What are the Five Most Important Things to Know About Health Insurance?

Health insurance is a product which can relieve you from financial burdens during an emergency. However, due to a lack of awareness, many people make mistakes during the buying process. You should always keep waiting periods, premiums, and other factors in mind.

5 Most Important Things to Know About Health Insurance

Whether you are buying health insurance for the first time or just want to update your knowledge, these 5 points are non-negotiable:

1. Waiting Periods

Waiting periods refer to the time you have to serve after buying an insurance policy, before you make a claim. In health insurance, there are several kinds of waiting periods: pre-existing disease waiting period, initial waiting period, survival waiting period, and specific illness waiting period.

These are put in place to make sure people do not buy health insurance when they are facing an emergency. However, for accidents, these waiting periods are not applicable.

2. Policy Inclusions and Exclusions

If you are planning to buy a health insurance policy, knowing about the policy's inclusion and exclusion is necessary. These specify what treatments, procedures, and other benefits the policy includes and excludes. For example, an individual health policy may include daycare procedures but exclude cosmetic procedures.

Before committing to any policy, you must read it thoroughly to understand your coverage range. Therefore, you will avoid unexpected claim denials at the time of need.

3. Sum Insured Amount

This is perhaps the most important thing to know about health insurance. The sum insured amount is the maximum limit your insurer will pay. The higher the sum insured amount, the higher your premium amount will be.

For example, if you buy a ₹5 lakh insurance policy and make a claim of ₹6 lakh, your insurer will only cover up to ₹5 lakh. You will have to pay the remaining ₹1 lakh out of your pocket.

4. Claim Settlement Ratio

The claim settlement ratio (CSR) is an important metric showcasing the reliability of an insurance provider in India. It is the ratio between the number of claims raised and the number of claims the company settled. The higher the percentage, the better.

For example, if a company has a CSR of 90%, it means that they settle 90% of all the claims they receive. When buying insurance, ensure to choose a company with high CSR.

5. Premium, Deductible and CoPay

Lastly, knowing the meaning of these terminologies is of utmost importance. The premium is the amount your insurer will charge you to give you the coverage. On the other hand, a deductible is the amount that you have to pay before your insurer starts to cover you.

Co-pay is a fixed and out-of-pocket expense that helps you share the medical expense between you and your insurer.

Final Thoughts

By understanding these 5 points about health insurance, you will be able to make better decisions and maximise your savings. Do your due diligence before buying any health insurance product, and get rid of financial stress.