What is Health Insurance?

Health insurance covers medical expenses during hospitalisation. The insurance company pays the medical cost of the insured if the insured becomes sick or injured due to accidents or other covered causes. Depending on the conditions covered and the benefits and choices of treatment available on the policy, the insurance may pay for medicine, visits to the doctor, hospital stays or other medical expenses.

Why is Health Insurance needed?

A medical emergency can strike at any time, be it an accident or a disease. Our present lifestyles of excessive stress, travelling, working hours, and unhealthy eating habits make us very susceptible to illnesses. Very often families are faced with financial crises, where existing savings and future family goals are compromised to arrange for such medical expenses. Taking an adequate medical and health insurance would help you cover your medical expenses, and can additionally repay you for your lost income during the period of recovery.

How much Health Insurance should be taken?

‘How much health coverage you need’ is not an easy question to answer. Is one lakh sufficient, or five? Its difficult, especially since you can never know what the medical emergency could be and when it could happen. But when it comes to major illnesses, it sure does cost a lot. The amount of coverage you take should be able to cover for good medical treatment and hospitalisation, but it must also be enough to make sure you do not compromise on your savings, monthly expenses, or any future goals. One way of arriving at this amount is to find the maximum health cover that you can afford, after covering for expenses needed for major illnesses that are most likely to occur.

Health Insurance products available in the market:

• Individual Policies : Individual health insurance is a policy that a person buys on their own. (It is not one that they receive as part of a group, or from their employer taking a policy for all employees of the organisation.) Individual health insurance policies can be bought by a person for them self as per their requirements. The insured alone can avail the benefits up to the pre-determined sum insured.
• Group Policies : Persons working in the same organisation or having the same occupation, etc. can form a group, and the health insurance company collectively insures the group. Group insurance policies are most used in organisations, where they form a group of all the employees and get them collectively insured where each member is then insured for a particular cover amount. The premium that is paid per person is far less than the premium of an individual policy.
• Floater Policies : Floater policies cover for an entire family, including the spouse, dependent parents and children. The sum insured for the entire family is pre-determined, so whenever there is a medical claim for any of the family members, the claim is made from that total sum insured. For example, if there is a family floater policy with sum insured of Rs. 5 Lakh and one member in the family is hospitalised, using about Rs. 2 lakh for his treatment, the remaining 3 lakh can be used to insure the other family members. Hence the family floater covers the medical expenses of anyone in the family who falls ill.