Last Updated on May 24, 2022 by
Buying a health insurance plan is one of the most primitive steps to ensure that unforeseen medical emergencies don’t burn a gaping hole in your pocket. Health insurance plans help protect the policyholder financially and make medical treatment cheap and affordable.
However, purchasing a health insurance policy can seem overwhelming, especially for first-time buyers who don’t know the technical health insurance terms used in the industry.
Let us explore the most common health insurance terms in the health insurance sector. These are crucial terminology you must know about when you step into the market to shop for a health insurance plan.
Table of Contents
1. Deductible
A deductible can be understood as a specific amount that a policyholder is obligated to pay at the hospital before the insurance company settles the policy holder’s claim. Insurance companies will either pay the claim to you or directly to the hospital where you received medical care only after paying the deductible amount.
Although deductibles can help reduce your premiums, you will have to pay a certain amount before receiving the claim. Hence, it is crucial to understand if the health insurance plan of your choice has a deductible or not.
2. Inclusions
One of the important health insurance terms you need to know and look for in the health insurance plan is the inclusions. These are the key features or benefits offered by the policy- these are the items that the insurance company will compensate you for. Some of the common inclusions include hospital admission, ambulance and hospitalization expenses, surgery expenses, medicines, and other expenses related to the treatment.
3. Exclusions
Also known as the policy’s limitations, these are the items that the health insurance company won’t compensate you for. Insurance companies mention these exclusions in their plans. Thus, go through the policy’s fine print to know what items are excluded from your policy.
4. Premium
Premium in health insurance is the fixed amount you need to pay to the insurance provider periodically in exchange for the insurance cover. The premium payout can be monthly, quarterly, half-yearly, or annually. The premium amount depends on a range of factors like the sum assured, riders opted for, your age, smoker/ non-smoker, pre-existing conditions, etc.
5. Add on/Rider
Add-ons or riders are the additional covers that you can purchase to upgrade your basic health insurance plan into an all-rounded health insurance policy. You will have to shell out a minimal additional amount to avail these riders. However, they will help you save a significant amount of money in the future since unforeseen medical emergencies will cover you. Some examples of these riders include maternity cover, an accidental disability rider, room rent waiver, etc.
6. Co-morbidities/Pre-existing illness
Comorbid diseases like hypertension, heart diseases, diabetes, and renal disorders are considered high-risk by health insurance companies. Such comorbid diseases in a potential policyholder can lead to the health insurance companies charging a higher premium.
7. Cashless claim
A cashless claim is another important health insurance term to know. A cashless claim is when the policyholder is not required to pay any cash at the hospital, and the bills are settled directly between the insurance company and the hospital. It is recommended that the health insurance plan you opt for offers cashless claims.
8. Co-payment
A co-payment clause in a health insurance plan is when the total hospital bill is paid under a cost-sharing plan. Essentially, the policyholder will have to pay a certain percentage of the hospital bill while the insurance company will pay the rest. Although this reduces the premium, it does not impact the sum insured.
9. Critical illness
This is any life-threatening illness or medical condition which is high-risk. Some examples include organ failure, cancer, cardiovascular diseases, etc.
10. Sum insured
This is perhaps the most common health insurance term used. It is the policy’s coverage amount that the insurance company is obligated to pay in case of an eventuality.
11. No-claim bonus
The no-claim bonus is the reward that the insurance provider gives to the policyholder for not filing a claim in the preceding year(s). This is a feature that most health insurance policies offer.
12. Top-up plan
A top-up plan is a policy that the policyholder can purchase on top of the existing, base health insurance policy. A top-up plan ensures that the cost of your treatment gets covered by the insurance provider once the sum insured is exhausted.
13. Assignee
An assignee is a person who gets the benefits of the health insurance policy.
14. Grace period
This is generally a period of 15 days which begins right after the due date for the premium payment of your health insurance plan. The grace period allows you to continue and renew the policy without losing any benefits of the plan you opted for.
15. Waiting period
This is the period wherein specific benefits of the health insurance plan are not available to those insured as per the policy. During this period, you will not be able to claim benefits. The waiting period tenure differs for each policy, insurance provider, and several other factors.
16. Network Hospitals
These are the hospitals that the insurance company has a tie-up with. At these network hospitals, you can avail of medical care without paying anything. The settlement is made between the hospital and the insurance company as per your plan.
The takeaway
Buying a health insurance policy can come across as daunting due to the various health insurance terms and jargon used in the paperwork. However, learning these basic terms will help you buy the most beneficial plan. This will also help you be more aware of your rights as a health insurance policyholder.
