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Understanding health policy terms


Health Insurance has gained importance due to the awareness among one and all about good health, fitness, wellness etc. The requisites when in a health emergency are:

  • Minimizing the impact of a difficult health condition

  • Protection of finances

  •  Keeping mental peace in duress

The basics of a health insurance policy like sum insured, cover offered, premium, what is covered and what is not covered- the exclusions are by and large known to all. However, some of the policy terms and conditions need some explanation which will help a layman gain some clarity when buying a health insurance policy.

Deductible: This is the amount of claim that is borne by the patient. Only when the bill amount exceeds the deductible  the insurer pays. If the hospital bill is Rs 3 lakhs and the deductible is Rs 30,000/-, the insurer will pay Rs 2,70,000/- as claim under the policy .

This feature helps the policyholder in reducing the premiums at the time of policy purchase.The deductible is chosen based on the financial flexibility of the insured. Another view would be that a small amount borne as a deductible helps when a bigger claim is settled. It must not be understood that the deductible takes care of the non payable items by the hospital. Deductible is the element of financial risk taken by the policyholder on himself.

Deductible is on an aggregate or per-claim basis. If the deductible is Rs 30,000/- as in the example above, on an aggregate basis, the policyholder has to bear  Rs 30,000/- in a year for all claims put together  and if the option is on a per-claim basis, policyholder will have to pay Rs 30,000/- for each claim.

Co-payment or co-pay: This means that the insured bears a portion of the bill. While deductible is an absolute amount deducted from every claim, co-pay is laid out as a percentage of the sum insured. If the total bill is Rs. 3 lakhs and the co-pay is 20 percent, the insured will have to bear Rs. 60,000 and the insurer will pay Rs. 2,40,000.

Premiums are high in the case of senior citizen plans. By opting for a co-pay or deductible, they can reduce their premium. 

  • In the case of co-pay, the amount the policyholder has to pay increases as the bill increases. 

  • If deductible is opted, policyholders’ liability gets limited to a fixed amount. 

Higher co-payment may be opted for greater reduction in  premiums 

Waiting period: This is for a pre-existing condition. It is a policy feature that excludes diseases pre existing diseases however a certain time period is prescribed and varies with the different health plans.

Proposer must check the waiting period for pre-existing conditions. Some products allow reduction in waiting period on payment of additional payment of extra premium, this option is best for senior citizens. Insurance companies  impose a waiting period of 2-4 years for specific diseases. Cover for the medical expenses incurred for treatments of pre-existing diseases commences only after the waiting period gets over .Insured must declare any pre-existing condition because nondisclosure of any pre existing condition can prejudice the claim.

Sub limit: Sub-limits can be placed on hospital room rent, doctor’s consultation fee, ambulance charges, and a few  medical procedures, such as cataract removal etc.

A sub-limit is a limit within the sum insured of  a health  policy coverage  on certain medical expenses. Insurance company can limit its liability  by incepting sub-limits. Sub-limit is laid for  particular illness/disease/treatment and  can also be included as a percentage of the total sum insured. Similarly proper selection of sub-limits in room rent, doctor’s fees, other charges is advised.  If one requires a standard room in a city hospital  the room rent could be higher than the room limit chosen and this affects the amount the insurer will reimburse at the time of a claim. A comprehensive analysis of one’s requirements and prevailing rates of  health services must be made so that ambiguities at the time of claim can be avoided. 

Unlimited restoration of the sum insured: Whenever a  claim is made for a related or unrelated condition, sum Insured gets depleted to the extent of claim. This way the next claim has insufficient sum Insured due to diminishing sums insured. Health insurance plans should be able to restore the sum insured to 100%. This is to ensure that the insured never runs short of funds or coverage. One has to compare all policies and arrive at an appropriate health plan.

Cumulative bonus: Cumulative bonus of 10% is added to the sum insured each year if the policy has been claims free. However some products offer cumulative bonus even if claims have been filed. This continues annually until the accumulated bonus amounts to 100% of the sum insured.This helps build the sum insured as the entire amount is available at the time of a claim.

Preventive health check-up: Senior citizens find it difficult to get a preventive health checkup due to the cumbersome and time consuming process. Some health  plans  offer unlimited consultations with doctors and specialists online. Policies therefore offer a comprehensive health cover with customized plans for the benefit of customers.

Declaring all information: All the information should be declared in the proposal form as it enables the correct decision of the insurer with respect to the policy issuance  and the terms and conditions of cover. If not declared at the time of proposal the claim made on the policy might be rejected.The proposal form forms a part of the legal contract and it is significant to the contract. Non disclosure of  information, though done unintentionally can give scope for rejection of a claim by the  insurer and can affect future insurance proposals. Hence information is to be disclosed in utmost good faith to keep up the insurance contract.


We at Zen Insurance assist in choosing the right Insurance cover to suit your needs. Please contact us for assistance.

Disclaimer:

Zen Insurance is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.


 

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