What Is Health Insurance: Meaning, Types & How it Works?

What is Health Insurance?

Essentially, a Health Insurance policy is a contract between you, the policy holder, and the insurance provider to provide you with financial protection in the event of a medical emergency or anything that requires hospitalization, and in some cases, purchasing medicines, getting diagnostic tests done, etc.

In return, the policyholder pays the provider a periodic payment, termed as the premium. This premium amount changes based on the amount of Insurance coverage you are seeking (maximum amount the insurer is liable to pay) and factors such as your lifestyle, health, gender, age etc. This is the simple meaning of the term “Health Insurance”.

Though the definition is simple, one must be careful when buying health insurance as there are a number of clauses and terms within the terms and agreement that can result in the coverage process being very different.

For example, services that are not pre-approved as part of the plan, the insurance company may choose not to provide any coverage for. For example, there are some treatments and ailments that are almost always excluded from coverage, such as treatments for Mental Health. This however is changing gradually as its importance becomes more prevalent. There are also certain illnesses, or pre-existing illnesses that the policyholder may have prior to purchasing the health insurance policy that the insurer will put in place a waiting period for, i.e. a period of time where medical expenses incurred due to that illness will not be covered by the insurer.

Health Insurance policies may also come with co-pay clauses and Deductibles options, each of which are means by which to share the cost of medical expenses between the policyholder and the insurer.

Understanding your policy’s particular structure will help you assess how much you will actually be covered for in the case of a medical emergency and also assess the relative price of buying your health insurance policy.

How Exactly does Health Insurance Work?

Simply put, the policy holder pays the insurance provider a periodic payment called the premium in return for financial coverage in the case of a health emergency, be it illness, or accident.

Why Do you Need a Health Insurance Policy?

Medical costs are rising at a rapid rate in the country, despite the rapid advancement in medicine. This has been further exacerbated by the emergence of COVID-19. Large medical bills have the potential to wipe-out one’s savings and assets and can be devastating for those that are already struggling financially and in terms of their health. An easy and efficient way to reduce one’s worry with respect to this is through health insurance.

A good health insurance plan will secure one’s future by providing financial support in times of crisis and helps to alleviate mental and emotional stress.

Types of Health Insurance Plans in India:

There are effectively two kinds of health insurance plans in India:

1. Mediclaim Plan

Mediclaim insurance kicks in during hospitalization due to illness or injury. The cost of one’s treatment while in the hospital is covered by the insurance company, and certain pre and post-treatment expenses are also reimbursed as part of the plan.

2. Critical Illness Insurance Plan

The critical illness insurance plan is one that caters to the possibility of life-threatening diseases that may specifically be faced by the insured person. Usually the amount is paid by the health insurer as a lump sum, so the individual has the choice of using the money as per his/her convenience, since some diseases may require long-term treatment across a period of time or may even lead to a change in the individual’s lifestyle. This gives the individual the leeway to use the health insurance benefits as per their own needs. These plans are based on the final diagnosis of the individual and do not require the medical bills to reimburse expense claims.

Conclusion

Buying health insurance is critical in today’s day and age, but if you’re still wondering whether or not to buy a plan or even if you’re still unsure about what is health insurance, the easiest way to assess which Individual Health Insurance and Family Health Insurance is best for you is through the Niva Bupa online platform. Buying health insurance online is easy and with three simple details, you can find out which plan suits your lifestyle and even compare health insurance plans to see what works best for you. Niva Bupa’s wide range of affordable and comprehensive insurance plans will help protect your family for years to come.