Why Health Insurance is important? Know The Terms Related to Health Insurance
“Health is Wealth.” All of us are aware of this cliché; however, how many Indians pay enough attention to securing this wealth?
Unfortunately, not many!
13 crore Indians could suffer from lifestyle diseases ranging from diabetes, cardiac ailments to various types of cancer in the coming years. With Cancer treatment, on average, costing 10 Lakh rupees, treatment for Heart diseases costing up to 3.5 Lakh rupees, Kidney failure treatments, procedures requiring expenses up to 4-5 Lakh rupees, Organ transplants, surgeries, and replacements leading to costs between 4-18 Lakh rupees, how many Indians are adequately prepared?
“As per NSSO (National Sample Survey Office), among India’s elites (or top 5%), most people (98%) receive some kind of medical attention before death. However, when it comes to the bottom quartile (or the bottom 25%), a staggering 39% do not receive any medical attention before death. Many families opt not to go for any treatment even when a member faces a life-threatening disease. They are simply too poor to contemplate a long-haul hospital stay.” – Livemint.com We can certainly take pride in improving our healthcare facilities to a great extent. Income levels have also substantially gone up, yet, can we claim that all medical facilities are equally accessible to all citizens, irrespective of their financial status? If yes, is everyone able to afford them without any adverse consequences on their financial wellbeing?
Majority struggles to afford the available healthcare without digging deep into their savings or taking out loans. Out-of-pocket spending on medical needs are increasing, and in the last two decades, the number of people who spend on their own has increased from 60-80%. 31% of hospital admissions in urban India are either funded by loans or through the sale of valuable assets. Utilizing savings for medical expenses means many are left with no money to be spent on other necessities such as food, education or retirement planning. Consequentially, it leads to almost 6 Crore+ Indians moving below the poverty line every year.
Healthcare costs have risen sharply, the inflation is in double digits, and there is little relief in sight as this upward trend is likely to continue.
The Solution? Health insurance is an agreement between the insurance company and the insured where the company agrees to compensate for medical expenses when the insured falls ill or has an accident resulting in hospitalization. In many cases, you get cashless treatment through insurance companies’ tie-ups with leading hospitals. In the case of no tie-up, the insured is reimbursed the cost of expenses incurred. The insurance, to a large extent, takes care of your expenses such as tests, doctor fees, ambulance fees, hospitalization, post-hospitalization charges, including doctor visits, and medicines.
The Present Situation
Less than 20% of Indians have health insurance. Many have Group Insurance, which is not enough for a four-member family. Only 5% have a suitable insurance cover per their age, family status and location. Many depend on low-sum-insured corporate insurance plans, and 60% accept that health coverage through their employer may prove inadequate.
Need for Health Insurance Our drastic lifestyle changes, hectic work schedules, improper eating habits and rising pollution levels have made us more prone to a variety of health disorders.
As per a survey, 70% of the respondents considered health insurance as more important than life insurance. Health insurance protects you from and prepares you for rising medical costs. Provides peace of mind to you and your family members by ensuring little or no financial burden in case of any unexpected medical requirement. In many cases, you get cashless treatment. Depending on your insurance plan, you could also get pre and post hospitalization charges covered for a period of up to 60 days. Includes transportation charges as well.
Can earn NCB (No claims bonus) in case no claim is filed for any treatment in the previous year. Some insurance companies may offer free medical checkups based on your NCBs. You get tax benefits. The health insurance premium paid is tax deductible as per section 80D of the Income Tax Act.
Eligibility & Documentation Required
A mandatory health checkup while obtaining health insurance is not required for citizens under the age of 45. All applicants must disclose any pre-existing conditions like diabetes or hypertension. It is advisable to get a health insurance cover when you are young so that the premium remains reasonable. Should present the following documents with a Passport Size Photo while buying health insurance: Birth Certificate or 10th class mark sheet or 12th class mark sheet or Driving License/Passport/Voter ID. Must also provide the identity proof, address proof documents such as DL, Passport, PAN Card, Aadhar Card, Voter ID Card, Electricity/Telephone Bill and Ration Card.
Here are some commonly used terms we come across while looking at the features of a policy. Insurance Certificate/ Policy: This is a contract document which carries all the features of the coverage provided by the company to the certificate/policy holder. This gives information about the costs that are covered as well as the ones that are not covered. Claim: This is a request that is sent or filed by the policyholder to the insurance company in order to pay for the treatment received by him. Insurer: This is the health insurance provider, usually an insurance company, who issues the policy/plan to an individual. Insurer is responsible for the payment of expenses in case of a claim.
Assignee or Named Insured: Particularly, this is the named individual or firm or the policyholder with whom an insurance contract is made. He is the one who gets the benefits under the policy. In some cases, more than one person/entity may be referred as named insured. Sum Insured: The maximum amount that the insurer has agreed and liable to pay in case of a medical eventuality of the insured is referred to as the sum insured. For example, if the sum insured is Rs 3 lakhs, and the policyholder gets hospitalized. The costs add up to Rs 5 lakhs, the insurer is liable to pay him only Rs 3 lakh that is the sum insured. Premium: The monthly payment that is made in the name of the insured either by himself or his employer to the insurer in exchange of protecting him from the risk or liability of medical bills in case of medical treatment. Co-payment, Co-insurance and Deductible: These are the terms which represent a certain out-of-pocket payments when a claim is processed. Co-payment in Health Insurance is basically a fixed flat fee that is paid by the assignee or the policy holder whenever he claims health insurance from the provider. However, there could be other clauses regarding co-payment which need to be considered in order to understand the full impact of the co-payment feature in a plan. Co-insurance in Health Insurance, on the other hand, is a percentage of the total costs paid by the policy holder or the insured associated with a claim. It is generally mentioned as a percentage of the total amount, for example, 10% or 20% of the claim. In India, co-payment and coinsurance are sometimes used interchangeably. Hence one needs to be aware of the exact features before buying a particular plan. Copayment or co-insurance feature certainly reduces the premium since the risk or liability is shared by both, the insurer and the policy holder.
Deductible in Health Insurance is the amount that is borne by the insured before the insurance claim comes into effect. Deductible is expressed as a fixed amount or a certain percentage of the claim amount. Bigger deductibles lead to a lower premium. Exclusions: These refer to those situations or conditions which are not covered by the health plan or in other words, the insured will not receive any benefit for the same. Waiting period for Pre-existing Conditions: A medical condition which is excluded or not taken into account for Insurance claim settlement since it was present at the time of purchase of a plan is referred as a pre-existing condition in health insurance domain. Most insurers cover such medical conditions after a certain waiting period which is anything between 2-4 years. Thus, waiting period is defined as the time till which the pre-existing diseases are not covered under health Insurance plan. We hope the above write-up will help you understand the different terms and clauses in your health insurance plan and make an informed decision of buying a right health Insurance plan for yourself and your family. Please contact Quickinsure if you have any query or need further explanation.
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