Health Insurance and Types of Health Insurance

Health Insurance

In mid 80’s, most of the hospitals in India were government owned and treatment was free of cost. With the advent of Private Medical Care, the need for Health Insurance was felt and various Insurance Companies introduced Health Insurance as a Product. Presently the health insurance exists primarily in the form of ‘Mediclaim policy’.

Health insurance policy is a contract between  an  insurer  and  an  individual or group, in which the insurer agrees to provide specified health insurance at an agreed upon price (premium). Disability resulting from illness or accident may be peril to family because it not only  cuts  off income but also creates large medical expenses. Health insurance is taken as safeguard against rising medical costs. It provides risk coverage against unforeseen health expenditure that may result in financial hardship.

Types of Health Insurance

There are mainly three types of Health Insurance covers:

1. Individual Mediclaim

It covers the hospitalization expenses for an individual up to the sum assured limit

2. Family Floater Policy

It covers the hospitalization expenses for entire family up to the sum assured limit.

3. Unit Linked Health Plans

This policy combines health insurance with investment and pays back an amount at the end of the insurance terms.

Health Insurance provides following types of coverage:

Medical expenses – It covers the expenses of hospitalization/nursing home bills and doctors’ services.

Disability income – It replaces the income lost while the insured is unable to work.

claims Settlement

There are two ways by which health insurance claims are settled:

a. Cashless: The claim amount needs to be approved by the TPA and the hospital settles the amount with the TPA. (TPA or Third Party Administrator is a middleman between Insurer and the Customer)

b. Reimbursement: The insured avails himself or  herslef  of  the  treatment and settles the hospital bills directly at the hospital. The insured can claim reimbursement later on by submitting relevant bills/documents for the claimed amount to the TPA