What Is a Health Insurance Policy?
A health insurance policy is an agreement between insurance provider and policyholder whereby the insurance provider commits to pay a predetermined amount towards the medical expenses of the policyholder for treatment of predetermined illness or accident. The policyholder pays a premium to the insurance provider to get this medical coverage.
Importance of Health Insurance Policy in Financial Portfolio building:
Most financial experts believe a health insurance policy is considered to be an essential part of all financial portfolios, as most often the savings of an individual are drained in the expensive treatments of medical illnesses. People without sufficient savings, compromise on such expensive treatments.
Hence, to be able to fulfil all other financial goals, having health insurance is a must.
Types of Health Insurance Plans:
There are different types of health insurance plans available in India today offering benefits to fulfil your different health goals. Thus, it’s important to understand the differences in each of these policies before you get one.
- Indemnity Plans
- Definite Benefits Plans
1. Indemnity Plans:
Indemnity plans are traditional forms of health insurance plans that offer medical support up to the sum assured.
There are 5 types of indemnity plans:
Mediclaim cover –
People usually say ‘Mediclaim policy’ and ‘Health Insurance policy’ as a synonym of one another. However, Mediclaim is just a type of health insurance.
When you buy a Mediclaim cover the health insurer is obligated to pay for any hospitalization expenses incurred during the treatment of any illness or accident. This includes in-patient expenses such as nursing fees, surgery charges, doctor’s fees, oxygen, anaesthesia etc.
Individual Health cover –
An individual health cover provides health protection to one single individual. The maximum claim an individual can make is up to the sum insured for the hospitalization expense. In case, you add family members in individual health cover then each member will get health cover up to the sum insured individually.
For example – If you get an individual health cover where you include your mother, father or siblings for a sum insured of ₹ 1 lakh then each family member would have the sum insured of 1 lakh individually.
Family Floater –
A family floater provides health protection to your entire family in one single plan. The total sum insured is divided amongst the family members and hence, the premiums for these health insurance plans are comparatively lower than an individual plan.
Unit Linked Health Insurance –
Unit Linked Health Insurance Plans or ULIPs offer benefits of having both insurance and investment. The premiums paid for the purchase of these health insurance plans are divided into two: one portion is used to cover the cost of health insurance cover and the other portion is invested in equity funds, debt funds or other securities.
Group Mediclaim plans –
Group Mediclaim plans in India are usually taken by corporations for the financial well-being of their employees and clients.
You can avail the benefits of getting a Mediclaim cover at cheap premiums under a group insurance plan. However, one should know that the coverage offered under these group Mediclaim plans are valid only until you remain a part of the group.
2. Definite Benefits Plans:
Under definite benefits plans, the policyholder gets a lump sum payment from the Insurance companies on detection of illness.
There are 3 types of definite benefits plans:
Critical Illness Plan –
A critical illness plan provides a predetermined lump sum amount to the policy holder in case they get diagnosed with any of the critical illnesses mentioned in their policy document such as cancer, organ transplant, stroke, kidney failure, etc.
Hospital Daily Cash –
A hospital daily cash plan offers daily cash allowance up to a predetermined limit to the policyholder on being hospitalized for treatment of illness or accident.
Personal Accident –
A personal accident cover provides a lump sum amount to the policyholder for treatment of accidental inquiries. In case of death or loss of income due to partial or full disability of the policyholder due to an accident, the beneficiaries of the policy would get the total sum assured.
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