Deduction that can be claimed | |
| 1 | You and your family members (You and spouse are below 60 years) | Up to Rs.25,000 | Rs.25,000 | |
| 2 | You and your spouse are below 60 years and your parents are also below 60 years | Up to Rs.25,000 | Up to Rs.25,000 | Rs.50,000 |
| 3 | You are below 60 years and your parents are above 60 years | Up to Rs.25,000 | Up to Rs.50,000 | Rs.75,000 |
| 4 | You are above 60 years and your parents are above 60 years | Up to Rs.50,000 | Up to Rs.50,000 | Rs.1,00,000 |
There is also a provision to claim Rs.5000 for preventive health check-ups subject to the max limit specified for each case.
Know about the Common Exclusions in Health Insurance before you buy one!
