What Is Health Insurance And Different Types of Health Plans

In general, insurance has been a life saver, whether it is health insurance, life insurance, property or wealth insurance.

What Is Health Insurance And Different Types of Health Plans

There are a lot of unknowns in life, unfortunately, when we wake up in the morning we don’t know what’s going to happen to us. Something bad or good might happen. Everything changes if there are people dependent on you and naturally if something health-related issue happens to you then people dependents on you may also suffer financially and you may need money and there should be something for you to rely on.

I mean, facing a health situation can be detrimental anyway, adding sky-rocketing financial expense can cripple anyone easily. Therefore, to avail the best medical treatment without making a hole in your pocket a health insurance policy becomes no less than a necessity.

It is an imperative decision that requires you to be careful while buying health insurance. Let’s understand this in little more detail.

What Is Health Insurance?

Insurance simply means that “an arrangement by which a company or the state undertakes to provide a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a specified premium.”

That’s very generic term. However, health insurance means that an insurance company will compensate you for the medical expenses that you incur in case of acceptable health incidents.

Health Insurance is like protection which mitigates unexpected financial burden arising out of an accidental hospitalization or illness”. It can be one of the sources of finance to rely on during such times.

The concept in simple, when you sign up for health insurance, you would agree to pay an X amount of premium (either yearly or monthly) and that gives a Y amount of coverage.

For eg., if you 10,000 INR a year, you would most likely be covered for 5,00,000 INR. Which means that when you incur medical expenses the Insurance company would either pay upfront to the hospital for the charges incurred, or you can pay for the charges first and look for reimbursement through you insurance company.

This is just a simple demonstration of how an insurance policy works, there are various aspects to what is covered and what’s not. That’s a subject for another blog that we will soon cover.

If you think you don’t need health insurance, I’d want you to take a look at this infographics.

If you think you don't need health insurance, I'd want you to take a look at this infographics.

Types of Health Plans Available

Although most insurance companies tend to offer similar plans, however, the individual needs for an insurance could be different.

You would probably buy “A” category insurance and I would buy a “B” category. Let’s look at the basic differences and what helps you decide which you should consider.

1. Indemnity Health Insurance

Indemnity health insurance plans are traditional healthcare plans that covers your hospitalization expenses up to the sum insured.

They are further divided into the following:

a. Individual health insurance

As the name suggests an individual health plan offers coverage on an individual basis. However, one can add another member including spouse, children, parents, etc. by paying an extra premium. The premium is slightly higher as compared to a family floater plan because of the comprehensive coverage.

b. Family Floater Health Insurance

In a family floater plan, the coverage is offered to all the family members including spouse, children, parents and another dependent member at a single premium. Usually, the premium is based on the age of the eldest family member. This policy will cover all family member under a single sum assured.

c. Senior Citizen Health Insurance Plan

These plans are designed for people above the age of 60yrs. Elderly people are more vulnerable to serious illness, and the cost of treatment for such disease is also expensive.

d. Group Health Insurance Plan

Group health insurance is usually provided by an employer to its employees. Moreover, the policy will get terminated as soon as you leave the organization. Therefore, it is better not to rely on your corporate health insurance entirely and buy a separate health insurance plan.

2. Defined Benefit Plans

It pays for your hospital bills up to the sum insured. The basic concept is still the same, however, these might include additional features and benefits that specifically defined in the Insurance policy.

a. Critical illness plan

A critical illness policy covers life-threatening diseases such as cancer of specified severity, kidney failure, stroke, paralysis, etc. The cost of treatment for such conditions is quite high, and it may require multiple hospital visits over a long period.

Apart from hospitalization, there are various other expenses, including doctor visits, chemotherapy, etc. The sum insured amount is paid in a lump sum that can be used to cover all the medical costs. 

b. Personal Accidental Plan

This policy covers the owner/driver against and accidental injury or death.

c. Hospital Daily Cash Benefit Plans

This type of medical plan offers a lump sum amount for each day of your hospitalization. The sum assured is fixed at the outset and would remain fixed irrespective of the expenses incurred. 

Benefits of buying health insurance at a young age:

As a matter of fact, getting insurance at a young age is often ignored. We always believe that since we are young, we can’t be expecting any health issues so soon in our lives.

On the contrary, the age bracket of people suffering from health issues have gradually narrowed. May be 30-40 years, a heart attack would probably be experienced by someone that’s at the age of or over 60 years. However, these circumstances are rapidly changing.

It takes very little to get health insurance at an early age, when the worst hits you, this can save you from so much financial stress. Most people end up using life savings to deal with medical expenses.

There are several benefits to getting a health plan at an early age.

Firstly, it will be a lot easier to get insurance. Health insurance companies generally are vary when someone looks for insurance who are older in age. They are likely to have some pre-existing health condition which can either disqualify you from getting an insurance or a list of illnesses may be excluded. Leaving you partially covered.

Secondly, a general industry expectation is that people at young age are less likely to fall sick, comparatively, they tend offer wide range of benefits at a significantly lower premium.

In addition, you are also making sound financial decisions. This is a fundamental habit for any financially independent person.

Conclusion

Given the current healthcare infrastructure in India, one can’t depend on ordinary hospitals. At the same time, without an insurance plan, one will not be able to afford expenses in any of the major hospitals.

Never before have Indians been this desperate looking for a hospital bed and a few deep breaths of oxygen. Conditions are very precarious. Health insurance provides financial assistance and every individual has different medical needs.

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