Health Insurance - The Complete Guide.

“Health insurance is an investment plan where the policyholder is insured for his health expenses.”

    Basics of Health Insurance


    Third party administrator is the organisation monitored by IRDAI they process claims from the policyholder.


    Exclusion are medial conditions which are not covered for the policyholder under the insurance medical claim policy.


    Claim is the amount payable by the health insurance company for the medical expenses incurred by the policy taker.

    Waiting Period

    Waiting period is the months the insurance agency requests the policyholder to wait to insure certain benefits.

    Network Hospitals

    Network hospitals are the ones where the policyholder can admit and incur less charges compared to others.


    Premium is the fee the policyholder has to pay regularly for the health insurance plan monthly, annually or semi-annually.

    What is Health Insurance?

    Health Insurance offers coverage to the policyholder for medical expenses. It saves the policyholder in case of any health emergency. It covers all the medical expenses incurred by policyholders who own at the policy.

    The medical expenses covered under the policy include the cost of surgery, drugs, treatment, and the services provided by the hospital. This provides financial stability to cover the cost incurred during a medical emergency.

    In simple words, it provides reimbursement for medical expenses with a monthly payment of a small amount. Group health insurance falls under the employee benefit schemes, but the premiums are partially covered by the employer. In simple words, group insurance manages the welfare of the employees.

    The policy chosen by the insured provides coverage for many medical expenses. This includes – Surgical expenses, Daycare expenses, and Critical illness, etc.

    How Health insurance works?

    Let’s assume in a city there are 100 people. Ravi is one among them. Ravi takes health insurance of 1Cr up to the age of 54 years, after which his son/daughter starts earning. Out of 100, the average number of people who become ill is around 15%. This means only 15 people claim from the paid amount. The Balance amount goes to the bank’s management operations.

    Thus, the claim can be settled from the premium collected from other policyholders. This, just like sharing the risk of one individual with a huge group. This is how the life insurance industry runs. Unless a huge disease affects people, the insurance companies can settle claims.

    Type of Health Insurance?

    Insurance companies have catered to every need of their customers in the last decade. Hence, they have started introducing plans to suit the different needs of their customers.

    1. Individual Health Insurance

    This plan offers insurance protection with the below benefits.

    • Cashless hospitalization
    • Reimbursement of medical expenses
    • Compensation for expenses for pre and post-hospitalization expenses
    • Coverage for home treatment and much more

    Add Ons can also be taken with Individual health plans. This enhances basic coverage of the insurance. The policyholder has to pay an extra amount besides the premium.

    2. Group Health Insurance

    This plan is generally taken by employers. This policy helps the employees to leave the concern about the health of their employees. The employees through their Medi-Claim policy can claim the expenses inured from the hospital itself.

    This helps the employee to be more attached to the organization. As the employee doesn’t have to pay any premium directly.

    3. Family Health Insurance

    As the name suggests this plan is taken by an individual for his whole family. With this plan, the policyholders pay a single premium, and the sum assured becomes claimable for one person among the family.

    If one person from the family faces illness, with the health insurance the particular person can claim the expenses.

    Health Insurance and its benefits

    Health Insurance is a financial investment that lets the investor save money spent on his health expenses. Let’s have a detailed discussion on its benefits below.

    1. Medical expenses

    Here, the primary objective  is to provide the best health care service without relying on your income or savings.

    It covers all the expenses from medical charges, medical bills, and costs of medicines, treatment, and other services that are incurred to treat the illnesses.

    Thus, it takes away the burden of finance at the time of a medical emergency.

    2. Coverage for critical illness

    Apart from curable illnesses, there are other dreadful illnesses that require better coverage and incur long-term expenses

    Illnesses such as cancer, liver failure, and brain tumor require intensive care (surgery, therapy, and transplant, etc.) These treatments incur a huge amount of money to be spent as medical expenses.

    To cover such life-threatening health issues which come at a high cost an individual can opt for a health insurance policy.

    Thus, when an individual gets a health insurance policy he receives a lump sum upon the diagnosis of the health issue that falls under the predetermined list under the policy.

    Policyholders don’t have to spend their savings on the expenses, instead the same can be claimed with the insurance policy.

    3. Cashless claim benefit

    Nowadays several insurance companies provide the facility of the claim that involves cashless transactions.

    This is applicable when the policyholder gets admitted to the insurer’s network hospitals. Network hospitals are hospitals that are in agreement with the insurance company for a health insurance policy.

    In this case, the transaction takes place between the company and the hospital. The policyholder is not involved between them.

    The policyholder can fill out the pre-authorization form using the health insurance card to avail of the cashless facility.

    4. Extra coverage facility

    Generally, every organization offers their employees health insurance cover but only till their employment with the organization. If the employee has to leave the organization the medical expenses can’t be claimed from the company.

    There are many cases where the employees lose their employment as a result, they lose their health insurance coverage as well.

    To avoid such problems, it would be an additional coverage to protect you and your family in terms of finance and risk.

    5. Tax benefits

    One of the most familiar advantages is the tax benefits. There are various tax benefits depending on the age category. The premium paid under the health insurance scheme is covered under section 80D of income tax 1961.

    Tax benefits of Health Insurance

    Health insurance claim process

    Claims through reimbursement is a process where the insurance company compensates the insured after his treatment. In simple words, the insured pays the medical bills and he/she reimburses the pay later from the insurance company. The types of Health Insurance claims are…

    1. Cashless claim process
    2. Claim for an expected event
    3. Emergency claim

    1. Cashless claim process

    This type of claim process involves no cash and helps you to reduce the burden of handling cash.

    In this process of claim, the insurance provider directly pays the hospital all the costs incurred for the treatment.

    The insurance holder can use the card provided by the company. This process has a condition where the policyholder should be admitted or receive treatment only from the partner hospital or the insurance company to utilize this benefit.

    2. A claim for an expected event

    In certain scenarios, the doctors inform the policyholder in advance about the treatment for the illness.

    In such cases, the individual policyholder can inform the insurance provider about the amount payable. Generally, this process is expected to be completed 4 days prior.

    However, the period of intimation varies according to the companies. The policyholder has to submit the cashless claim through physical means or electronic mode.

    After this process, the insurance company coordinates with the hospital with the further process to initiate the plan.

    3. Emergency Claim

    Certain scenarios are unplanned and unforeseen. The process of a claim for an emergency begins with the customer care of the insurance company.

    Once the customer care informs about the situation, the network hospital is liable to fill the cashless claim form and submit it to the insurance company.

    The hospital receives the submitted form after after a thorough checking. The insurance company takes care of the cost incurred for the treatment and service of the hospital.

    Documents required for Health Insurance policy

    The policy demands documents at two instances. One is when the policyholder decides to buy a new policy second is when he claims the maturity amount. Lets discuss the two instances below.

    1. For health Insurance application

    To apply for a new health insurance policy below is a checklist that will be useful for the policyholder to organize the required documents. But remember, Our financial advisors suggest analyzing a policy thoroughly before choosing it as it should be a One time Investment.

    Documents required for Health Insurance claim

    2. For Health Insurance claim

    Accordingly, the insurance company requires proof documents which majorly comprise medical bills. On submission of these documents, they are verified by the insurance company.

    Some companies even use third parties to ensure that policyholders don’t file a false claim and filing such claims are considered to be fraudulent. Hence, the document is verified and found legitimate, then the claim amount is settled.

    Below are the list of the required documents.

    1. Passport size photographs of the Policyholder
    2. His / Her Medical reports
    3. Filled and signed proposal form
    4. Age Proof – (Voter ID card, Pan card, Aadhar card, Driving license, Passport, Birth Certificate).
    5. Identity proof – (Voter ID card, Passport, Aadhar card, Driving License)
    6. Address proof – (Ration card, Driving license, Passport, Rent agreement, PAN card, Aadhar card, Utility bills)
    Other Related Links