What is health insurance

You must have read about life insurance but do you also know what is health insurance? Health insurance, like life insurance, is a form of insurance in which people collectively pool their risk, in this case the risk of incurring medical expenses. It is sometimes used more broadly to include insurance covering disability or long-term nursing or custodial care needs. It may be provided through a government-sponsored social insurance program, or from private insurance companies. It may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by an individual. In each case, the covered groups or individuals pay premiums to help protect themselves from unexpected healthcare expenses.

The Need for health insurance

Now that you know what is health insurance you must be wondering whats the need for health insurance. Most of us today, lead very hectic lives, trying to juggle between work and home. All the stress, travelling, long hours and irregular eating habits makes our lifestyle very susceptible to illnesses. With a lifestyle where we do not get enough exercise and face the problems of pollution and stress, the number of people suffering from health problems is on the rise. Health care has also become very expensive and as such, it becomes difficult to bear the increasing costs of the doctor’s fee and hospital charges. A medical insurance or health insurance policy is a way to safeguard our health from the impact of illnesses as it helps reduce the financial impact as well as the mental stress associated with an illness.
Hope this illustration gives u a clear picture.

Health insurance companies in India

In India, there are companies both in public as well as private sector providing health insurance solutions to individuals and to groups. Some of the health insurance companies in India are:
1) Life Insurance of India
2) New India Assurance
3) Royal Sundaram Insurance
4) ICICI Lombard
5) Star Allied Health Insurance and many more.

Whats is a good health plan

With numerous companies offering health insurance and with a variety of heath insurance plans on the offer its hard to decide which plan you should go for. How do you define if a health policy is a good health plan?

Following some of components of a good health plan:

• Hospitalisation cover: This ensures that medical expenses incurred on hospitalisation for more than 24 hours are covered by the insurance company. This may include room charges as well as the money spent towards the surgeon, medicines and other tests.
• Cashless claims: In a cashless claim, the hospitalisation expenses are directly settled between the hospital and the insurance company.
• Tax benefits: An insured person can receive a tax exemption on the premium paid, up to a significant amount each financial year. This means that while he is safeguarding himself, he is also reducing his tax deductions and saving money on a portion of his income.
• Pre & Post-hospitalisation expenses: Daily cash allowance and payment for treatments received prior to hospitalisation and during the recovery period are extremely beneficial, as the insured might not have an alternate source of income during those trying times.
• Floater plans: Floater plans cover the entire family under one policy and allow the coverage of the medical insurance policy to be shared among the family members.

Types of health insurance

Now you know what is health insurance, the need for health insurance, how to figure out a good health plan. But apart from all this you also need to know the various types of health insurance plans available in the market.

There are mainly three types of Health Insurance covers:

• Individual Mediclaim : The simplest form of health insurance is the Individual Mediclaim policy. It covers the hospitalization expenses for an individual for up to the sum assured limit. The insurance premium is dependent on the sum assured value. Example : If you have 3 family members you can get an individual cover of Rs 2 lacs each . In this case each of you are covered for 2 lacs , if 3 members face a need for hospitalization , all 3 of them can get expenses recovered upto Rs 2 lacs . All the 3 policies are independent.
• Family Floater policy : Family Floater Policies are enhanced version of the mediclaim policy. The sum assured value floats among the family members. i.e each opted family member comes under the policy, and it covers expenses for the entire family up to the sum assured limit. The premium for family floater plans is typically less than that for separate insurance cover for each family member. Example : In this case if suppose there are 3 family members , you can take a Family floater policy for Rs 6 lacs in total . Now anyone can claim upto 6 lacs in expenses , but then the cover will go down by that much amount for that year . So if one of the family member is hospitalised and the expenses are 4.5 lacs . It will be paid and then the cover will be reduced to 1.5 lacs for that particular year . Next year again it will start from fresh 6 lacs. Family floater makes sense for a family because that way each one in family gets a big cover and probability of more than 1 getting hospitalized in same year is too low untill and unless whole family is travelling together most of the times in a year.
• Unit Linked Health Plans : Taking the ULIP route, health insurance companies too have introduced Unit Linked Health Plans. Such plans combine health insurance with investment and pay back an amount at the end of the insurance term. The returns of course are dependent on market performance. These plans are very new and still in development phase . This is only recomended for people who can handle market linked products like ULIP and ULPP . Read who should buy ULIPs.

Source:
http://www.icicilombard.com/app/ilom-en/personalproducts/Health.aspx
http://www.jagoinvestor.com/2010/01/introduction-to-health-insurance-in-india.html