Common Terms in Health Insurance

Here’s a detailed explanation of common terms in health insurance in India, with definitions and examples for better understanding:

1. Premium

Definition: The amount of money an insured individual pays to the insurance provider to maintain their health insurance policy.

Example: If you purchase a health insurance plan with a ₹10 lakh sum insured and a premium of ₹15,000 annually, you need to pay ₹15,000 each year to keep your policy active. The premium increases every year or after you cross a certain age bracket.

2. Sum Insured

Definition: The maximum amount that an insurance company will pay for medical expenses under your health insurance policy.

Example: Rani has a health insurance policy with a sum insured of ₹5 lakh. If she incurs medical expenses of ₹6 lakh, the insurance company will only cover up to ₹5 lakh, and Rani will be responsible for the remaining ₹1 lakh.

3. Deductible

Definition: The amount the insured must pay out-of-pocket before the insurance coverage starts.

Example: If Neha's policy has a deductible of ₹2 lakh, and her hospitalization bill is ₹5 lakh, she will pay the first ₹2 lakh herself. The insurer will cover the remaining ₹3 lakh.

4. Co-Payment

Definition: A percentage of the total claim amount that the insured has to pay after the deductible has been met.

Example: If Amir’s plan includes a 20% co-payment, and he has a claim of ₹10 lakh (after meeting the deductible), he would pay ₹2 lakh, while the insurer would cover ₹8 lakh.

5. Waiting Period

Definition: The time period during which specific conditions or diseases are not covered by the insurance policy after it is purchased.

Example: Kumar's policy states a waiting period of 2 years for pre-existing conditions. If he has hypertension and files a claim within those 2 years for diseases related to hypertension, it will be rejected.

6. Exclusions

Definition: Specific conditions or circumstances not covered by the health insurance policy.

Example: If Pooja’s policy excludes coverage for cosmetic surgery, any claims related to such procedures will not be paid by the insurer.

7. Network Hospitals

Definition: Hospitals that have an agreement with the insurance company to provide cashless treatment.

Example: If Suresh gets admitted to a network hospital, he doesn't need to pay upfront in case of cashless treatment; the hospital bills the insurer directly.

8. Cashless Facility

Definition: A provision that allows policyholders to get treatment in network hospitals without making immediate payments, as the insurer directly settles the bills.

Example: During an emergency, Anjali is hospitalized in a network hospital. With cashless treatment, she shows her insurance card and does not pay any cash upfront; the hospital claims directly from her insurer.

9. Maternity Coverage

Definition: A benefit included in some health insurance plans that covers expenses related to pregnancy, childbirth, and newborn care.

Example: If Priya’s policy includes maternity coverage and her delivery costs are ₹50,000, she can claim this amount under her insurance policy. There is a maximum limit of sum insured in case of maternity expenses.

10. Pre and Post-Hospitalization Expenses

Definition: Medical costs incurred before and after hospitalization for a specified period defined by the policy.

Example: If Raj's policy covers up to 30 days of pre-hospitalization expenses and 60 days post-hospitalization, he can claim costs for the tests done 20 days before his surgery and for follow-up check-ups in the two months after being discharged.

11. Day Care Procedures

Definition: Medical treatments that do not require a 24-hour hospital stay and are conducted within a few hours.

Example: Ashok undergoes a laparoscopic procedure that lasts a few hours; he can be discharged the same day. His health insurance covers this day care procedure as per policy terms.

12. Domiciliary Treatment

Definition: Medical treatment received at home rather than in a hospital, typically for conditions where hospitalization is not feasible.

Example: If Gita is bedridden and requires nursing care at home for her illness, her health policy may cover these treatment costs, depending on the policy’s terms.

13. Blacklisted Hospitals

Definition: Hospitals that are not covered by the insurer for any claims due to past issues or irregularities.

Example: If a particular hospital has been found to inflate bills or has had complaints against its treatment, it may be blacklisted, and any treatment obtained there will not be reimbursed by the insurer.

14. Free Look Period

Definition: A specified period during which a new policyholder can review their policy and opt to cancel it for a full refund if dissatisfied.

Example: If Ram purchases a health insurance policy and within 15 days realizes it does not meet his expectations, he can cancel the policy and get a full refund of the premium paid, as long as he does so within the free look period.