Due to the fragility of the human body, there is a lot of uncertainty about the health of a person. Hospital bills and medical care are expensive and can cost a large sum of money. This is when health insurance comes into play. A health insurance not only prepares you for a rainy day but also provides health protection cover.
A health insurance is a contract between an insurer (health insurance company) and an individual in which the insurer agrees to cover the cost of any medical expenses that may arise in the future in exchange for premiums paid by the beneficiary. .
The health insurance system in India works as follows:
Choosing a plan- A person can choose a health insurance plan from the insurance company of his choice as per his needs based on the facilities provided, expenses covered etc. In case of pre-existing diseases, different companies have different policies for cover. Thus, it is very important to choose the right plan for yourself keeping in mind all the relevant factors.
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Calculation of premium- After the insurance plan is selected, the premium is calculated for the buyer. It is calculated on the basis of age, income, health problems/diseases, if any. A comprehensive complete physical examination is done by the insurance company.
Only then, the premium payable every year is determined by the company and the maximum amount of insurance cover known as the “Sum Assured” is authorized.
How the claim works – If there is a medical expense due to hospitalization, the claim can be sought in two ways. The first option is cashless. In this method, if the insured visits a hospital in the network list of the insurance company, all the expenses will be directly settled by the company.
The second option is the reimbursement process. In this process, the bills are initially paid by the insured himself and later the expenses are reimbursed by the company after the company submits the bills and receipts.
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What happens if no claim is ever made by the insured – If medical coverage is never required, the person pays premiums for nothing in return, during that year. However, some companies offer a “no-claim bonus”, whereby the company refunds a certain percentage of the premium every year, no claims are sought. Also, some companies increase the sum insured of an individual as one. Reward for no claim.
Health insurance is a very beneficial financial product for all. Health insurance plans have many additional benefits like tax deduction, free health check-up among many others. One should choose the insurance cover very carefully keeping in mind their individual needs.
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