What is health insurance? Learn the types, benefits and how a policy works in simple words, so you can choose well. Ask Insurance Kro for a free call back.
Health insurance is a contract with an insurer. You pay a premium, and the insurer pays your hospital bills as per the policy. It helps you handle a sudden illness or accident without using up your savings.
Let us look at how it works, the main types, and what to check before you buy.
How health insurance works
You choose a plan and pay a premium. This is the money you pay to keep the policy active. The plan has a sum insured. This is the most the insurer will pay in a policy year, as per the terms.
When you need treatment, you can use the policy in two ways. In a cashless claim, the insurer pays the network hospital directly, usually after pre-authorisation. In a reimbursement claim, you pay first and then claim the money back with your bills.
You still pay for some items. These can be costs the policy does not cover, a co-payment or a deductible. We explain these words below.
What a health policy usually covers
Cover differs by plan, so always read your policy wording. Most plans usually cover:
- Hospital stay and room charges, up to the plan limit
- Doctor, nursing and operation costs
- Pre and post hospitalisation costs for a set period before and after your stay
- Day-care procedures, which are treatments that do not need a full day in hospital
- Ambulance charges, in many plans
Some plans also give extra benefits, like a restoration benefit. This refills your sum insured if you use it up in the same year. Some plans give a no-claim bonus, which is usually a higher sum insured for each claim-free year.
Main types of health insurance
- Individual plan: One person, one sum insured.
- Family floater: The whole family shares one sum insured. You can read more in our guide on individual vs family floater plans.
- Senior citizen plan: Made for older people, with rules that suit their age.
- Top-up and super top-up: Extra cover that starts after a set amount of claims. This is a cheaper way to raise your cover.
- Critical illness plan: Pays when you are found to have a serious illness listed in the policy.
- Personal accident plan: Pays for injury, disability or death from an accident, as per the policy.
Words you will see in a policy
- Network hospital: A hospital that has a tie-up with the insurer for cashless treatment.
- Room rent limit: A cap on the room charge. If you take a costlier room, other charges may be cut too.
- Co-payment: A share of every claim that you pay yourself.
- Sub-limit: A cap on the cost of a certain treatment or item.
- Deductible: An amount you pay before the insurer starts paying.
- Waiting period: A time when some claims are not paid. Read more in waiting period in health insurance.
What is usually not covered
Every policy has exclusions. These can include cosmetic treatment and other items listed in the policy. Treatment for an old illness may not be paid until the waiting period ends. Always read the list of exclusions before you buy.
Why health insurance is useful
Medical costs keep going up, and illness does not wait for a good time. A policy gives you peace of mind. It helps you choose the right hospital without worry about money. Buying early is usually easier, because it helps you finish waiting periods sooner.
Health insurance is also different from a vehicle policy, but the idea is similar. Just as car insurance protects you from a big repair bill, a health plan protects you from a big hospital bill.
How to start
- List who needs cover: you, your partner, children and parents.
- Think about how much cover you may need in your city.
- Compare plans on waiting periods, room rent limits, co-payment and network hospitals.
- Tell the truth about your health in the form.
- Read the policy when it arrives. You usually get a short free-look period to return it if it does not suit you. Check the exact time in your policy.
For help with the steps, see our health insurance page or ask for a free call back. Rules and plans can change, and the policy document is always final.
FAQs
Is health insurance different from a mediclaim policy?
The two words are often used for the same thing. A policy that pays hospital bills is usually called health insurance or mediclaim. Check what each plan covers in its own wording.
Do I need health insurance if my employer gives cover?
Work cover can end when you change jobs. It may also be too small for your family. Many people keep their own plan as well.
Can I buy health insurance for my parents?
Yes. Many insurers offer plans for parents and senior citizens. Waiting periods and checks may be stricter, so read the terms with care.
What happens if I stop paying the premium?
Your policy can lapse, and a lapse can lose benefits like waiting period credit. Renew on time. Your policy shows the grace period at renewal.
This guide is for information only. Rules and policy terms can change, and the policy document is final. Please read your policy wording.