Getting yourself a health insurance policy is much like visiting the dentist; you know you should do it but you avoid it till the last possible moment.
Health Insurance is an absolute necessity for every individual – young or old. Here’s everything you want to know about health insurance.
I am healthy. Why should I take health insurance?
A health insurance is a way of ensuring you and your family against any financial contingency arising due to an unforeseen medical emergency.
The average life span of an individual has increased considerably, owing to improved medical facilities and increased awareness about one’s well being. However, at the same time health care and medical costs have also skyrocketed. Moreover, there has been an increase in incidence of medical problems due to lifestyle related issues like stress and eating habits.
With soaring health care costs, a serious injury accident or surgery that might require a hospital stay can set you back by lakh of rupees. Therefore, medical insurance makes complete sense. It is advisable to take health insurance when you are young so that you have a number of choices available and can choose the best and most affordable plan.
How does health insurance work?
To purchase health insurance, you need to pay an annual fee to the insurance company known as “premium”, for the coverage (sum assured) you require. The higher the premium, the more the coverage offered by the company.
What factors determine the premium amount of the health insurance?
Under health insurance, the age, health issues and the amount of cover are the factors that decide the premium. Usually, younger people are considered healthier and thus pay lower annual premium. Older people pay a higher health insurance premium as their risk of health problems or illness is higher.
How much health insurance I should opt for?
Looking at the present medical cost one should take minimum sum assured of Rs 3 lakhs (individually).
What coverage is available under health insurance plan?
A health insurance plan typically cover the hospitalisation expenses for treatment of disease and accident (minimum 24hrs of hospitalisation required) and pre and post hospitalisation expenses to the extent of the sum assured, depending on the policy you take.
Hospitalisation expenses include room rent, medicine expenses, specialist fees (surgeon, anesthetist, etc), diagnostic expenses and other medical expenses related to treatment.
Expenses that are usually not covered in your insurance policy are registration charges, service charges/nursing care chares, and personal expenses such as telephone, refreshment etc., taxes levied by government and other expenses not related to treatment.
Conditions arising from diseases existing before the purchase of the policy are also not covered in the policy. These “preexisting” diseases are covered usually after 4-5 years of the policy being in force, depending on the policy terms & conditions.
Is there any tax benefit that I can avail of while buying a health insurance plan?
As per section 80D of Income Tax Act, you can claim annual deduction on premium paid for self, spouse and dependent children up to Rs 15,000 and if tax payer is a senior citizen then a deduction of up to Rs 20,000 is allowed.
If you are paying the medical insurance premium for your parents, an additional deduction of Rs. 15,000 per year can be claimed under section 80D. If your parents are senior citizens, you can claim an additional amount of Rs. 20,000.
How do you claim the money?
The sum assured can be used at one go or through multiple claims in a year. There are two ways of claiming the insurance:
1. Reimbursement: When you undergone the treatment, you bear the costs and then file a claim to the insurance company, who then reimburses the medical costs paid by you, to the extent of the sum assured as per the policy’s terms and conditions.
2. Cashless settlement: When the treatment is sought in a hospital that is associated with the insurance provider, the insurance company settles the bill directly. In this case you don’t have to pay the cost of treatment from your pocket.
Is a medical check-up necessary before buying a policy?
A medical check-up is necessary for a new health insurance policy for customers above the age of 40 or 45 years, depending on the health insurer’s norms. Medical checkups are usually not needed for renewal of policies.