Health insurance is a type of insurance that covers medical expenses that arise due to an illness. These expenses could be related to hospitalization costs, cost of medicines or doctor consultation fees.
Types of Health Insurance:-
1. Mediclaim Plans
Mediclaim or hospitalization plans are the most basic type of health insurance plans. They cover the cost of treatment when you are admitted to the hospital. The payout is made on actual expenses incurred in the hospital by submitting original bills. Most of these plans cover the entire family up to a certain limit.
2. Critical Illness Insurance Plans
Critical Illness Insurance Plans cover specific life-threatening diseases. These diseases could require prolonged treatment or even change in lifestyle. Unlike hospitalization plans, the payout is made on Critical Illness cover chosen by the customer and not on actual expenses incurred in the hospital. The cover gives the flexibility to use the monies for changing lifestyle and medicines. Also it's a substitute for income for the time you could not resume work due to illness. Payout under these plans are made on the diagnosis of the disease for which the original medical bills are not required.
Why do you need Health Insurance now?
No one plans to fall ill or get hurt, but a serious illness can strike anyone at any time. The cost of treating the illness can cause severe financial strain on the savings you have accumulated over time. This means that you might have to compromise on providing your child the best quality education or defaulting on your home loan payments. Today, the cost of medical treatment is continuously rising.
For e.g., Herceptin, a cancer medicine costs approximately 1,10,000 for a vial of 440 mg. Depending on the weight, a patient usually requires 17-19 bottles for treatment over a year . That's 18 - 20 lakh just for the medicine~. Then add hospitalization costs, doctor consultation fees, chemotherapy costs, etc. and your overall expenses could exceed 25 lakhs. These costs which are already very high are increasing every year. Most smart people have taken necessary precautions to insure their health as soon as possible. Health insurance is a living benefit, where you would need monies at the time of dire need. One disease can drain out all the savings you have made for your children's education, marriage, for buying a house or even retirement. You would not want your family's dreams to get shattered just because of an illness, especially when you could have protected yourself financially. It is beneficial to take a health insurance policy when you are young and healthy. As you get older, not only does your premium increase, but you also stand a chance of being denied a health cover by the insurance company.
How to choose a good health insurance plan?
Anybody who has a health insurance policy will tell you that buying one is one of the smartest financial decisions by any earning individual. Now, that you have decided to buy a health insurance policy, you need to know how to select a good health insurance plan that will take care of all your needs. Here is a list of benefits any good health insurance plan should offer you:
• Protection against a large number of critical illnesses
• Flexibility to choose your health cover
• No increase in premiums during the policy term even if your health condition changes
• Long policy term that covers you even in your old age
• Large hospital network for easy access to medical treatment
Should I buy a Mediclaim plan or a Critical Illness Insurance plan?
A Mediclaim plan will either reimburse all your hospitalization expenses or settle the hospital bills via a cashless facility. With a Critical Illness Insurance plan, you will receive a lump-sum payout on the detection of a critical illness. You don't have to be hospitalized for the same. If you are unable to work because of the illness, then you can use the amount as a substitute for your monthly income. You can even use the money to cover expenses for doctor visits, medicine purchases, medical tests or any other expense that might arise during this time. That is why you need both – a Mediclaim plan to cover your hospitalization expenses and a Critical Illness Insurance plan to cover your loss of income and other expenses that arise due to an illness.
3. Top-Up Health Insurance Plan
A top-up health insurance plan is an insurance product that provides you medical insurance in addition to your regular health insurance plan or a group mediclaim policy. Therefore, such a plan enhances the degree of financial security you have against different health-related concerns.
A health insurance top-up plan works much the same way as your basic health insurance plan, albeit with a lower premium burden, making it affordable. You must not confuse a top-up health insurance plan with a health insurance rider for a specific illness such as a critical illness rider or a personal accident rider.
A health insurance rider can only be purchased as an additional cover with your basic health insurance plan, whereas a top-up health insurance policy can be purchased as a standalone plan. Therefore, a top-up plan can be used both as an individual mediclaim health insurance plan and an added cover for your regular health insurance plan
Types of Health Insurance Top-up Plans in India
There are two types of health insurance top-up plans available in India, namely a top-up plan and a super top-up plan. Both types of health Insurance plans and their workings have been discussed below.
1. Top-up Health Insurance Plan
A top-up health insurance plan provides you additional health insurance coverage on a per claim basis. You can avail of the sum insured under such a plan only if the claim amount is more than the base health insurance plan's sum insured.
For example, let's say you have a base health insurance plan with a sum insured of ₹5 lakhs and a top-up health insurance plan with a sum insured of ₹7 lakhs. If you have already made a claim of, say, ₹5 lakhs on your base health insurance plan but subsequently need to file another claim amounting to ₹3 lakhs, you cannot file a claim under your top-up plan since the amount of the second claim is below the sum insured of the base plan.
For you to be able to file a claim under your top-up health insurance plan, the amount of the claim has to be higher than the sum insured under the base plan, which is ₹5 lakhs in this example. It is important to note that a top-up plan covers only one claim that is in excess of the claims made under your base health insurance plan.
2. Super Top-up Health Insurance Plan
A Super Top-up Health Insurance Plan works on the principle of aggregate claims and allows you to file multiple claims. In the example cited above, for instance, if you have a super top-up health insurance plan of ₹7 lakhs in addition to a base plan of ₹5 lakhs and exhaust the sum insured under the latter in your first claim of ₹5 lakhs, the subsequent claims can be filed against the super top-up plan.
The first claim under your super top-up plan shall be settled after the deduction of your health insurance deductible. If this claim amounts to, say, ₹5 lakhs, then after the deductible of, say, ₹1 lakh has been accounted for; the claim shall be settled for ₹4 lakhs. You can file further claims against this super top-up plan but the total of these claims cannot exceed ₹3 lakhs since that is the sum insured you have remaining after the first claim of ₹4 lakhs on this plan.