Why Buy A Health Insurance Plan at An Early Age?/ Tax Benefits of Health Insurance/ Does Your Medical Insurance Policy Cover COVID-19 Treatment?/ Arogya Sanjeevani Health Insurance Policy/ Benefits of Health Insurance
What Is The Difference Between Health Insurance And Mediclaim Policy?
In case of medical emergencies, you canavail of medical insurance coverage benefits by either having a health insurance policy or with a mediclaim policy.
What is Mediclaim?
Mediclaim is a health insurance policy that gives you specified financial protection only for expenses arising due to hospitalisation. It covers you for hospitalisation required due to an accident, in case of sudden illness or surgery, or in case of any surgery during the policy term. Mediclaim is of two types, viz., cashless and reimbursement.
What is Health Insurance?
Health insurance is an insurance cover that provides you complete protection for medical and surgical expenses in case of emergencies. With a health insurance policy, you can avail of cashless treatment or get reimbursement for the amount paid to avail of the treatment covered.
To understand the difference between a medical insurance and mediclaim policy, kindly refer to the table below:
Mediclaim Policy | Health Insurance Policy |
It covers you only for hospitalisation expenses | It offers a comprehensive cover more than the only hospitalisation. For example, AYUSH treatment expenses, in-patient hospitalisation expenses, pre-hospitalisation, and post-hospitalisation expenses, daycare expenses, etc. |
It does not offer an add-on cover | You can choose from different add-on covers as per your requirement, such as hospital cash, critical illness, room rent waiver, etc. |
It comes with a limited hospitalisation cover of up to Rs. 5 Lakh | It comes with an extensive hospitalisation cover that may exceed Rs. 5 Lakh, which is decided on the basis of several factors such as age, the number of members covered, pre-existing conditions, etc. |
It is not flexible | It is flexible and can be customized as per your budget and requirements |
When choosing between a health insurance policy or a mediclaim policy, you must consider the following factors:
- Your financial condition
- Your and your family members’ pre-existing conditions if any, age,
- Add-on covers
- Sum insured
- Policy term
- Members to be covered under a health insurance policy
Why Buy A Health Insurance Plan at An Early Age?
Following are the reasons why it is recommended to buy medical insurance at an early age:
Lower Premium – As you age, you are required to pay higher health insurance premiums. This is because, in old age, you have a higher possibility of getting ill, due to a weaker immune system. For instance, a person aged 20 years will be required to pay a lesser health insurance premium than someone aged 52 years, due to lesser health issues involved.
Lesser Exclusions – Many medical insurance plans come with restrictions on coverage offered, due to which you may not be able to avail full-fledged cover on buying a policy in later years of life. But if you buy a health insurance policy at an early stage in life, when you do not have any health condition, then you will be able to enjoy a full-fledged health cover.
No Health Check-Up – Another reason why buying health insurance at an early stage in life is recommended is because you would not be required to undergo a medical check-up then. But if you buy the policy in old age, let us say 50 years, then most health insurance companies will ask you to undergo the same. Also, in case there is a health condition in the medical test results, then you might be required to pay a higher premium due to higher chances of hospitalisation involved.
No Claim Bonus – You will be able to start accumulating No Claim Bonus early on by buying a health insurance policy timely. You can use this NCB in the later years of life when you might be more vulnerable to illnesses and may need to make a claim. But if you buy the policy during later years of life, then you would not be able to enjoy such increased coverage.
Aligned Finances – If you buy a health insurance policy at a young age, then you have time to plan your finances for a long term. But if you buy it in later years of life, then financial planning may go haywire. Hence, it is recommended to buy a health insurance policy when young so that financial planning can be started early, and also that you are prepared for emergencies irrespective of their magnitude.
Waiting Period – Health insurance plans come with waiting periods for specific conditions, cover for some of which you may require in old age. The advantage of buying health insurance plans when young is that you can complete the waiting period early and avail of the coverage benefits when you actually require them.
Rejections – As you will be more prone to illnesses in your old age, therefore there are higher chances of your health insurance application getting rejected then. Therefore, buying health insurance plans when young is recommended so that there are lesser chances of your application getting rejected.
Pre-Existing Conditions – When you buy a health insurance policy in later years of life, then there are chances that you may already be suffering from pre-existing diseases. But then, you will be required to complete a waiting period to get coverage benefits for the same. On the other hand, if you buy the policy when young, then by the time you may need cover for pre-existing illnesses, you would already have completed the waiting period and will be able to avail the required coverage.
Tax Benefits of Health Insurance
Every HUF can claim tax benefits, under Section 80D of the Income Tax Act, 1961, on the premium paid for medical health insurance plans. You can avail of tax benefits on the premium paid for yourself and your family members including spouse, dependent children, or parents.
The deduction from the total income can also be availed on the premium paid for top-up health insurance plans as well as critical illness plans, apart from regular health insurance plans.
To understand the amount of deduction currently available to an individual taxpayer in different scenarios, refer to the table below:
Situations | Premium Paid | Deduction under Section 80D of the Income Tax Act | |
Self, Family, Children | Parents | ||
When the policyholder and parents are aged below 60 years | Rs. 25,000 | Rs. 25,000 | Rs. 50,000 |
When the policyholder and family members are aged below 60 years with parents aged above 60 years | Rs. 25,000 | Rs. 50,000 | Rs. 75,000 |
When the policyholder, family members, and parents are more than 60 years of age | Rs. 50,000 | Rs. 50,000 | Rs. 1,00,000 |
Members of the HUF (Hindu Undivided Family) | Rs. 25,000 | Rs. 25,000 | Rs. 25,000 |
Non-Resident Individuals (NRIs) | Rs. 25,000 | Rs. 25,000 | Rs. 25,000 |
Understand Terms Included in Your Health Insurance Policies
Explained below are terms that you must know in order to understand your health insurance policy better:
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Co-Payment – Health insurance plans reimburse you for the healthcare expenses during a treatment that is covered under the policy. But if the insured, as well as the insurance company, share the expenses at the time of claim, then it is a case of co-payment. Generally, health insurance plans with a co-payment clause come at comparatively lesser premiums. Mostly, this feature can be seen in senior citizen health insurance plans.
No Claim Bonus – It is a reward that a medical insurance company gives to the insured for not making a claim in a particular year. For instance, an increase in the sum insured by a fixed percentage according to the policy, not more than 50% of the sum insured, if the policy has been renewed continuously.
Deductible – Deductible is similar to co-payment. It is a fixed amount in rupee terms that are shared by the policyholder, and not the insurance company, at the time of claim. It is, however, decided by the insurance company if the insured is required to pay this amount per year, per life, or per event.
Dependents – Dependents are family members of the insured who are financially dependent on him/her. These can be a legally wedded spouse, and unmarried children (natural or adopted).
Exclusions – Every health insurance policy comes with a list of conditions that the insurance company will not cover the insured for, during the policy term. These are known as exclusions. Some common exclusions under health insurance plans are treatments required due to participation in adventure sports, Injuries due to self-harm, insured committing a breach of law, etc.
Grace Period – The grace period is a specific period starting immediately after the expiry of the due date or premium payment, given to the policyholder to pay the premium to continue availing coverage benefits under the policy. If the premium is paid during this period, then you can continue availing of the policy benefits. But if the premium is not paid even during the grace period, then your policy will lapse and you will lose all the accumulated benefits. Hence, it is recommended to keep renewing health insurance plans when the premium is due.
Insurer – The insurance company.
Premium – A fixed amount to be paid periodically in order to keep availing of health insurance policy benefits.
Policy – It is a legal contract between an insurance company and the insured, that contains all the terms and conditions of the insurance.
Pre-Existing Disease – It is any condition, ailment, or injury for which the insured already had symptoms, within 48 months prior to buying a health insurance policy. Generally, pre-existing conditions are covered by the policy after a specific waiting period. Hence, it is recommended to disclose pre-existing diseases, if any, to avoid any hassle at the time of claim settlement.
Network Hospital – Every insurance company has a tie-up with hospitals wherein the insurer can avail cashless treatment. These hospitals are known as network hospitals. It is recommended to choose an insurance company with a high number of network hospitals, for utmost convenience in case of an emergency strike in the future.
Portability – Portability is an individual health insurance policyholder’s right that allows him/her to switch from one insurer to another or from one health insurance policy to another of the same insurer if the policy was maintained without any lapse. Portability allows you to transfer the accumulated benefits as well such as waiting for period benefits, NCB, etc.
Sum Insured – It is the payout amount that an insurance company is liable to pay to the insured in case of a claim. For instance, if the sum insured of a health insurance policy is Rs. 5 Lakh and the hospitalisation expenses incurred are Rs. 2 Lakh, then the insurance company will cover the expenses. But if the expenses exceed the sum insured limit, then the insured will have to bear the remaining expenses.
Waiting Period – This is a fixed time period for which the medical insurer does not cover you, even after the commencement of the policy term. Waiting periods can be of different types such as initial waiting period, waiting period for specific diseases, waiting period for pre-existing diseases, etc. The waiting period is calculated from the date of commencement of the policy.
Free Look Period – Free look period is the time that an insured gets to understand his/her health insurance policy better. During this period, if not satisfied, the insured can cancel the policy.
Does Your Medical Insurance Policy Cover COVID-19 Treatment?
As per the mandate of the Insurance Regulatory and Development Authority of India (IRDAI), all the general insurance companies and health insurance companies offering health insurance plans cover expenses related to COVID-19 treatment, in the existing plans. The regulatory authority issued a circular on March 4 that directed insurance companies offering health insurance plans to include cover for COVID-19, irrespective of which policy the insured is covered for.
If you already have a medical insurance policy, then you must note the following:
• An initial waiting periodis applied, which is 30 days in most health insurance plans.
• The claim process for COVID-19 is the same in regular health insurance plans like any other medical condition.
• Cover for pre-hospitalisation and post-hospitalisation expenses is offered as per the terms and conditions of the policy selected.
Apart from COVID-19 cover in existing health insurance plans, the IRDAI had also launched COVID-19 health insurance policies namely Corona Kavach and Corona Rakshak policies. Both are short-term health insurance plans that cover families and individuals, wherein the former is an indemnity-based health insurance policy, and the latter is a benefit-based health insurance policy. Both the plans help you feel financially secure in case of a positive diagnosis of COVID-19.
Arogya Sanjeevani Health Insurance Policy
Arogya Sanjeevani Policy is a standard health insurance product which aims to simplify health insurance for people by providing them with a basic and standard plan. An Arogya Sanjeevani Health InsurancePolicy is offered by all health insurance companies with exactly the same benefits. An Arogya Sanjeevani Health Insurance Plan comes with the following features –
- No medical check-up up to the age of 45 years
- Sum insured between Rs. 1 Lakh to Rs. 5 Lakh
- Policy tenure of 1 year with lifetime renewability benefit
- No claim bonus of up to 50% of the insurance premium
- Waiting period of 30 days for all illnesses except accidents.
Benefits of Health Insurance
Health insurance offers a wide array of benefits to the insured. Following are some of the key benefits of a health insurance plan –
- Comprehensive Coverage
A health insurance policy keeps you covered for major healthcare expenses incurred in case of medical emergency. Usually, health insurance plans keep you protected for in-patient hospitalisation expenses pre-hospitalisation and post-hospitalisation expenses, ambulance expenses, domiciliary hospitalisation expenses, daycare procedures, organ donor expenses, treatments taken under AYUSH systems of medicines, etc.
- Lifetime Renewability
As per the guidelines issued by Insurance Regulatory and Development Authority of India (IRDA), the insurance companies offering health insurance plans are supposed to offer lifetime renewability benefits to the policyholders. It allows you to renew your health insurance policy without any upper restriction on the maximum age limit. The feature is most beneficial for parents and senior citizens as they can renew their insurance plans without any pressure of looking for new health insurance plans in old age.
- Cashless Treatment
Insurance companies have tie-ups with certain hospitals, known as network hospitals, where the insured can avail cashless treatment. If you avail treatment at these hospitals, the insurance company will directly settle the bills at the hospital, and you will not be required to pay anything for the treatment availed, except for non-medical expenses incurred.
- Portability
Health insurance portability allows the policyholders to switch from their existing health insurance company to another, in case they are not satisfied with their existing health insurance plan, or find a more suitable plan. Portability feature saves the policyholders from being taken for granted and offers them flexibility to switch in case of dissatisfaction.
- Tax Benefits Under Section 80D of the Income Tax Act, 1961
The government of India promotes health insurance by offering tax exemptions of up to Rs. 1.5 Lakh on the premium paid for health insurance plans, under Section 80D of the Income Tax Act, 1961. An individual can also claim a deduction of up to Rs. 25,000 for insurance cover for self, spouse, and dependent children. You can also avail a tax deduction of up to Rs. 25,000/Rs. 50,000 for health insurance plans purchased for parents aged 60 years/ more than 60 years .