In today’s time, a human being has an average lifespan of 71 years. Even though our life expectancy has increased, our susceptibility to countless lifestyle diseases has multiplied too.
A sedentary lifestyle, poor nutrition and environmental pollution are some of the contributing factors.
In such a scenario, it is best to be prepared to mitigate financial loss owing to medical contingencies by buying the right health insurance plan.
There is a large variety of health insurance plans out there. In order to make a suitable choice, you need to be aware of what different types of plans offer.
That is why we crafted this quick and simple guide to help you learn about different types of health insurance plans.
The backbone of your health insurance coverage- Reimbursement based health insurance plans
We all know that, although usually infrequent, the largest of health expenses are associated with hospitalisation.
To minimise the impact of these expenses, reimbursement based, indemnity health insurance plans are the best choice.
Also commonly known as ‘mediclaim’ policies, these plans reimburse the costs arising out of hospitalisation up to the chosen sum insured.
This sum insured is renewed every year on the payment of premium and can be increased as per the norms of the insurance company.
This plan also covers pre and post-hospitalisation costs, occurring within a defined number of days before and after hospitalisation, these costs may include the expense of diagnostic tests conducted before hospitalisation as well as post-hospitalisation consultation and outpatient treatment expenses.
Individual and family floater policies
In an individual policy, the chosen sum insured is applicable on the individual insured member only.
Family floater policy:
In a family floater policy, the chosen sum insured is shared by all family members, thus distributing the risk among the insured family members.
Whether to choose an individual policy or a family floater policy depends on the size of your family, the age of your family members and associated health risks and the amount of coverage required.
Those with a nuclear family can do well with a family floater policy while those with elderly family members or a large family should buy individual health insurance policies to ensure sufficient coverage for their family members.
Who should buy reimbursement based plans?
The most severe financial setbacks are associated with events of hospitalisation, owing to high room rent, cost of surgery and other, numerous expenses.
Hence, a reimbursement based health insurance plan is an indispensable part of a person’s health insurance coverage.
These plans should be purchased by all who do not have a reimbursement policy, especially those who do not have health insurance of any kind.
Variants of reimbursement based health insurance plans
There also exist some variants of reimbursement health insurance plans, such as:
High deductible health insurance plans
This type of plan provides coverage only post a certain rupee value/threshold value.
These plans are cheaper than typical reimbursement plans.
They are designed to offer added coverage at a low cost to someone who already has a health insurance cover.
There exist two types of high deductible health insurance plans.
(1) Catastrophic high deductible health insurance plans
This variant offers coverage when the expenses incurred in a single event of hospitalisation cross the deductible value.
For example, if you have a coverage of 5 lakhs with a deductible of 3 lakhs, and a single event of hospitalisation costs you more than 3 lakhs, you’ll be provided further coverage up to 5 lakhs.
(2) Aggregate high deductible health insurance plans
This variant offers coverage when hospitalisation-related expenses in the policy period cross a threshold value.
For instance, if you have a plan offering a coverage of 5 lakhs with a deductible of 3 lakhs, in case hospitalisation-related expenses in the policy period amount to more than 3 lakhs, you’ll be provided further coverage up to 5 lakhs.
Who should buy high deductible health insurance plans?
These plans are suitable for those who already have a reimbursement based plan and would like to enhance their coverage at a low cost. They are also a good choice for those who have employer-provided health insurance but would like to safeguard themselves against medical expenses that may exceed their employer-provided coverage.
When you need more- Fixed benefit hospitalisation insurance plans
Fixed benefit hospitalisation insurance plans offer a fixed benefit payout in the instance of a pre-defined disease or hospitalisation occurring.
You can claim the payout from such a plan even if you have claimed for hospitalisation arising out of the same illness from any other health insurance policy.
These plans are designed to not only partly cover hospitalisation expenses but also act as an income substitute and fund outpatient treatment expenses or the long-term care often associated with certain chronic illnesses.
Variants of fixed benefit hospitalisation insurance plans
Some variants of fixed benefit plans include:
(1) Critical Illness plans
These plans offer a fixed lumpsum payout in case of the occurrence of a critical illness covered by the plan.
Nowadays, critical illness health insurance plans cover 8-37 critical illnesses, depending on the product you choose. Some disease-specific critical illness plans have also come into existence.
The lumpsum payout not only helps cover hospitalisation expenses but also acts as an income substitute and helps provide for outpatient treatment costs.
(2) Hospital daily cash/surgical benefit plans
This type of plan offers a fixed daily cash benefit in case of hospitalisation that can be used for hospitalisation expenses, as an income substitute or to fund non-medical expenses such as an attendant’s travelling and food-related expenses.
The surgical benefit offers a fixed lumpsum payout in case of the occurrence of a surgery covered under the plan. This benefit is usually several times your chosen daily cash benefit, depending on the severity of the surgery.
Who should buy fixed benefit hospitalisation insurance plans?
These plans should be bought by those who are already covered by a reimbursement based health insurance plan.
This is because the fixed benefit you will get is not based on your actual health expenses, and thus, may not cover all your expenses.
Also, as the critical illness plans and the surgical benefit rider cover pre-defined illnesses and surgeries, you are likely to lose out on coverage in case you suffer from an illness or surgery not covered by such plans.
So, which plan should you buy?
Always start by picking out a comprehensive reimbursement based health insurance plan.
You can enhance your hospitalisation-related coverage by picking a catastrophic/aggregate high deductible health insurance plan.
You can optimise your health cover further by opting for a hospital daily cash and surgical benefit plan.
When you have optimum health insurance coverage, life begins to seem less stressful and you can focus more on maintaining good health.
Because you will know that, in the unfortunate event of an illness or accident, you have a safety net that is wide and strong enough to cushion your fall and help you spring back to your feet.