Health insurance is a critical part of your financial plan. When it comes to protecting yourself, a health insurance plan should be the first choice. It protects the beneficiaries against financial stress that might occur in times of medical emergencies. Having a safety net in the form of a health insurance policy is the best way to deal with such health ailments.
Selecting a health insurance policy at times can be bewildering. To ease it for you, we have compiled a list of common terms that can simplify the selection process. Let us look at them-
Sum Insured / Sum Assured
The sum insured is the maximum amount of claim payable by your insurance company. In the event of a medical emergency, you need to submit relevant documents to your insurer while making a claim application. Your coverage amount determines the premium of your health insurance policy.
Critical Illness Insurance
Unlike a standard health insurance policy, the insurance company does not pay out the sum assured after availing the treatment. Instead, the payout under critical illness insurance is after the diagnosis of pre-specified diseases. These policies only cover life-threatening diseases like cancers, heart ailments, kidney failures, organ transplants and more. You can either purchase a critical illness plan as a standalone policy or add-on to your base insurance plan.
Cashless Claim Facility
A cashless claim is a mode of settlement by your insurance company. Here, you do not have to pay upfront towards your treatment costs, but instead, your insurance company settles the hospital bills on your behalf.
Akin to no claim bonus in motor insurance, a cumulative bonus is provided if no claim is made during the policy tenure. The health insurance company increases the coverage of your policy for the same premium. Thus, greater benefits are available at the same price.
A deductible is the amount claim which you, the insured, have to bear before the policy coverage kicks in. A deductible can either be a specific percentage of the claim amount or in terms of monetary value too. This deductible is inversely proportional to the premium amount. The higher the deductible, the lower is the premium and vice versa. Always refer to the policy wordings as specified under your health insurance plan for more details.
Just like a policy provides cover for specified illnesses and treatments, some are excluded too. These treatments that are not covered by your insurance plan are called exclusions, and they differ between plans and insurance companies. Exclusions are of two types – ‘Permanent’, i.e. which are not at all covered by your insurer, and ‘Temporary’, which are covered after a specified policy tenure.
A health insurance policy covers various treatments under its ambit. However, not all plans cover the entire cost of such treatment. Various sub-limits offer coverage up to a specified amount of expenditure as defined under the terms and conditions of your policy.
Each health insurance policy has a duration for which the insurer does not cover any expenses. This period is called the waiting period. It differs among the various insurers and their plans.
When understanding the crux of your insurance policy, do not forget to compare it with the various plans using a health insurance premium calculator. It will simplify the process of shortlisting a favourable insurance policy. These are a few handy terms that can help you in understanding your insurance policy better. Now that you know about them, it will make your selection process a hassle-free experience.