Health Insurance

Health insurance is a type of insurance that helps pay for medical expenses covered under the policy.

The policyholder pays a premium to the insurer. In return, the insurer agrees to cover eligible healthcare costs up to the policy’s sum insured, subject to its terms, exclusions, waiting periods, and other conditions.

Depending on the policy, coverage may include:

• Hospitalisation expenses
• Surgeries and medical procedures
• Pre- and post-hospitalisation expenses
• Day-care treatments that do not require a full-day hospital stay
• Certain ambulance, diagnostic, or home-care expenses
• Cashless treatment at eligible network hospitals

In a cashless claim, the insurer or its administrator settles eligible expenses directly with the hospital. In a reimbursement claim, the policyholder pays first and later submits documents to claim eligible expenses.

Health insurance does not necessarily cover every medical expense. Policies may have waiting periods, exclusions, room-rent limits, co-payments, deductibles, or sub-limits.

The amount of cover should therefore be judged not only by the sum insured, but also by the policy conditions.

Health insurance is mainly designed to protect savings from the financial impact of unexpected medical costs.

Avoiding a Large Hospital Bill

Ananya has a health insurance policy with a ₹10 lakh sum insured.

She is admitted to a network hospital for surgery, and the eligible hospital bill comes to ₹3.2 lakh.

After the insurer approves the cashless claim, most covered expenses are settled directly with the hospital. Ananya only has to pay for any non-covered items or amounts excluded under the policy.

Without health insurance, she may have had to pay the entire hospital bill from her savings. The policy therefore helps protect her finances from a major unexpected medical expense.