Monday, August 24, 2009

Health Insurance: Frequently Asked Questions (FAQs)

Q1. I am young and healthy. Do I really need health insurance?

Yes. You will need insurance. Even if you're young, healthy and haven't had to see a doctor in years, you will need coverage against unexpected events like accidents or an emergency. While your health insurance coverage may/may not (depending  on the policy taken) pay for things that aren't too costly like routine doctor's visits, the main reason to have coverage is to have protection against the large treatment expenses of serious illness or injury. No one knows when a medical emergency might strike. It is best to buy health insurance, to save money when an emergency strikes.

Q2. Is Health Insurance the same as Life Insurance ?

No. Life Insurance protects your family (or dependents) from financial loss that may arise in the event of your untimely death/or if something happens to you. The payout is made only post the death of the person insured or at the maturity of the policy. Health Insurance protects you against ill health/diseases by covering the expenses you might incur (for treatment, diagnosis etc.) in case you are affected by disease or injury. There is no payout made at maturity. Health insurance also needs to be renewed annually.

Q3. My employer provides me with health insurance coverage. Is it advisable to take another policy on my own?

It is strongly advised to have health insurance on your own as well because of reasons of continuity. Firstly, if you change your job, you might not necessarily get health insurance from your new employer. In any case you will be exposed to health costs in the transition period between jobs. Secondly, the track record that you have built in health insurance at your old employer will not transfer to the new company policy. Covering pre existing diseases might be a problem. In most policies pre-existing diseases are covered only from the 5th year onwards. Therefore to avoid the above problems, it is advisable to take a private policy in addition to your company provided group health insurance policy.

 

Q5. Is there any tax benefit that one can avail of while purchasing Health Insurance ?

Yes, there is a tax benefit available under Section 80D of the income tax act 1961. Every tax payer can avail an annual deduction of Rs. 15,000 from taxable income for payment of Health Insurance premium for self and dependants. For senior citizens, this deduction is Rs. 20,000. Please note that you will have to show the proof for payment of premium. (Section 80D benefit is different from the Rs 1,00,000 exemption under Section 80 C)

Q6. Is a medical checkup necessary before buying a policy?

A medical checkup is necessary for a new health insurance policy for customers above the age of 40 or 45 years depending on the health insurer's norms. Medical checkups are usually not needed for renewal of policies.

Q7. What are the minimum and maximum policy durations?

Health insurance policies are general insurance policies usually issued for a period of 1 year only. However, some companies also issue a two year policy. At the end of your insurance period you must renew your policy.

Q8. What is coverage amount ?

Coverage amount is the maximum amount payable in the event of a claim. It is also known as "sum insured" and "sum assured". The premium of the policy is dependent on the coverage amount chosen by you.

Q9. My wife and children are residing at Mysore while I am here in Bangalore. Can I  cover all of us in one policy?

Yes, you can cover the entire family under one policy. Your health insurance policy is in force across India. You must check whether there are any network hospital near to your as well as your family's place of residence. You must check if your insurer has a network hospital close to you or where the rest of your family resides. Network Hospitals are the hospitals that have tied up with the TPA(Third Party Administrator) for cashless settlement for expenses incurred there. If there are no network hospitals at the place of your residence, you could opt for reimbursement mode of settlement.

Q10. Are naturopathy and homeopathy treatments covered under a health policy ?

Naturopathy and Homeopathy treatments are not covered under a standard health policy. The coverage is available only for allopathic treatments in recognized hospitals and nursing homes.

Q11. Does health insurance cover diagnostic charges like X- ray, MRI or ultrasound ?

Health Insurance covers all diagnostic test like X- ray, MRI, blood tests etc as long they are associated with the patients stay in the hospital for at least one night. Any diagnostic tests which have been prescribed in the OPD are generally not covered.

Q12. Who is a Third Party Administrator ?

A Third Party Administrator (commonly referred to as TPA) is an IRDA (Insurance Regulatory and Development Authority) approved specialized health care service provider. A TPA provides the insurance company with a variety of services like networking with hospitals, arranging for cashless hospitalization as well as claims processing & timely settlement.

Q13. What do you mean by Cashless Hospitalization?

In the event of hospitalization, the patient or their family will have a bill to pay the hospital. Under Cashless Hospitalization the patient does not settle the hospitalization expenses at the time of discharge from hospital. The settlement is done directly by the Third-Party Administrator (TPA) on behalf of the health insurer. This is for your convenience.
 
However, prior approval is required from the TPA before the patient is admitted into the hospital. In case of emergency hospitalization, approval can be obtained post-admission. Please note that this facility is available only at the network hospitals of the TPA.

Q14. Can I buy more that one Health Insurance policy?

Yes,you can have more than one Health Insurance policy. In case of a claim, each company will pay rateable proportion of the loss.
For example,a customer has Health Insurance from Insurer A for a coverage of Rs. 1 lakh and Health Insurance from Insurer B for a coverage of Rs. 1 lakh. In case of a claim of Rs. 1.5 lakh each policy will pay in the ratio of 50:50 up to the sum assured.

Q15. Are there any waiting periods when my expenses will not be settled, in case of a contingency?

When you get a new health insurance policy, there will be a 30 day waiting period starting from the policy start date, during which period any hospitalization charges will not be payable. However, this is not applicable to any emergency hospitalization occurring due to an accident.
This 30 day waiting period is not applicable when the policy is renewed.

Q16. What happens to the policy coverage after a claim is filed?

After a claim is filed and settled, the policy coverage is reduced by the amount that has been paid out on settlement.
For Example: In January you start a policy with a coverage of Rs 5 Lakh for the year. In April, you make a claim of Rs 2 lakh. The coverage available to you for the May to December will be the balance of Rs.3 lakh.

Q17. What is the maximum number of claims allowed over a year?

Any number of claims is allowed during the policy period. However the sum insured is the maximum limit under the policy.

Q18. What are the documents required for buying a health insurance?

No documents are required for purchasing health insurance. As of now, you do not even need any PAN Card or ID proof. Depending on the norms of the insurer and the TPA.You might need to furnish documents like ID proof at the time of submitting a claim.

Q19. Can I avail this policy if I am not an Indian National but living in India?

Yes, foreigners living in India can be covered under a health insurance policy. However, the coverage would be restricted to India.

Q20. What are exclusions in a health insurance policy ?

Every health insurance policy has a set of exclusions.

  1. Permanent exclusions like AIDS,cosmetic surgery and dental surgery which the policy will not cover at all.
  2. Temporary exclusions like cataract & sinusitis which are not covered in the first year of the policy but are covered in subsequent years.
  3. Conditions arising from diseases existing before the purchase of the policy are not covered. These "preexisting" diseases are covered usually after 4 years of the policy being in force depending on the policy terms & conditions.

Q21. What are the factors which determine the premium payable for health insurance ?

Under health insurance, the age and the amount of cover are the factors that decide the premium. Usually, younger people are considered more healthy and thus pay lower annual premium. Older, people pay a higher health insurance premium as their risk of health problems or illness is higher.

Q22. Who will receive the claim amount under health insurance if the policyholder dies during the time of treatment ?

In cashless mediclaim settlement, it is settled directly with the network hospital. In cases where this is no cashless settlement, the claim amount is paid to the nominee of the policyholder.
In case there is no nominee made under the policy, then the insurance company will insist upon a succession certificate from a court of law for disbursing the claim amount. Alternatively, the insurers can deposit the claim amount in the court for disbursement to the next legal heirs of the deceased.

Q23. Is mediclaim the same as health insurance ?

Yes, it is the same.

Q24. What is the difference between Health Insurance & Critical Illness policies or Critical Illness Riders in insurance?

A Health Insurance policy is a reimbursement of the medical expenses.
A critical illness insurance is a benefit policy. Under a benefit policy upon the occurrence of an event, the insurance company pays the policyholder a lump sum amount. Under a Critical Illness policy, if the insured is diagnosed with any critical illness as specified in the policy. The insurance company will pay the policyholder a lumpsum. Whether the client spends the amount received on the medical treatment or not depends on the client's own discretion.

Q25. How does the insurance company decide whether a disease was a pre-existing one or not?

While filling up the proposal form for insurance you need to provide details of the illnesses you have suffered during your lifetime. At the time of insurance, you should be aware whether you have any disease and whether you are undergoing any treatment. The insurers refer such health issues to their medical panel to differentiate between pre-existing and newly contracted illnesses.
Note: It is important to disclose any disease you might be suffering with before buying the health insurance policy. Insurance is a contract based on good faith and any willful non disclosure of facts might lead to problems in future.

Q26. What happens when I cancel the policy?

If you cancel the policy, your cover will cease to exist from the date of cancellation of policy.  Additionally, your premium should be refunded to you on short period cancellation rates. You will find these in the policy terms and conditions in the policy document.

 

Q27. Can I seek treatment at home and be reimbursed for it under health insurance?

Most policies offer the benefit of treatment at home:
a) When the condition of the patient is such that he cannot be moved to the hospital or
b) When there is no bed available in any of the hospitals and only if it is like the treatment given at the hospital / nursing home which is reimbursable under the  policy. This is called "domiciliary hospitalization" and is subject to certain restrictions both in terms of the amount which is reimbursable as well as the disease coverage.

Q28. What do you mean by coverage amount ? Is there is a minimum or maximum limit ?

Coverage amount is the extent to which the insurance company will reimburse you for the medical expenses incurred by you. Usually, mediclaim policies start with a low coverage amount of Rs 25,000 and go to a maximum of Rs 5,00,000. (There are also high value insurance  policies especially for critical illness available from some providers)

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