Health insurance covers medical expenses that arise due to an illness. These expenses could be related to hospitalization and other pre and post-hospitalization expenses. Life insurance health plans are amongst the lesser-known insurance plans even though 89%* of all private healthcare expenditure in India is out of pocket.

There are basically two basic types of health insurance plan:

Mediclaim Plans

This is the basic form of health insurance. The plans cover the cost of treatment when you are admitted to a hospital. Mediclaim plans also cover some pre and post-hospitalization expenses. The payout is made basis the actual expenses incurred during the hospitalization. The insured submits the details and the expenses are reimbursed by the insurer. If the hospital is within the network established by the reinsurer the insured can get the facility of a cashless claim. In such a case the hospital bill is paid by the insurance company directly to the hospital.

Critical Illness Insurance Plans

Given the increasing incidence of lifestyle diseases like heart disease, cancer, etc., there has been a significant increase in the take-up of critical illness products. Critical illness plans offer financial coverage against life-threatening diseases.

Major illnesses require prolonged hospital stay followed by a lengthy recuperation period. At this time the insured and the family have to manage with from a reduced income flow. The lump-sum payout made by the not only helps fund the cost of treatment but also helps the family tide over the period where the income has stopped or reduced due to absence from work. The insured is paid a fixed amount as chosen by him/her at the time of buying the policy. Also, no original documents are required at the time of processing a claim as in the case of mediclaim policies. A certificate from the doctor confirming the diagnosis of the illness is adequate for the insurance company to process the claim.

Also Read: Planning for health cover: Why mediclaim alone is not enough

Why health plans are important

India has witnessed a high degree of inflation in the cost of healthcare over the last few years. A bout of hospitalization can have severe financial implications which have the potential of derailing the financial plan. Given the low insurance penetration, families have to dip into the savings pool (which would have been saved for a child’s education or own retirement) or even worse borrow money to pay for the expenses. To mitigate such a risk, it is imperative that health insurance be an important part of the financial plan. While the Mediclaim policy covers the hospitalization cost, the lump sum payment from Critical Illness Plans health plans helps you tide over the financial crisis arising due to the critical illness. You can use the money to cover further medical expenses or any other expenses incurred.

Also Read: Quit Smoking for a healthy life

Why choosing the right health plan is important

Though there are a large number of health plans available in the market, you should choose a health plan which is right for you. But how do you select the right one? You should consult your family doctor about this. Though you can be diagnosed with any disease for reasons not known to you, there are some diseases that are hereditary in nature. For example – Heart disease. Some companies offer you exclusive heart care insurance covering various heart ailments for you and your spouse through a single policy. The payouts are fixed irrespective of the cost of treatment. Also, multiple claims can be made under a single policy.

Once you have chosen the right plan, you should choose the sufficient cover based on your lifestyle expenses, income level, etc. As the claim proceeds received from health plans works as a replacement of unforeseen expenses, your cover should be adequate enough to take care of your expenditures during the recovery period when you are not earning. 

Also Read: Fitness for every working mom

Conclusion - The kind of stress under which we work on a day to day basis and the lifestyles we maintain has made us prone to lifestyle diseases, sometimes even at a very early age. The cost of treatment for these diseases is very high and can make a serious dent in our family savings. Critical illness plans are a definitive way to cover one’s medical expenses. These benefits– immediate financial relief when faced with a serious illness, coverage of major terminal illnesses and a monetary boost for those who are dependent on you

(* Source: Global Health Expenditure Database 2013)

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