A health insurance policy has become essential in today’s age when the cost of medical treatments has become unaffordable. The policy covers the medical costs you incur and gives you financial relief, especially in serious illnesses when the costs can drain your finances. A health plan is, therefore, an essential tool of financial protection that you should invest in.
It’s important to understand the technical aspects of the plan to know the coverage benefits available. So, here are five of the most important health insurance terms that you should know about before buying health insurance:
1. Waiting period
In simple language, the waiting period is the period during which coverage for particular illnesses or treatments is not available. Once the waiting period is over, the coverage is available. Under most policies, a waiting period is applicable for the following:
|Instances||Applicable waiting period|
|Any illness after buying the policy||30 to 90 days|
|Pre-existing illnesses||12 to 48 months|
|Maternity coverage||9 to 48 months|
|Specific treatments like hernia, fistula, piles, joint replacement, cataract, etc.||1 to 2 years|
Co-payment is short for compulsory payment. It is the amount of claim that you have to bear out of your pocket. The insurance company, then, pays the rest. For example, if the co-payment ratio is 10%, 10% of each claim would be paid by you, and the insurance company would pay the remaining 90%.
Co-payment is usually applicable if the insured’s age is 61 years and above. Many plans also impose a co-payment if you avail of treatments in other cities where the treatment costs are higher (metro cities).
A deductible is the limit up to which the claim is not admissible under the health insurance plan. In other words, if the claim is up to the deductible, it would not be paid. Only if the claim exceeds the deductible, the health insurance policy pays for the excess amount of the claim. For example, if there is a deductible of Rs.1 lakh and you incur a claim of Rs.1.5 lakhs, the insurance company would pay Rs.50,000 as a claim. The concept of deductible is usually found under top-up and super top-up health plans.
4. No claim bonus
If you do not make any claim in a policy year, you earn a no-claim bonus. Usually, health insurance plans allow an increase in the sum insured, free of cost, on renewal if there has been no claim. The sum insured is increased by a specific percentage, and it keeps on increasing after every successive claim-free year. That is why the no claim bonus is also called a cumulative bonus in many plans. Some plans might also allow a discount in the renewal premium as a no-claim bonus.
5. Free-look period
If you are not satisfied or unhappy with the health insurance policy, you can cancel the plan after buying. You are allowed a period, ranging from 15 days to 30 days or more, to cancel the policy after its issuance. This period is called the free-look period. Suppose you cancel the plan during the free-look period. In that case, you get the refund of your premium after the company deducts the policy issuance costs and the cost of allowing the coverage till the date the policy is cancelled.
These are some of the important health insurance terms. When buying a policy, check these terms, understand the coverage and then invest in the health insurance plan.
Geojit, with its deep understanding of financial products and services, helps people choose the best-suited life insurance plans considering their needs and the importance of insurance in any person’s life. To know more click here to contact Geojit Customer Care.