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A Beginner’s Guide to Health Insurance

By Finserv MARKETS - Jan 23,2019
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A Beginner’s Guide to Health Insurance

Buying health insurance can sometimes be quite a difficult task. Given the amount of insurance companies and policies that are available in the market today, it has become increasingly difficult to pick the right one. However, knowing what plan you want based on your need makes it easier for you to buy a policy. In this article, we will tell you everything you need to know about health policies. Whether you’re someone buying policy for the first time or looking for renewal, here’s an elaborate health insurance guide to help you understand all about it.

What is Health Insurance?

Health policy is essentially a way to pay for healthcare services. It refers to and includes all medical services provided basis with the plan you choose. These services include illness visits, ER visits, preventative care, medications etc.

Why do I need Health insurance?

Health policy is critical in today’s time especially due to factors like sedentary lifestyle, improper diet, pollution increasing at an alarming rate and many other things contributing to health problems. Some of the reasons which make health insurance a must have are:

  • Helps cover you during uncertain times in your life like medical emergencies, sudden hospitalization, etc.
  • Helps protect your hard-earned savings during uncertain health-related emergencies.
  • Can help in lifestyle changes through their preventive care services

Basic Insurance Terms that you must know:

  • Premium

This is the amount of money you pay for your health policy/healthcare plan

  • Out-of-Pocket

These are expenses that are not covered by your health insurance policy and borne by you

  • Copay

A fixed and pre-determined amount that you pay to avail health care services

  • Deductible

It is essentially the is the amount that you pay for health care services before your health insurance company starts to pay for the same. E.g. If the medical expenses to be paid are Rs.2,500 and your deductible is Rs.500, then you pay Rs.500 from your own pocket first, before your insurance company pays the balance amount of Rs.2,000.

Types of Health Insurance Plans:

When it comes to health policy, you will notice that the majority of the insurance companies offer four different options for covering your healthcare costs. Managed care coverage, basic health insurance, indemnity insurance and major medical coverage. Each of these will cover you for different expenses in different ways.

  • Managed Care Coverage:

If you are looking for your health insurance policy to cover you for all your expenses, then the best way to go about is to buy managed care coverage. This is also known as “Preferred Provider Plans”. These plans come with significantly lower insurance premiums and co-pays i.e. the amount you pay out of your pocket for a doctor’s visit. With managed care coverage, you are covered for a wide variety of services such as doctor visits, x-ray services, hospitalization, surgery, lab services, mental healthcare, prescription drugs and the likes.

  • Indemnity Plans:

Indemnity plans are also referred to as “Fee for Service” coverage. This plan gives you the freedom of choosing your healthcare provider. You can seek medical treatment anywhere irrespective of your location, however, they come with co-pays and deductibles and of course, significantly high monthly payments. These would hence not be a great option for people on a tight budget.

  • Basic Health Insurance Policies:

Basic health policies are quite easy to understand. As a part of these policies, your insurer promises to pay a part of your health care costs in exchange for your premiums. If you land up in a hospital due to medical emergencies, then your insurer would pay for the health care costs that are specified in the health policy. Any expense that goes over and above the policy cover needs to be paid by the insured (that is you) from his own pocket.

The choice of health insurance plans available in the market usually narrows down to these 4 broad categories. Different insurance companies design different plans around these four major buckets which can sometimes make it confusing for you to take a decision. Hence, it is advisable that you put in a little effort to find out what each plan really has to offer before you sign the policy papers.

If you find yourself confused about a policy, then make sure to talk with an insurance agent to clarify your doubts. It’s also better to talk to two or more agents to be clear on the inclusions, exclusions, terms and conditions mentioned in your policy. You can opt to buy a health insurance plan online once you’ve got all your queries answered and clarified.

Also know about the health insurance tax exemption you will get after you buy the policy

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522