What is Health Insurance?
Health insurance is an insurance product which covers hospital, medical and surgical expenses of an insured individual.
It reimburses the expenses incurred due to illness or injury or pays the hospital directly where the insured is treated or hospitalised (also known as Cashless facility).
In more simple terms, if you are taken to a hospital either because of an illness or accident injury, the expenses arising out of that treatment are paid by the insurance company ( based upon terms & conditions). These expenses are either paid directly to the hospital if that hospital is part of the network hospital* with the Health Insurance Company or reimbursed (paid) to the insured if he/she is getting treated at a hospital which is not a part of the network hospital.
Health Insurance policy premium is calculated based upon the age of the individual in an Individual policy & age of the eldest member in a floater policy.
*What is a Network Hospital?
Each and every health insurance company has tied up with different hospitals across the city, state & country. If the insured goes to any of the hospitals with which his/her insurance company has done a tie-up, his/her treatment would be done cashless.
If that is not the case then the insured needs to initially pay the hospital expense from his/her pocket & then claim the bill amount from the insurance company.
Types of Health Insurance?
An individual can buy Health Insurance for himself/herself & his/her family members in two ways:
- Individual Policy
- Floater Policy
An individual health insurance plan offers coverage on an individual basis.
So if you have taken a 10 lacs of Individual policy for 3 members of your family, it means each and every member can use 10 lacs of health insurance in a policy year. To simplify it even further, it means every member for whom the policy is taken is eligible to claim 10 lacs of hospital expenses during the policy year.
Moreover, the premium is also charged as per every individual’s age, medical history, and respective sum insured.
In individual plans claim filed by one member, it doesn’t affect the sum insured of the other insured member. Individual plans obviously are costlier than Family floater plans.
Individual plans are normally recommended by us to the following:
- HNIs : Someone who is looking for higher sum assured for each & every member of his/her family.
- Couples with more age gap between the two. In this case, sometimes the individual policy works out to be cheaper than the floater policy or the difference in premium is very small.
- Obviously to Individuals who are single/divorced/widowed.
Family Floater Policy
In a family floater plan, a single cover is available to all the members of the family.
So if you have taken a 20 lacs of Family Floater policy, for 3 members of the family, it means the total hospitalization cover available for all three members would be 10 lacs in a policy year. So if one of the members is hospitalised & the claim amount is, say 12 lacs then in that policy year only 8 lacs of cover is left for all the members for the remaining year.
If you have small kids or have family members that do not have serious health issues, then a family floater plan is a good option as the chances of exhausting your sum insured as lesser.
However, if you have elderly members or someone with some severe health conditions like cardiovascular problems, then a family floater plan might not work for you. This is because that one member would utilize the sum insured amount, and it would leave a lesser coverage amount for all the other members.