10 advantages & benefits of health insurance policy

Don’t we often find ourselves wondering whether purchasing health insurance policies is that essential? One can not only shield one’s family and elders from unforeseen health emergencies financially by buying health insurance coverage but also ensure that their ambitions and dreams are not jeopardized. It saves an individual from incurring hefty expenditure in the event of any exigency, as hospitalization costs have soared in the last few years. 

Moreover, a large percentage of millennials are aware of the advantages of good health and adequate medical cover. However, a significant proportion still looks at health insurance as an instrument for saving tax. A recent survey of 1,400 millennials in the age group of 25 to 35 years showed 75% of the respondents claiming to have health insurance. But 46% of the buyers suggested that the tax deduction on health insurance premium was what made them buy the health cover. The primary importance was tax savings. Well, taxes should be considered in decision making as it makes the health insurance additionally attractive, but an investor should not base her decision entirely on taxes.

The key advantages of health insurance policies are mentioned below to help you while making a well-informed decision:

Benefits of availing a health insurance policy

1. Cashless Hospitalization 

One of the essential advantages is that health insurance can provide coverage for most of your healthcare expenses. This type of insurance pays for multiple doctor’s visits, trips to the emergency centre and specialist treatments (either in part or in whole). Depending on your specific policy, large hospital bills associated with surgery or other significant treatments can also be covered via health insurance.

2. Hospital and Transportation Charges

Health Insurance covers not only the enormous hospital bills but also the charges which are paid to ambulance towards the transportation of insured. It could prove particularly beneficial in the contemporary times of COVID 19 wherein the hospitals have been charging huge sums of money for providing ambulance to people. In such cases, an insurance cover can go a long way in mitigating your burden.

3. A wide array of choices for the insured

Gone are the days when insurers just used to offer basic health insurance plans. Nowadays, modern insurance providers offer a wide variety of health insurance policies. Most insurers now provide individual policy and family floater plans. For instance, with a personal plan, you get a cover for yourself; but with a family floater plan, you can guarantee the health of your entire family up to a fixed umbrella amount. Other types of health plans ranging from critical illness plan, ULHP (Unit Linked Health Plan), personal accident plan, group health insurance, and hospital cash benefit plan can also be found apart from the popular options mentioned above. The availability of a multitude of alternatives ensures that you can choose a policy which best meets your requirements and is customized to your unique needs.

4. Provides financial security

The most significant advantage of purchasing health insurance is that it prevents your long-term savings from getting wiped out in the event of medical emergencies. You might be saving and investing for essential needs such as investing in a property or children’s education. Still, you or someone in your family suffering from a medical emergency can require you to put your assets into liquidation.

 Further, if you are still unable to manage the expenses, you might also go ahead and borrow money from family, friends, take a loan from a bank or financial institutions, etc. All of these can have a mammoth impact on your financial health and the achievement of your long-term financial objectives. Therefore, keeping in mind the ever-increasing cost of quality healthcare, obtaining health insurance can help you avoid such unfavourable outcomes.

5. Cashless access

Another advantage of health insurance is cashless claims. Nowadays, most top insurers have wide-ranging network of hospitals throughout the country where you can avail cashless hospitalization. In case the individual is suffering from a health problem and gets admitted to one of the network hospitals, there is no need to pay any cash and the entire expenses are borne by the one will undoubtedly be able to benefit from cashless hospitalization.

 This facility gets rid of the conventional insurance reimbursement procedure where the patient first clears the hospital dues and then files an insurance claim with the insurer. The company shall reimburse the cost to the insured. To avoid the cash outflow for the patient in such difficult times, the insurer will directly pay the hospital bills to the hospital through the cashless facility. Thus, the patient does not have to bear considerable medication costs out of pocket. 

6. Coping with medical inflation

As medical technology (diagnosis, prevention, monitoring, treatment, or alleviation of disease) improves, so does the cost for treatment associated with the particular disorder. And one needs to make a note of the fact that expenses related to medical treatment are not limited to only hospitals. The multiple costs range from doctor’s consultation and diagnostic tests to ambulance charges, operation theatre costs, medication, room rent, post surgery care etc. All these are also rampantly increasing. All of these could put a considerable strain on your hard-earned money if not planned well. By paying a relatively reasonable health insurance premium each year, you can escape the anxiety of medical inflation while opting for quality treatment, without worrying about how much it will cost you. At least, you don’t worry about shelling out cash in an emergency.

7. No Claims Bonus (NCB)

Health plans are normally renewed every year by paying the insurance premium. What happens if you do not file even a single claim in the year? Do not worry; as you would not be losing anything; instead, you will be entitled to receive your No Claim Bonus or NCB in case you do not file any claim for the entire year. Thus, this provides an added advantage for a person to purchase a health insurance plan. Normally, the no claim bonus does not reduce your premium amount but increases your insurance cover each year when there has not been a claim.

There is a small difference in how NCB is treated in vehicle insurance and how it is treated in health insurance. The NCB reduces the annual premium with motor insurance. However, the NCB offers you a higher sum assured at the same premium amount through health insurance. E.g., if the health insurance plan’ coverage of an individual is Rs. 8 lakhs and you do not file any claim in one year, the insurance cover will be increased to Rs. 8.8 lakhs (10% of coverage) in the next year without any increase in the premium amount. Eventually, you do stand to benefit from the NCB.

8. Availability of extra benefits

Several health insurance plans, for example, ignore numerous critical illnesses such as cancer or heart diseases or do not even cover treatments arising from an accident. You can go ahead and buy an acute illness or accident cover add-on to ensure that your policy covers such exclusions as well. There are numerous types of add-ons which one can avail along with health insurance policies. While such benefits raise the policy premium marginally, they significantly help in enhancing the scope of the plan. Even if you purchase a basic health insurance policy, such add-ons can help make your health insurance more profitable.

9. Tax exemption on health insurance premiums 

A significant population in India end up buying health insurance only because of the tax benefits it provides. While the tax gain should not be the sole driving factor for you in health insurance purchase, it still is a significant advantage. An individual can claim a tax deduction of the premiums paid for a health insurance policy subject to the prevailing laws in the country under Section 80D of the Income Tax Act, 1961. Currently, the insured can claim exemption up to Rs.25,000 for self and family and an additional Rs.25,000 for dependent parents. In case of senior citizens, the above limit automatically stands enhanced to Rs.50,000. Effectively, your maximum benefit in health insurance can go up to Rs.100,000 in a single financial year, if both you and your parents are senior citizens.

 The taxpayer can claim a similar benefit for the parents’ health insurance policy subject to the threshold as prescribed the income tax law in force. 

10. Health Insurance gives you peace of mind

Purchasing health insurance brings in a great sense of security, mainly if an individual has purchased a family floater plan. One is bound to experience a certain sense of security, knowing that his or her loved one’s health, is wholly secured. Obtaining a health plan allows you to be tension-free about the medication costs, allowing you to focus on the best treatment rather than the cost of such treatment. Furthermore, quality care can also speed up the process of recovery, allowing you to get back to your healthy-self, earlier than expected.

Now that we are quite well-versed about the advantages associated with health insurance plans, it should not be very difficult for you to make a wise and informed decision. Indeed, the younger you are when you buy health insurance, the more fruitful and advantageous it is going to be.

So, start scouring through the schemes available and the different types of health insurance plans which are available. The idea is to choose the plan that best serves your requirements and goals. Make sure that you select the right policy customized to your needs from a reliable insurance provider. Also, check that the insurer you select enjoys a high claim to settlement ratio so that you can secure your health in the best way possible.

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1. What are the advantages of a cashless insurance policy?

In times of financial crisis, it is better to avoid expenses out of pocket. Cashless facility allows the policyholder to get treatment at the preferred hospital. The payment for all the medical expenses covered under the insurance policy agreement are paid by the insurance company directly to the concerned hospital. A claim settlement process, on an average, lasts for about 40 days. In case of any policy other then cashless insurance policy, the policyholder will have to bear the expenses and then file the claim for reimbursement.

2. How much Mediclaim should one have?

The role and importance of medical insurance has largely evolved from being merely a tax benefit to an actual enhancement to your financial plan. In today’s times, it offers many more benefits than a tax cover. There is no thumb rule to determine the adequacy of a medical insurance but here are few benchmark points to keep in mind before choosing a Mediclaim policy. 

1. Ability to pay
2. Income 
3. Family medical history 
4. Age
5. Hospital 

3. What is the difference between health insurance and Mediclaim?

Both these terms are same but they are also different in a way. Let us understand. These two terms are closely associated with the health insurance space and are often used interchangeably. Mediclaim refers to the hospitalization and related expenses. Such polices often indemnifies the expenses related to hospitalization in case of an illness or an injury. Health insurance, on the other hand, is a much broader and comprehensive term covering expenses much beyond the scope of hospitalization as well. It is more like an umbrella policy with comprehensive coverage and covers other aspects of healthcare too.