Health Insurance Plans: Types of Health Insurance in India

Insurance, and Health Insurance, in particular, is undoubtedly one of the most underrated investment avenues, especially among youth.

These trying times have made all of us realize the importance of our health. Many have begun to prioritize their own and their loved ones’ health and adopt mindful practices to ensure a healthy work-life balance. To aid this process, an appropriate health insurance policy is very crucial. Today’s article will help you understand all the nuances of a health insurance policy.

What is a Health Insurance Policy?

A Health Insurance policy is a contract between an insurance company and an individual, wherein the former agrees to indemnify the latter with respect to any medical expenses incurred, provided that those expenditures are included in the contract.

In simpler terms, health insurance policies provide financial assistance to policyholders in case of an unforeseen ailment or medical emergency. For a long time, in India, health insurance policies covered only physical ailments. But recently, psychological disorders have also been included in the list. 

As these policies deal with a subjective element like health, a single type would not cater to everyone’s needs. The health insurance market has evolved over time to bring in innovative policies to cater to mass requirements.

Types of Health Insurance Plans

There are various kinds of plans available in India. Let’s look at each of them in detail.

Individual Health Insurance

This type of insurance plan provides coverage for an individual. The premium is based on factors like age, medical history, lifestyle habits, etc. It covers all kinds of medical expenditures like hospitalization, surgeries, room rent, and other costs. Though this is primarily for an individual, one can benefit from this plan by adding other members like kids, spouse, or parents. An additional amount of premium is to be paid. The sum assured of all the members is independent of each other. 

Family-Floater Health Insurance

This type of plan comprehensively covers a family, including children, spouse, parents, or any other dependents. The sum insured is cumulative, and the premium depends on the age of the eldest member of the family. The premium of a family floater and health insurance plan is slightly cheaper than an individual plan. As the sum insured is for all the members, one must rationally decide whether to opt for a family floater plan or not. 

Group Health Insurance

This is one of the most common perquisites that an employer or company provides to its employees. These come with a low-cost premium. These plans are also not as extensive as the other plans available. The employer can also extend this benefit to the employee's family members by paying an additional premium. Also, the day the employee leaves the organization, the insurance plan is terminated. 

Senior Citizen Health Insurance

As the name suggests, an exclusive health insurance plan for individuals aged above 60 is known as a Senior citizen health insurance plan. Needless to say, the premium to be paid on such plans are higher. One can purchase this plan up to the age of 70, with lifetime renewal. Most insurers insist on a full body check-up before selling this plan to keep a record of any underlying issue.

Critical Illness Insurance Plan

The critical illness insurance plan provides coverage for various diseases like cancer, kidney failure, stroke, paralysis, multiple sclerosis, and other similar chronic diseases. The list of diseases covered is pre-determined when purchasing the insurance plan. A lump sum is paid on the diagnosis of any other covered illness. No hospitalization is required for claiming the amount.

Hospital Daily Cash Benefit Plan

In this plan, the insured party is paid a lump sum amount for each day of hospitalization. The amount is pre-determined. It is determined while the parties enter into the insurance contract. So if an amount of Rs.10,000 per day is fixed, that amount will be paid irrespective of the actual expenditure of hospitalization incurred.

ULIPs

Unit linked investment plans or ULIPs are unique investment products that provide coverage for your health and help you invest a part of your surplus funds. So the premium you pay is divided into two portions. One is allocated towards the health insurance plan, and the other is invested in a combination of debt and equity. There are various kinds of ULIPs that one can choose from.

Personal Accident Plan

This type of plan indemnifies one’s expenditure after an accident. This usually covers three kinds of events, partial disability, full disability, and death due to accident. 

Maternity Insurance Plan

The maternity insurance plan covers all the pre-natal and post-natal expenditures along with delivery and ambulance charges. A baby cover can also be purchased as an add-on that provides coverage for the baby till a certain age. This plan can also be taken as an add-on to the basic health insurance policy. 

How to Choose a Health Insurance Policy?

The choice of policy is, of course. very subjective and depends on one’s preference and health condition. But there are certain common factors that one needs to consider before purchasing a health insurance policy. So here’s the list (in no specific order).

a. Maximum Renewal

A health insurance policy provides the benefit of renewing the policy. Certain plans allow renewal up to the age of 65. But other plans allow lifelong renewal.

b. Type of Coverage

As discussed, there are individual plans and plans for the entire family. Individual plans are designed specifically as per the requirements. But if there are dependents, a family plan could be preferred.

c. Sum Insured

One might tend to choose the plan that provides the maximum amount of sum insured. But it is also to be considered that premiums payable on such plans are higher. Therefore, one needs to choose rationally based on their requirements.

d. Total Amount

The amount of medical expenditure is on a steady rise. To combat this, most insurers provide a facility to increase your total sum insured over a period of time. This is one important factor to be considered.

e. Premium 

When taking up an insurance policy, premium becomes a recurring expenditure. One should be mindful and analyze the amount of their funds that can be expended towards the insurance plans and then decide on the plan.

Pros and Cons of Health Insurance

There are various kinds of policies available in the market to suit one’s requirements. Most insurers provide cashless facilities, wherein the policyholder need not pay the hospital bills; the insurance companies directly settle them. Also, most plans provide not only medical coverage but also provide tax benefits. The premium paid on such a policy is deductible under Section 80 C of the Income Tax Act. 

There are certain cons to this as well. If one is suffering from a pre-existing illness, health insurance plans might not provide coverage for it. The sum to be claimed is limited to the pre-determined limit, irrespective of the actual medical expenditure. Also, plans like ULIPs have a lock-in period of 3 years.

The Bottom Line

It is rightly said, “Health is not valued until sickness comes.” To combat this psychology of humans, the concept of health insurance was brought into existence. Many companies currently provide this facility with varied benefits and costs. It might become slightly tricky for one to choose among the lot.

But considering certain basic factors and the requirements of an individual would help one choose the best policy and prepare for a stormy day.

Health insurance is a necessity - a bare minimum.

Get yourself & your family insured.