Health Insurance Glossary: that you should be aware of

Vikramjit is 22 years old and works in a private company in Indore. Vikramjit is not covered under a corporate health insurance plan and thus, he wants to purchase a separate individual insurance policy that will give him adequate coverage and protection against various ailments including the COVID-19. One of Vikramjit’s acquaintances was infected with this deadly coronavirus and that person had to pay a hefty amount from his pocket for the treatment as he had not purchased a health insurance policy. That’s why Vikramjit didn’t want to take any risk with his life though he is healthy, young, and doesn’t have any ailments. Since Vikramjit is a novice player in the field of the health insurance industry, he believes that if he had some knowledge regarding the basic insurance terminology, then he will certainly make a wise purchase decision.

Here we are going to explain all basic insurance terminology so that people like Vikramjit can understand the policies clearly and can make informed decisions.

Whenever you are planning to purchase a common health insurance policy, you may come across some insurance policy terms and conditions. If you don’t understand these terms, you may not be able to choose the right policy for you.

Common Health Insurance Glossaries in India

Claim: A claim is a financial support that an insured policyholder receives from his/her insurance company for healthcare expenses undertaken.

Co-payment: Co-payment is a certain portion of the claim amount that an insured policyholder needs to pay from his pocket for his treatment. The remaining amount is paid by the insurance company. The co-payment clause reduces your health insurance premium amount. Most senior citizen policies come with this type of clause.

Reimbursement: Your insurer will reimburse the treatment cost if you are admitted to a non-network hospital.

Cumulative Bonus: Cumulative bonus is also called No Claim Bonus (NCB). For every claim-free year, the sum insured will be increased by a fixed percentage for your health insurance.

Claim Settlement: By following this process, you will get your claim money from the insurer for your treatment. There are two modes of the claim settlement process.

• The Reimbursement: If you opt for a non-network hospital for your treatment, then you can apply for the reimbursement of the amount paid from your insurer.
• Cashless Claim: In a cashless claim facility, the insured policyholder doesn’t need to pay anything from his pocket if he chooses a network hospital for his treatment. Since your insurance company is tied up with the hospital, they will settle your bill directly with the hospital. But this facility is applicable only at network hospitals.

Exclusion: Exclusions are circumstances or conditions for which your health insurance policy will not offer you any coverage. Some permanent exclusion in health insurance policies is sports injuries, suicide, and hospitalization due to consumption of drugs, alcohol, and more.

Grace Period: Once you missed your premium, the insurance company gives you another 15 days after the due date of your health insurance premium. This period is called the grace period and you need to pay within this period to enjoy the continuity of your policy benefits.

Insurer: An insurer is a health insurance company that will offer you various lucrative health insurance plans.

Premium: A premium is a fixed periodical amount that you need to pay to your insurance company to enjoy the benefits and coverage of your health policy.

Policy: This is a legal contract between you and your health insurance company. This contract comes with various terms and conditions.

Pre-existing disease: Pre-existing disease is an ailment/condition/injury for which the insured person (once diagnosed) received treatment within 48 months before the first policy issued by the insurer. After a certain period, every policy covers pre-existing diseases. Don’t hide your pre-existing diseases from your insurer. Your claim will be rejected if you don’t disclose this.

Network: Network is a group of hospitals or healthcare centers that are partnered with health insurance companies. If you choose a network hospital for your treatment, you may get a cashless facility.

Daily Hospital Cash: This specific cover is designed to offer a fixed amount for each day if the policyholder is admitted to a hospital. The exact amount is decided at the time of purchasing a policy.

Sum Insured: This implies the maximum financial support/benefits in a year offered under the policy by the insurance company. You should wisely choose the sum insured while purchasing a policy. Your premium amount will also be calculated based on the sum insured.

Waiting period: A waiting period is a period from the date of commencement of the policy. After completion of this period, you will be eligible for all benefits of the policy.

Free Look Period: Free-look period is the time duration that you will get after purchasing a policy to decide whether you want to continue with your plan or not. The free look period extends from 15 to 30 days from the date of receipt of the policy.

Restoration Benefit: A health policy with restoration benefits implies the plan will reinstate your sum insured for unrelated treatments once it is exhausted.

Riders: Riders are often called add-ons that offer extra protection to the insured policyholders. Some common riders are maternity benefits, accidental cover, etc. If you want to incorporate these riders into your base plan, you need to pay an additional premium amount.

These are some common health insurance glossaries that you should know before purchasing a health policy. These insurance terminologies will help you to understand your policy in a better way and make the right decision.