Be Money Aware

Health insurance is a very important product for individuals of all ages. It provides a cover for a number of medical illnesses and ailments. With the increasing number of lifestyle diseases across the country, it is essential to invest in a quality health insurance coverage. Different insurance companies offer different types of plans and have varying premium amounts. However, before you decide on the plan that is perfect for you, it is best to understand the important health insurance terms. Getting to know the terms will help you in the long run and you will be able to understand the plan and choose the one that is the best fit for you. Here are eight health insurance terms explained in detail.

• Claim

One of the most important terms to understand is a claim. The claim is a request, which is filed by an insured to the insurance company in order to pay for the services, which are availed of under the health insurance policy. This is the amount, which the insured expects to be reimbursed against the payment made to the health care professional. Depending on the terms of processing the claims, the insurance company will begin the procedure for reimbursement of the amount. A claim is necessary when it comes to an insurance policy. It is a form of communication between you and the insurance company about the amount you incurred during hospitalization.

• Co-payment

Whenever the insured files for a claim, there is a specific amount, which has to be borne by you. You will have to incur the costs before an insurer plays his role in the policy. This particular amount that you bear is known as a co-payment. It is shown as a percentage of the total amount of the claim you make. You need to understand the terms of co-payment before you buy health insurance. This will be an additional amount, which you will be incurring, apart from the premiums, which you pay for the policy.

• Cumulative bonus

Very similar to no claim discounts, a cumulative bonus is a bonus you receive when you have a claim free year. For every claim free year, you will receive a cumulative bonus and the sum insured will increase by about 5%. You also need to keep in mind that this bonus is subject to a minimum amount, which will never exceed 50 percent of the capital amount insured. In addition, the policy should be renewed consistently and on time. The bonus will increase your sum insured with each passing claim free year.

• Deductible

Many policyholders get confused with this term. A deductible is the amount of loss, which is borne by the insured. A deductible can be a specific amount of money or a specific percentage of the claim amount and this varies from one policy to another. If you have a bigger deductible, your premium amount will be lower, and vice versa.

• Pre-existing condition

An integral part of health insurance, a pre-existing condition is a medical condition of an individual that is excluded from the cover. This occurs when the insurance provider believes that the condition existed much before the insurance cover was purchased. Depending on the type of pre-existing condition, the terms of the policy will be established. If the insurance provider believes that the pre-existing condition is significant to the policy, it might refuse to cover you for the same or might ask you to pay a higher premium amount for the policy. You cannot hide this condition from the insurance company because you will have to go through a medical check-up at the time of purchase of the policy.

• Network

When it comes to a health insurance policy, a network consists of a group of doctors or hospitals, which are contracted to provide the services to customers of the insurance providers. They charge less than the usual amount and are a part of the insurance provider’s network. This network could consist of a large market or a large number of health care services. When you are insured with a service provider, you have to pay less for using the services of a network provider.

• Sum insured

When you purchase online health insurance, you will have to determine the sum insured for the same. It is the payout amount, which your insurer will be liable to pay in case an eventuality occurs. This is based on the principle of indemnity. If your sum insured is INR 5 lakh and if you are hospitalized and bear expenses amounting to INR 3.5 lakh, the insurance company will have to pay you INR 3.5 lakh. Your sum insured should be carefully determined by you keeping your current health and financial needs in mind. It will be the sum that the insurer will be liable to pay you in case of hospitalization.

• Waiting period

If an individual signs up for a health insurance policy, he has to wait for a specific period of time after which the benefits will come into effect. This is known as a waiting period. In the case of pre-existing conditions, there is a waiting period of four years, which will be applicable to all the individuals.

Whether you are looking for a plan for yourself or for health insurance plans for family, you need to research the market and choose one that is apt for your needs. Depending on your current health and age, you can also opt for a critical illness cover in order to ensure that you have a comprehensive cover from all types of illnesses.