What Is Health Insurance?

Never before has it been so important to take care of your health. The Coronavirus outbreak has made that abundantly clear for all of us. However, even before the global pandemic, there were several threats to our health present in the environment, because of which we need to understand what is health insurance. You might lead a healthy lifestyle, but unfortunately, a medical emergency can occur without warning.

In times of a health crisis, the financial burden can become immensely stressful. With the skyrocketing healthcare costs, it can be challenging to pay for them out of your savings. Therefore, it is essential to plan for medical emergencies.

Another way to tackle potentially expensive medical emergencies while ensuring continuous growth of your investments is to opt for the Max Life Secure Earnings & Wellness Advantage (SEWA) Plan .This plan also provides life cover as an additional benefit to the insured.

A health insurance plan protects you from these overwhelming medical expenses. When you understand health insurance meaning and invest in a suitable health insurance plan, it ensures that your family is financially untroubled. Make sure you are aware of various tips to consider before buying health insurance in India.

There are several benefits to investing in a health insurance plan next to understanding health insurance meaning. Following are the benefits of health insurance plans in India:

• Optimum Coverage
• Cashless Claim Benefit
• Additional Protection
• Tax Benefits

Let’s discuss the above health insurance benefits in detail.

If your annual income falls under the taxable category, health insurance can prove beneficial in more than one way. The government allows tax deductions for specific expenses that will help reduce your taxable income. A health insurance plan comes under the list of expenses eligible for tax deductions.

Under Section 80D of the Income Tax Act, you can claim a tax deduction of up to Rs. 25,000 for the self, spouse, or dependent children. If you have a health plan for your parents of less than 60 years of age, an additional deduction of up to Rs. 25,000 is applicable. In case the parents are above the age of 60, the deduction amount can be increased up to Rs. 50,000.

In case both the taxpayer and the parent are above the age of 60, this section allows a maximum deduction up to Rs. 1 Lakh. There are also taxation reliefs for preventive health check-ups between Rs. 5,000 – Rs. 7,000 for the age brackets mentioned earlier.

You can avail of the tax benefits under Section 80D and Section 80C by adding a critical illness rider with a Max Life term plan, thereby serving as a health insurance plan. You can use an online calculator to pay the premium.

Also Read: Features & Benefits of Critical Illness Insurance

Every individual has different requirements from their insurance plan, depending on their financial situation. Therefore, you must be exceptionally careful and thorough while investing in a health plan.

It is a critical life decision that will impact your future significantly. Consequently, it is essential to understand the types of health insurance plans available today to provide optimum coverage for yourself and your loved ones.

There are two categories of health insurance policies.

• Indemnity Plans
• Defined-Benefit Plans

While deciding to purchase a health insurance plan, there are certain things you must consider. Here’s how to choose a plan that provides maximum benefits:

• You must choose the sum-insured precisely based on your age, marital status, and health condition. Inadequate coverage will defeat the purpose of a health plan and cause financial strain. It is often recommended to invest in a health plan at a younger age since the premium amount is comparatively lesser and waitig periods can be consumed during the early years when one is healthy
• When you purchase a health plan, there is a waiting period before the insured can claim the compensation. Since different plans have varying terms and conditions, make sure that your plan's waiting period is relatively lesser
• Consider the claim-settlement ratio of the insurance provider as well
• Make sure to look at the network list of hospitals
• Strengthen your plan by adding relevant riders to it

Principally, if you are an earning individual, it is highly recommended to invest in a health insurance plan. It is a significant financial decision that helps plan the future.

Insurance providers have specific eligibility criteria in place. Most often, this includes a medical screening of the person to be insured. It evaluates their health according to specific medical parameters to make a note of any underlying medical conditions. It enables the underwriter to arrive at a reasonable cost of the premium. It also helps in avoiding any future disputes over the insurance claim.

Different insurance providers require a different set of documents when buying health insurance. Here is a list of standard documents that are needed:

•  Age Proof – A voter ID Card, Pan Card, Aadhar Card, Passport, Driving License, or Birth Certificate.
•  Identity Proof – A Voter ID Card, Passport, Aadhar Card, or Driving License
•  Address Proof – Ration Card, Driving License, Passport, Rent agreement if applicable, PAN Card, Aadhaar Card and utility bills like electricity bill, telephone bill, etc.
•  Passport-size photographs (if demanded by the insurer)
•  Medical reports (if demanded by the insurer)
•  Proposal form duly filled in and signed

At the time of health insurance purchase, the insurer calculates the premium that need to be paid based on factors like the sum insured, applicant age, pre-existing conditions, add-on benefits, etc. Usually the insurer carries out a medical check-up of the applicant prior to confirming the premium amount that needs to be paid. After initial purchase of the policy, the due premium amount needs to be paid usually on an annual basis to keep the policy in effect.

If expenses are incurred as a result of hospitalization or treatment while the health insurance policy in effect, such medical expenses will be covered unless they are in the health insurance exclusion list. In case of covered medical expenditures, there are two ways a health policy can work – cashless method or reimbursement method.

As mentioned in the earlier section, not all hospitalization and treatment-related expenses are covered by health insurance. Such medical expenditures are commonly termed as health insurance exclusions and not covered by the health insurance company. These are out-of-pocket expenditures for the policyholder and some common examples of excluded expenditures are:

• Non-medical expenses such as food costs during hospitalization
• Pre-existing conditions
• Cosmetic procedures such as plastic surgery
• Costs associated with dental treatment
• OPD treatments unless otherwise covered by the plan
• Cost of treatment for self-inflicted injuries, etc.