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Health Insurance

No one plans to get sick but most people need medical care at some point. The fast-paced life in today’s
age, bad eating habits, high levels of pollution and higher risk of disease are the major factors that may
result in medical emergencies. An excellent way to prepare for such situations is to avail of health
insurance policies.
Health insurance is an agreement whereby the insurance company agrees to undertake a guarantee of
compensation for medical expenses in case the insured falls ill or meets with an accident leading to
hospitalisation. Insurance companies have tie-ups with hospitals for providing cashless treatment, but in
case the insurance company has no tie-up with the hospital, it reimburses the cost of expense incurred
by the insured.
Benefits of health insurance
Buying a health insurance policy for the family and self is important as medical care is expensive,
especially in the private sector and can derail finances. It becomes tougher if the main wage earner ends
up in hospital. This can be avoided by paying a small annual premium and reduce stress in case of a
medical emergency.
A good health insurance policy usually covers doctor consultation fees, medical tests, ambulance
charges, hospitalisation costs and even post-hospitalisation recovery costs to an extent.
Among other benefits is no claim bonus (NCB), which is paid if the insured does not file a claim in the
previous year. An insurance policy also provides options for health checkups based on previous NCBs.
Some policies also cover room expenses depending on the premium being paid by the insured. The
premium paid on health insurance is eligible for tax rebate under Section 80D of the Income Tax Act.
Low penetration
Despite the country’s growing prosperity, less than 15% of the population is covered through health
insurance. As per World Health Organisation statistics, 31% and 47% of hospitalisations in urban and
rural India are either financed by loans or through sale of assets. Additionally, 70% of Indians spend their
entire income on healthcare and 3.2% fall under the poverty line owing to high medical bills. This clearly
shows that India is still an untapped market for health insurance policies.
Choice of insurance plans
Opting for the best health insurance policy may be confusing, but avail of a plan that best safeguards the
family and you.
There are two basic types of health insurance plans in India:
Indemnity plans
These policies compensate the actual expense that has been incurred. One may avail of the entire
coverage amount multiple times during the policy term. Some of the expenses covered under an

indemnity health insurance include hospital room rent, operation theatre charges, doctors’ fees,
medicine costs and pre and post-hospitalisation expenses.
Lump-sum benefit policies
These types of health plans pay the entire sum assured if the covered event occurs. For example, if the
health plan includes critical illness coverage and one is diagnosed with the same, benefits will follow.
Such plans meet expenses like physiotherapy or other rehabilitation procedures, monitoring devices
needed in case of critical illness, follow-up medical tests and investigations, dietary supplements and
ergonomic furniture or home modifications needed due to illness.

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