Health Insurance

What is Health Insurance?

Health insurance is an agreement whereby insurance company agrees to undertake a guarantee of compensation for medical expenses in case the insured falls ill or meets with an accident which leads to hospitalization of the insured. Generally, insurance companies have tie-ups with the leading hospitals so as to provide cashless treatment to the insured. In case the insurance company has no tie-ups with the hospital, they reimburse the cost of expenses incurred by the insured. The government also promotes health insurance by providing a deduction from income tax.

Why Health Insurance is important?

The current COVID-19 pandemic has made the entire world sit up and realise that medical exigencies are unpredictable and can cause a financial upheaval that is tough to handle. With a high infection rate and no successful vaccine yet, people have started to understand the importance of having a good health insurance plan. Besides, with the rising cost of medical expenses, access to good medical facility and hospitalisation costs can be financially strenuous. Therefore, getting a health insurance cover for yourself and your family can provide the added protection you need in times like these. Apart from the obvious benefit of having the financial confidence to take care of your loved ones, a health insurance plan is extremely useful when it comes to beating medical treatment inflation.

Buying a health insurance policy for yourself and your family is important because medical care is expensive, especially in the private sector. Hospitalisation can burn a hole in your pocket and derail your finances. It will become even tough, if the person who brings in the money, is now in a hospital bed. All this can be avoided by just paying a small annual premium which would lessen your stress in case of medical emergencies.

A good health insurance policy would usually cover expenses made towards doctor consultation fees, costs towards medical tests, ambulance charges, hospitalization costs and even post-hospitalization recovery costs to a certain extent.

Types of Health Insurance

There are two basic types of health insurance:

Mediclaim Plans

Mediclaim or hospitalisation plans are the most basic type of health insurance plans. They cover the cost of treatment when you are admitted in the hospital. The payout is made on actual expenses incurred in the hospital by submitting original bills. Most of these plans cover the entire family up to a certain limit.

Critical Illness Insurance Plans

Critical Illness Insurance Plans cover specific life threatening diseases. These diseases could require prolonged treatment or even change in lifestyle. Unlike hospitalisation plans, the payout is made on Critical Illness cover chosen by the customer and not on actual expenses incurred in the hospital, thereby giving flexibility to use the monies for changing lifestyle, medicines and as a substitute for income for the time you could not resume work due to illness. Payout under these plans are made on diagnosis of the disease for which the original medical bills are not required.

Benefits of having a Health insurance Policy

Cashless Treatment: If you are insured, you can get cashless treatments as your insurance company would work in collaboration with various hospital networks.
Pre and post hospitalization cost coverage: Insurance policy also covers pre and post hospitalization charges up to the period of 60 days, depending on the insurance plans purchased.
Transportation Charges: Insurance policy also covers the amount paid to ambulance towards the transportation of insured.
No Claim Bonus (NCB): This is the bonus element which is paid to the insured if the insured does not file a claim for any treatment in the previous year.
Medical Checkup: Insurance policy also provide options for health checkups. Free health checkup is also provided by some insurers based on your previous NCBs.
Room Rent: Insurance policy also covers room expenses depending on the premium being paid by the insured.
Tax Benefit: Premium paid on Health insurance is tax deductible under section 80D of the Income Tax Act.

Tax Benefits on Health Insurance

The amount you pay towards health insurance premium claimed as a tax-saving deduction under Section 80D. You can claim ₹25,000 annually for a health insurance policy for yourself. If you also pay the premium for a health insurance policy for your parents(senior citizens), you can claim up to ₹50,000 for the same as well.

Earning money is not at all useful if you don’t have a life. Think about yourself and your family and the importance of life. You know the importance and benefits of having a Health Insurance Policy. Start one, if you haven’t already.