A health insurance policy is a contractual agreement between you and your insurance company that covers your medical expenses. It is essential to understand the key terms before buying a policy coverage, as they will help you navigate the policy and make informed decisions regarding your health care. Here, we will discuss in detail these key terms of a health insurance policy and their importance.
What are the key terms in a health insurance plan?
These terms define the cost, limitations, and coverage of a health insurance policy. A proper understanding of these important terms minimises misunderstanding when making claims or choosing the right plan.
Let us break down some of the terms in a health insurance plan that you must know before buying one:
- Policy
A policy is a legally binding contract between an individual and an insurance company, outlining the terms, conditions, and coverage for medical expenses. It specifies what the insurance company will cover, including the limits of these coverages. Basically, it is a detailed agreement that defines the scope of financial protection against healthcare costs.
- Sum Insured
In a health insurance policy, the sum insured is the maximum amount the insurance company will pay towards your medical expenses within a policy year. They will not start the process until you file a claim. If, anyhow, your medical expenses exceed the sum insured, you will have to pay the extra amount out of your savings.
- Premium
In health insurance, a premium is the periodic payment you make to a health insurance company to receive coverage during emergencies. It is the amount which you pay regularly, usually quarterly, monthly, or yearly, to keep your health insurance active. Various factors, such as the plan’s coverage, location, and age, determine the premium amount.
- Coverage
Benefits of a health insurance policy include financial protection against high medical costs, access to quality healthcare, and mental peace during medical emergencies. It covers surgeries and pre- and post-hospitalisation expenses and may also include checkups and wellness discounts.
- Waiting Period
A waiting period in a health plan indicates the specific period during which certain benefits or coverage are not available after purchasing a policy. It is a period the insurer requires before offering full coverage. During this particular time, they will not cover certain treatments or illnesses. This particular period can vary depending on the insurer, types of coverage, and the specific plan.
- Claim
A claim is a type of formal request that policyholders submit to the respective insurance company to receive financial compensation for medical expenses. This request covers expenses incurred for procedures, treatments, or services that are eligible under the policy’s coverage.
- Deductible
A deductible is the fixed amount of money you must pay out of pocket for medical expenses before your insurance company starts to pay. It is a way for the insurer and policyholder to share the cost of healthcare. After paying your deductible, the insurance plan will begin covering these remaining expenses, usually according to a coinsurance or copay arrangement.
- Co-Payment
It is a predetermined amount or percentage of a claim that the policyholder pays at the time of receiving medical treatment or services. The insurance company covers the remaining balance along with various co-payments during the process. This is also a cost-sharing mechanism where the insurer and the policyholder share the healthcare expenses.
- Network of Hospitals
Network in a health insurance plan refers to a specific group of healthcare providers, such as doctors and hospitals. Insurance companies sign a contract with them to provide services to their policyholders. These providers agree to accept negotiated rates, making it convenient and affordable for policyholders to get treatment. Some companies offering group health insurance policies have a wider range of hospital networks.
- Exclusions
Exclusions are specific medical conditions, circumstances, or treatments that your insurance company will not cover. These exclusions can be permanent, meaning they will never cover these expenses, or may be covered after a certain waiting period. You must properly understand exclusions to avoid claim rejections and unexpected out-of-pocket expenses.
- Insurer
An insurer is your insurance company that provides financial protection for medical expenses. They offer a policy that, in exchange for premium payments, covers the medical costs in case of any illness or injury. Your insurer will agree to pay for covered expenses, either directly to the healthcare provider in a cashless facility or through reimbursement of the sum insured.
- Insured
In health insurance policies, the insured is a person who is covered under the policy, meaning the company covers their health expenses. This is generally a primary policyholder who can include dependants or family members under the plan. An insured person is entitled to receive all types of financial benefits of their insurance policy, such as reimbursement for medical expenses or access to cashless treatment.
- No-Claim Bonus
A no-claim bonus in health insurance is an additional discount that a policyholder can avail of if they do not make claims during a policy year. It is a reward for remaining healthy and not using the sum insured from the health insurance policy. This bonus is typically reflected as an increase in the sum insured or a discount on the renewal premium.
- ABHA Card
The Ayushman Bharat Health Account – ABHA card is a unique health ID that stores your medical records digitally and securely. It helps streamline access to health services across hospitals and insurance providers in India.
Final Words
Before purchasing a proper health insurance policy, you must understand all these key terms properly. These terms are crucial regarding how health insurance works and how you can get the benefits from it. Additionally, you must consider what the exclusions and terms and conditions of that particular policy are.
