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What Is Health Insurance?

Health insurance is like financial security that you can have for unforeseen medical expenses. It is like wealth creation for your future, wherein you safeguard it by paying a small sum of money in the form of a premium for covering yourself against sickness or medical emergency.

A wide range of Health Insurance products are available in the Indian market and you should choose the best health insurance plan for you/your family so that you can have peace of mind in the future while paying huge medical bills.

Besides helping you with financial security, health insurance also helps you to have quality medical care & tax benefits too.

What benefits are covered under health insurance?

Here are some of the standard coverages/benefits covered under the health insurance policy:

  • In-patient Treatment: Whenever you are admitted to a hospital for more than 24 hours, the cost of treatment will be covered
  • Room Rent / ICU Rent: The cost of boarding/lodging a Room/ICU during your stay in the hospital
  • Nursing / Doctor Charges: When you are admitted for treatment, both nursing and doctor charges are covered
  • Pathology/Radiology/other Lab Charges: Reports like Blood, Urine, Stool, X-Ray, MRI, CT scan, Biopsy, etc. are covered
  • Day Care Treatments Where you need not be admitted for 24 hours for procedures falling in the day-care category (e.g., eye surgery)
  • Pre-& Post Hospitalisation: Cost incurred before you get admitted and after you are discharged for the specific treatment you are undergoing
  • Organ Donor: the cost of organ donation is covered
  • Ambulance: Road ambulance is covered & some products even cover Air Ambulances also
  • AYUSH: ayurvedic, Unani, Siddha & Homeopathy treatments
  • Maternity Expenses: cost of maternity/delivery is covered
  • New Born Baby Cover: coverage for newborn baby from day one

Besides the above basic coverages/benefits, the following can also be a part of the policy or as optional coverage:

  • Bonus: Whenever you have not made any claim in the previous policy year, some extra sum insured will be added to the current policy in the form of a Cumulative Bonus (CB)
  • Life-long Renewal: The insurance company will renew your policy till you are alive
  • Wellness Benefit: Varies across insurance companies; it can be mental health coach, dietician, counselor, etc.
  • Free Health Check-up: Company will pay for Preventive Health Check-up whenever you have a claim-free year(s) for a specified period
  • Portability of Insurance Company: Health insurance can be ported to other Insurance Companies during renewal with continuity of the past policies’ benefits

Types of coverage.

  • Individual: Coverage for you and your family members on an individual sum-insured basis under a single policy

  • Family Floater: Coverage for you & your family members on a single sum insured under a single policy

  • Top-up: A top-up health insurance policy provides an additional sum insured to your existing health insurance policy; however top up policy comes with a deductible limit (during each hospitalization) which must be borne by the insured before this policy activates

  • Super top-up: A super top-up health insurance is similar to top up policy but it comes with an aggregate deductible option & not based on each hospitalization basis.

  • Critical Illness: This coverage is mostly in the benefit mode and not in indemnity mode. It covers specific listed critical illnesses and the insurer pays the sum of the policy on the detection of the listed illness.

  • Senior Citizens: The policy provides cover for your parents or persons who have crossed the age of 60 years & opting for insurance for the first time. Coverage comes with some limitations in the benefits provided in the policy.

  • Diabetic Cover: The policy provides coverage for persons suffering from diabetes and in need of health insurance.

Besides the above, some other examples are Cancer Insurance, Cardiac Insurance, Dengue Insurance, Covid Insurance, etc.

What about Sum Insured/Premium/Claims?

Sum Insured offered currently ranges from 3 Lakhs up to 1 Crore and above, premium varies from company to company and is linked with the insured’s age & health condition.

Claims Procedure:

  • Cashless Treatment: Insured can opt for a Cashless facility, provided the treatment is being taken at the empanelled Hospital(s) of the Insurance Company available across the country, which provides cashless treatment.

  • Reimbursement Claims: Whenever the Insured is not eligible or not opting for a cashless facility, the insured will have to file for a reimbursement claim with the insurance company for settlement. The following are the points to be considered while filing a reimbursement claim.

    • Insured must be admitted in a hospital that is registered with the local authority i.e., Municipal Corporation or appropriate authority.

    • Hospital must have 15/10 beds if in urban area/rural area respectively.

    • Intimation should be given to the insurance company or intermediatory such as broker or agent as soon as the insured is admitted to the Hospital or within 24 hours of hospitalization. Insured can also use tollfree services to intimate the claim to the insurance company.

    • All the Medical/Diagnostic bills, Consultation papers, Test Reports, Hospital Discharge Summary, Hospital Bill/Payment Receipt, etc., in original, related to the treatment should be kept in order and ready.

    • Insured has to fill up the Claim Form, Hospital/Treating Doctor’s Form, etc..

    • All the relevant claim papers are to be arranged and submitted to the insurance company or intermediatory within the stipulated time frame.

    • Once the claim file is submitted to the insurance company it usually gets settled within 15-20 days, provided all the documents are in order.

    • Claim-approved payment is made directly to the insured’s Bank account via the NEFT process

What is not covered under health insurance?

General Exclusion is as under:

  • Expenses where in-patient treatment is not warranted and does not require hospitalization
  • First 30 days waiting period for a new policy for all treatments except accidental injury requiring hospitalization
  • For specified illnesses & pre-existing diseases, the waiting period varies from company to company for a new policy
  • Stand-alone diagnostic charges for evaluation & investigation
  • Obesity / Weight Control
  • Cosmetic or Plastic Surgery
  • Dental treatment & circumcision, unless required in view of an accident
  • Breach of law
  • Treatment for alcoholism, drug or substance abuse, or any addictive condition and consequences
  • Dietary supplements, protein, nutrients treatment
  • Unproven treatment
  • Congenital External disease or defects or anomalies, stem cell therapy
  • Intentional self-injury, suicide, attempted suicide, etc.
  • Any treatment outside the Indian territory.
  • Non-medical expenses as approved by IRDAI .

    • Above are only indicative exclusion and not exhaustive; insured must read final print of policy wordings to understand all the exclusions applicable.

In Personal Accident Insurance

For all information change existing to below:

Definition

Personal accident is a benefit policy and covers accidental death, accidental disability (permanent/partial), and Temporary total disability and may also have add-on coverage of accidental medical expenses, funeral expenses, educational expenses, etc. depending on the particular product.

The peril covered under the PA policy is “Accident”.

Definition

An accident is defined as anything sudden, unforeseen, unintentional, external, violent, and by visible means

The personal accident insurance policy provides that, if at any time during the currency of this policy, the insured (person who has taken the policy) shall sustain any bodily injury resulting solely and directly from an accident caused by external violent and visible means, then the insurance company shall pay to the insured or his legal personal representative(s), as the case may be, the sum or sums set forth in the policy if resulting in specified contingencies such as death, permanent disablement, etc.

Important definitions of the bold words mentioned above are:

  • Bodily injury: Any disease due to an accident is known as bodily injury but does not include any disease due to natural cause. Mental shock or grief does not amount to an accident unless and until some physical injury is caused.
  • Solely & Directly: The bodily injury shall have been caused solely and directly by an accident and is independent of any other cause, resulting in death or disablement
  • External, violent and visible means:The cause of the accident i.e. the means must be within the definitions as a whole but the result may not be external. In other words, the means or cause of an accident must be within the definitions but the result or effect need not be external or visible so long as it is bodily injury e.g., the injury may be internal i.e. inside the body but the result must be death or disablement.
  • Disablement: When a person is prevented by an accidental bodily injury from engaging in any occupation or business, he is said to be disabled, and his inability to attend to any occupation or business is called disablement.

COMPENSATION/COVERAGES:

In a PA policy, while the death benefit is a payment of 100% of the sum insured, in the event of disability, compensation varies from a fixed percentage of the sum insured in the case of permanent disability to weekly compensation for temporary disablement.
Weekly compensation means payment of a fixed sum per week of disablement subject to a maximum limit in terms of the number of weeks for which the compensation would be payable

Death: If a person dies due to an accident, the risk is covered under the personal accident policy. His legal heirs are entitled to get the sum insured. For example, if the sum insured is Rs 1.00 lakh, in case of death, his legal heirs will get Rs 1.00 lakh as compensation.

Disability: Disability can be classified further as follows:

  • Permanent Total Disability (PTD)
  • Permanent Partial Disability (PPD)
  • Temporary Total Disability (TTD)

Permanent total disability (PTD): means becoming totally disabled for a lifetime viz. paralysis of all four limbs, comatose condition, loss of both eyes/both hands/both limbs or one hand and one eye or one eye and one leg or one hand and one leg.

Permanent Partial Disability: means becoming partially disabled for a lifetime viz. loss of fingers, toes, phalanges, etc. The compensation will be based on the percentage of the disability as defined in the policy coverages.

Temporary total disablement: means becoming totally disabled for a temporary period of time. This section of cover is intended to cover the loss of income during the disability period. The temporary period may be days, weeks, months, or even years. The payment will be on weekly basis.

The client has the choice to select only death cover or death plus permanent disablement of or death plus permanent disablement and also temporary total disablement.

Add on Cover (differs for different companies based on respective policy guidelines):-

Carriage of dead body & Funeral expenses: The expenses incurred for the carriage of the dead body of the insured due to an accident to the place of residence are reimbursed. This amount will be over & above the sum insured.

Education amount for children: In case of death or permanent disablement of the insured person, the insurance company also pays the education for two children if their age is below 25 years.

  • Hospital cash allowance
  • Ambulance expenses
  • Burns

Medical Expenses: The medical expenses cover is as follows:

  • A personal accident policy can be extended by endorsement, on payment of an extra premium to cover medical expenses incurred by the insured in connection with the accidental bodily injury.
  • These benefits are in addition to the other benefits under the policies.
  • It is not necessary that a person has to be hospitalized.

Premium calculation factors:

The underwriting considerations for personal accident policies are discussed below:

Rating:

In personal accident insurance, the main factor considered is the occupation of the insured. Generally speaking, exposure to personal accidents at home, on the street, etc. is the same for all persons. But the risks associated with a profession or occupation vary in accordance with the nature of the work performed. For example, an office manager is less exposed to risk at work than a civil engineer working at a site where a building is being constructed.
It is not practical, to fix a rate for each profession or occupation.

Hence, occupations are classified into groups, each group reflecting, more or less, similar risk exposure. The following system of classification is simple and found to be feasible in practice. Individual companies may have their own basis of classification.

Classification of Risk:

Based on occupation, the risks associated with the insured person may be classified into three groups:

Risk Group I

Accountants, Doctors, Lawyers, Architects, Consulting Engineers, Teachers, Bankers, persons engaged in administration functions, and persons primarily engaged in occupations of similar hazards.

Risk Group II

Builders, Contractors, and Engineers engaged in superintending functions only, Veterinary Doctors, paid drivers of motor cars and light motor vehicles, and persons engaged in the occupation of similar hazards. All persons engaged in manual labour (except those falling under Group III), cash-carrying employees, garage and motor Mechanics, Machine operators, Drivers of trucks or lorries and other heavy vehicles, professional athletes and sportsmen, woodworking Machinists and persons engaged in occupations of similar hazards.

Risk Group III

Persons working in underground mines, explosives magazines, workers involved in electrical installation with high tension supply, Jockeys, circus personnel, persons engaged in activities like racing on wheels or horseback, big game hunting, mountaineering, winter sports, skiing, ice hockey, ballooning, hang gliding, river rafting, polo and persons engaged in occupations/activities of similar hazard.

Risk groups are also known in the form of ‘Normal’, ‘Medium’, and ‘High’ respectively.

Age Limits:

The minimum and maximum age for being covered and renewed varies from company to company. Generally, a band of 5 years to 70 years is the norm. However, in the case of persons who already have a cover, policies may be renewed after they complete 70 years also, but up to the age of 80 subjects to a loading of the renewal premium.

No medical examination is usually required for renewal or fresh cover.

Sum Insured :

The sum insured in a personal accident policy has to be fixed with caution, as they are benefit policies and not subject to strict indemnity. Care should be taken to consider income derived through ‘gainful employment’. In other words, income that will not be affected by accident to the proposer should not be considered while determining the sum insured.

As practices of fixing the S.I. varies among insurers/underwriters, the exact amount for which the cover could be granted depends on the underwriters. However, the general practice is that the cover granted should not exceed the equivalent of 72 months / 6 years’ earnings of the insured.

This restriction is not strictly applied if the policy is for capital benefits only.
For temporary total disablement cover, however, it should not happen that in the event of compensation payable, the same is disproportionate to his earnings during the same period. If the cover is for weekly compensation for TTD, the sum insured usually does not exceed twice his/her annual income.

While giving cover to persons who are not gainfully employed e.g. housewives, students, etc. the insurers make sure that they provide for capital benefits only and that no weekly compensation is provided.

Types of policies other than individual policy cover

Family Package Cover
For children and non-earning spouse, the cover is limited to death and permanent disablement (total or partial). However, based on individual company’s norms, the Table of Benefits may be considered. Some Companies allow TTD cover to a non-earning spouse also up to a particular limit.

Group Policies
A group discount is allowed off the premium if the number of insured persons exceeds a certain number say 100. Group policy however may be issued when the number is smaller, say 25 but without any discount.

Normally, policies on an unnamed basis are issued only to valued clients, where the identity of the member is clearly ascertainable beyond doubt.

Claim documentation:

Death claim

  • a) Duly completed Personal Accident claim form signed by the claimant’s nominee/family member
  • b) Original or Attested copy of the First Information Report. (Attested copy of FIR / Panchnama / Inquest Panchnama)
  • c) Original or Attested copy of Death certificate.
  • d) Attested copy of Post Mortem Report is conducted
  • e) Attested copy of AML documents (Anti-money laundering), for name verification (passport / PAN card / Voter’s ID / Driving license) & for address verification (Telephone bill / Bank account statement / Electricity bill / Ration card).
  • f) Legal heir certificate containing affidavit and indemnity bond, both duly signed by all legal heirs and notarized

Permanent Total Disability (PTD) and Permanent Partial Disability (PPD) Claim

  • a) Duly completed Personal Accident claim form signed by the claimant.
  • b) Attested copy of First Information Report if applicable.
  • c) Permanent disability certificate from a civil surgeon or any equivalent competent doctor certifying the disability of the insured.

Temporary Total Disability (TTD) Claim

  • a) Medical certificate from the treating doctor mentioning the type of disability and disability period. Leave certificate from employer giving details of the exact leave period, duly signed and sealed by the employer.
  • b) Fitness certificate from the treating doctor certifying that the insured is fit to perform his normal duties.
  • The above list is only indicative, further documents (including photographs of scar marks, site of the accident, etc.) may be required depending on particular facts of the case, especially the cases with suspected fraud angle to be investigated.

EXCLUSIONS (NOT COVERED UNDER PERSONAL ACCIDENT POLICY)

No compensation is payable in respect of death, injury, or disablement of the insured

  • (i) From intentional self-injury, suicide, or attempted suicide.
  • (ii) Whilst under the influence of intoxicating liquor or drug
  • (iii) Whilst engaging in Aviation or Ballooning, whilst mounting into, dismounting from, or traveling in any balloon or aircraft other than as a passenger (fare paying or otherwise) in any duly licensed standard type of aircraft anywhere in the world
  • (iv) Directly or indirectly caused by venereal diseases or insanity
  • (v) Arising or resulting from the insured committing any breach of law with criminal intent.
  • (vi) From service in the armed forces
  • (vii) Resulting directly or indirectly from childbirth or pregnancy.