Thanks to genetically modified food sources (both plants and animals), ever-increasing social, family and work stress, lack of mobility and increasing inflation, we are no longer as healthy as our ancestors. We should not be wondering why we fall sick so easily. We should rather be worried about what can we do without our limited capabilities to keep ourselves and our loved ones protected against health oddities. There are just a few things we can do:
- Live an active lifestyle to regain mobility.
- Get used to regular meditation to alleviate stress.
- Settle for healthy eating habits and prefer organically grown food products.
- Get rid of bad habits like smoking and excessive drinking.
- Stop doing drugs.
Still, even after doing all those things no one can say for sure that he or she will never fall sick and will never need medical attention. Sad part – medical expenses have this nasty habit of spiraling out of control thanks to the deadly kiss of capitalism. What are we supposed to do? There is a simple solution – go for a health insurance policy or possibly two or even more.
This brings us to the question, ‘what really is health insurance?’ This is precisely what we intend to find out in this article. We will walk you through health insurance overview and help you understand why it is necessary. We will like to warn you that in case you are looking for details of a specific type of health insurance, you will be disappointed because this is going to be a generic article that will not focus on any specific company or the insurance products it offers. Let us begin…
Health Insurance Overview
Question: What is health insurance?
Answer: Health insurance is a type of insurance product in which the insurer (that is the insurance company) promises the insured (person holding the policy contract) to pay for the medical expenses in the event of the insured being admitted to hospital for a period of more than 24 hours. The insured on the other hand promises to pay a certain amount of money to the insurer over a certain period of time. The payment is usually made every month but there are options of paying every 3 months or every 6 months or every 12 months.
Question: What is the most important factor while purchasing health insurance policy?
Answer: It is extremely important to disclose every aspect of health. For instance, the person purchasing a health insurance policy needs to disclose whether he or she has any genetic disorder or not, whether anyone from his or her family has a hereditary disorder or not, whether he or she possesses bad habits like smoking, drinking, drugs etc., whether her or she eats junks food more or not, whether he or she has a daily habit of exercising or not etc. Even the most minute details are to be disclosed because what seems not very important can be a deciding factor when it comes to life and death. The premium charged by a health insurance company depends on these factors. The higher the health risks of a person, the higher will be the premium. Deliberately suppressing information can lead to troubles when it comes to settlement claims because once a claim is made, the insurer will go through detailed reports and if necessary, speak with doctors to determine whether the claim is genuine or not.
Question: Will a health insurance cover all medical expenses?
Answer: That depends on several factors. The first thing the insurance company will do is to check the disease for which you required medical treatment. If the disease is covered under the policy contract, the company will pay. If not, the company will not pay. It is as simple as that! Next thing that the insurer will check is whether the sum assured is enough to pay for the entire medical bill or not. If yes, the entire medical bill will be covered by the insurance. If not, the insurer will only pay the amount of sum assured. Any balance amount from the medical bill will not be paid by the insurer. The insured person who underwent medical treatment will have to pay for the remaining amount.
Question: What is cashless treatment?
Answer: Cashless treatment is also sometimes referred to as cashless hospitalization. It is a scenario where the insured person – if the need shows up – will be admitted to the hospital and will be treated but not charged a single penny. The health insurance policy of the insured person will settle all bills separately with the hospital provided, the sum assured is big enough to pay for the entire bill. In case the sum assured falls short, the insurance company will get in touch with the insured and inform the same. The insured person will then have to pay the balance amount. So basically, there is no need for any upfront payment or payment during treatment. However, cashless treatments are allowed only in hospitals that are approved by the insurer. If the insured person receives treatment in any other facility that is not approved by the insurer, the insured person needs to pay the hospital first and then the person can make a settlement claim with the insurer.
Question: What diseases are covered under medical treatment?
Answer: Well, it is going to be a long list and hence, we are going to skip that. In order to learn about the covered diseases, speak to the insurance agent of your preferred medical insurance company. Also, the policy you select will list all the diseases that will be covered by the policy.
Question: What is the modus operandi of health insurance?
Answer: The modus operandi or the mode or method of operation of a health insurance company is same as the modus operanding of a life insurance company or a general insurance company. A medical insurance company operates with assumption that not all of its customers will fall sick at once. The money collected by a company from its customers in form of premiums forms a pool of money. When someone needs to encash the policy, the company simply takes out the money from the pooled reserve and pays. The pool is regenerated by new premiums that flow in. If not claims are made in a year, the pool simply continues to grow.
Question: What are the different types of health insurance available in India?
Answer: If we look at broad classification, there are only three variants – Mediclaim, Fixed Benefits and Critical illness. Let us take a look at each of these variants separately:
- Mediclaim: In this type of policy, the amount paid by the insurer will either be the actual expense or the sum assured, whichever is lower. This means that if actual medical bill is greater than the sum assured, the insurer will pay only the sum assured. On the other hand, if the actual medical bill is smaller than the sum assured, the insurer will pay only the medical bill and not the sum assured.
- Fixed Benefits: Policies that fall under this category promise to pay a certain fixed amount, which is completely independent of the total expense. The benefits are usually calculated on a daily expense basis. Simply put, there is a predetermined amount that will paid daily for hospitalization, a daily additional amount for ICU expenses and a daily additional amount for surgery, if needed. Everything boils down to one simple thing – the insurer will pay a predetermined fixed amount. Whether this amount is falling short of the actual expense or whether it is greater than the actual expense, the insurer will not look into that.
- Critical Illness: This is actually similar to policies that fall under the fixed benefits category but only and only for a few specific types of illnesses or diseases. These are called critical illnesses and cover diseases like renal failure (kidney failure), hepatic failure (liver failure), cancer etc. In short, those diseases are covered under critical illness plans that can lead to death. The number of critical illnesses covered by a medical insurance company can differ from those covered by another company. Usually the number of diseases covered under critical illness plans range anywhere between 9 and 35. Critical illness plans are strictly restricted to critical illnesses or diseases. Anything outside the listed diseases will not be covered. These types of plans are perfect where need for constant hospitalization is absent.
Question: Which one is better – individual health insurance or a family floater?
Answer: First thing first, both of these insurance types are categorized under Mediclaim. Now, the question was, which one is better. The answer to this question is slightly complex. It all depends on the needs. A family floater covers the entire family at once. As opposed to this, individual plans will offer coverage to individuals of a family and not the entire family as a whole. Let us a take two examples:
Example 1: There is a family of four – father, mother and two children. Let us assume that the father is about 60 years old, the mother is about 50 years old and the two children are both 30+ years in age. In this family, two are old people and two are adults. They have higher risk of diseases compared to those who are younger. Hence, if they go for family floater, they will have a single policy for the entire family. If multiple medical emergencies arise at once or if consecutive medical emergencies arise, the total sum assured may not be enough to cover all medical expenses. It is better for them to take individual medial insurance policies.
Example 2: Let us take the exact same family setup but this time let us assume that the father is 30 years old, the mother is 28 years old and there are two kids – one is 3 years old and the other is just 1 year old. Because all members of the family are pretty young they have low risk of diseases. For them a family floater is perfect because the likelihood of multiple people in the family requiring medical attention at the same time or at quick successions is low. Taking individual health insurance plans in this case will be a waste of money.
Question: A person already has a medical insurance provided by his or her company. Should he or she buy one separately?
Answer: It is a matter of choice but yes, buying a separate one is always a good idea because of the following reasons:
- Medical insurance provided by companies are usually group insurance policies with low coverage.
- A company can pull out the medical insurance benefit at any point in time. This will leave the employees vulnerable.
- Purchasing a separate medical insurance will also help to get tax benefits.
Well, that’s pretty much a decent health insurance overview. In case you are looking for any further generic details, feel free to drop a message and we will revert back as soon as possible.