What is Health Insurance: Health Insurance is one of the most important constituents of any family’s financial plan. In the recent past, it has gained some popularity yet it has not reached every family.
Health Insurance is a necessity in today’s world that provides a guard against unforeseen medical emergencies. Health Insurance (also known as Mediclaim) is one of the most important constituents of any family’s financial plan. In the recent past, it has gained some popularity yet it has not reached every family. Our usual response to buying health insurance is not very encouraging. This can be illustrated in the following short story.
What is Health Insurance – Our usual response
Anil is employed with a reputed IT company and has a good standard of living. He is married and has a 4 years old child. When Anil was talking to a financial planner, the advisor(planner) tells him about the importance of health insurance but Anil refuses, saying that his family is fit and fine. While going back home Anil sees the latest mobile advertisement outside a mobile shop and feels tempted to buy it and ends up buying the costly phone on monthly EMI.
Anil is in a highly stressful job and one day while going to the office he, unfortunately, meets with a road accident. Immediately he is taken to a nearby hospital where he is admitted for 15 days. After looking at the hospital bill Anil realizes that the amount is far more than he expected and the bill of this amount would erode a significant portion of his savings and his financial condition for the next few months will be bad.
Anil now realizes the importance of Health Insurance. He ponders instead of buying a mobile phone he should have invested in health insurance which would have helped him in an emergency situation like this.
Life is precious but is full of uncertainties. Studies reveal that medical inflation will rise by fifteen percent every year so in 10 years’ time the cost of any medical treatment will rise three times than today. What if we don’t have sufficient funds in your savings account to pay the hospital bill then we will have to borrow funds.
All such things can be avoided by simply investing in Health Insurance policies to safeguard ourselves from uncertainties.
Benefits and Importance of Health Insurance
1. Complete Treatment
Health Insurance plans cover the entire cost of treatments. Treatment of any illness involves the following:
- Doctors consultation fees,
- Cost of medicines,
- Charges for medical tests,
- Specialist charges
- Surgery(if any) charges
- Ambulance Charges
- Room(bed) charges etc
All such expenses are entirely covered in health insurance plans.
2. Cashless Facility
All Health Insurance plans come with the benefit of Cashless treatment facility at network (impaneled) hospitals. In this facility, the patient is required to pay for anything in the hospital during the course of hospitalization. These expenses are borne by the insurance company. Even expenses for pre-hospitalization and post-hospitalization are also reimbursed to the policyholder on the production of bills. This facility, however, is not available at non-networked where expenses are reimbursed on the submission of bills.
3. Protection of Savings
One importance of Health Insurance is that it protects our savings from getting eroded at the time of medical emergency. Emergencies are unpredictable and with the rising cost of medicals, they can hit our savings very badly. Health Insurance saves us from such kind of threats to our finances.
4. Tax Benefits
Premiums paid for Health Insurance Plans are exempted from income tax. Amount paid for premium is exempted up to Rs. 25000/- under sections 80(D) of the income tax for individuals below 60 years. This limit rises to Rs. 50000/- for senior citizens. The benefits are also available for premiums we pay for our parents.
Health Insurance (Mediclaim) – Different Types
Health Insurance plans are normally valid for one year. Some companies have also started to offer three and five years plans. Health Insurance plans are to be renewed by paying the required premium before expiry.
Let us explore different types of Health Insurance Plans
- Individual Health Insurance Plans – Individual Health Insurance Plans cover the health expenses of an insured individual.
- Family Floater Health Insurance plans – If an individual wants to cover his family (self, spouse, children, and parents) then family floater health policy is the best option available. Family Floater Health Insurance plans cover the insured family member and the coverage amount is available as a sum for the whole family. If one of the family members is hospitalized and some certain amount is spent from the coverage amount from the health insurance plan, then that amount is reduced from the available coverage amount for that particular year. The coverage amount is reinstated on the renewal of the policy. The premium of the floater health plan is determined by the age of the eldest member of the family.
- Senior Citizen Health Insurance Plans – Insurance companies create special plans for senior citizens. Generally, the premium for such health plans is higher as compared to normal health insurance plans. At old age, health issues arise more frequently and in order to meet such expenses, special plans are created.
- Critical Illness Health Insurance Plans – Critical Illness Health Insurance plans cover medical expenses for critical diseases like cancer, heart attack, etc. These policies normally pay the coverage amount on the diagnosis of disease.
- Group Health Insurance Plans – Group Health plans are taken by the employer for employees. The features of this policy are the same for every insured individual and premiums are normally lower.
- Top-up Health Insurance Plans – Top-up health insurance plans give extra coverage to the policyholder in addition to the existing normal health insurance plans. The policy is triggered only when the coverage of the normal health policy is exhausted.
Thus it can be said that Health Insurance is a must-have policy for every individual. Health Insurance acts as our guard to save us from medical uncertainties. Health Insurance is a basic requirement for anybody looking for protection of family and savings.