6 Major Benefits Of A Health Insurance Policy In 2023 – Forbes Advisor INDIA

Benefits Of Health Insurance

A health insurance policy is primarily designed to cover you financially in case of a medical emergency caused by illnesses, accidents or hospitalization. It has long-term benefits that make taking a health insurance policy a definite goal in your annual financial plan. 

Let’s look at how a health cover can benefit you. 

1. Hospitalization Cost

One of the most pertinent benefits of health insurance policy is that it covers expenses for hospitalization, whether it is for accidental injury or illness.

Illness hospitalization

Health insurance policies cover for costs incurred while taking treatment in a hospital for any illness. The expenses covered include any associated costs related to the treatment ranging from the following:

• Room charges
• Intensive care unit (ICU) charges 
• Doctors’ fees
• Diagnostic tests costs
• Surgery charges

Accidental hospitalization 

Any cost incurred for treatment of injury due to an accident are covered in health insurance policies. These include any associated costs related to the treatment of an accidental injury that is covered in the health insurance plan such as: 

• Room rent
• Doctor/surgeon fees 
• ICU charges
• Diagnostic test costs

Capping on room rent 

An option to choose a cap on room rent in your health insurance policy is an important determiner because charges such as diagnostic and doctor fees are directly related to the category of room one chooses during treatment in the hospital. 

This feature involves options such as a fixed amount linked to the total sum insured of an individual or a single private room and even no limit on room rent while undergoing treatment at a hospital. 

Day care expenses

With advancement in the treatment methodology, there are many procedures that do not require overnight hospitalization. Health insurance plans are designed to help policyholders in such cases by covering such treatments as well without customary hospitalization.

Alternative treatment

These days not everyone prefers allopathic treatment and there are certain illnesses that can be effectively treated through other alternative medical treatment methods such as ayurveda, siddha, unnani and homeopathy. Certain health insurance plans cover the cost of such alternative treatment as well.

2. Pre-and Post-Hospitalization Expenses

When an individual takes treatment at a hospital, there are a series of visits by doctors along with the diagnostic tests that are required to be done for you before you get treated as well as after. These expenses are considered by certain health covers. 

For instance, health insurance plans pay for the expenses incurred in the hospital for treatment but they also factor paying for the expenses incurred prior to hospitalization for a certain number of days ranging from 15 to 60 days prior to treatment. They also cover charges of follow-up visits, medicines and diagnostic tests once you get discharged from the hospital. Some health insurance plans pay for such expenses ranging from 30 to 90 days from the discharge of an individual from the hospital.

Transportation cost

This benefit covers the cost of ambulance and is generally offered as a sublimit of about INR 5,000 for each hospitalization you undertake during your policy cycle. 

3. Health Check Ups

Health insurance plans are designed to primarily take care of financial stress in case of medical emergency. However, insurers also want people with good health in their portfolio. 

To ensure an individual is aware of their health, most health insurance plans offer preventive health check-ups on a yearly basis. This helps an individual to know about their health vitals and take corrective steps to bring changes to their lifestyle. In the long-term, this helps insurance companies potentially lower their claims outgo.

Waiting period

In a health insurance policy, there are certain specified illnesses for which the coverage is not available from day one. There is a waiting period of one year to four years for specific illness. The illnesses that are specifically excluded are considered for coverage after policyholders sign up for continued renewal of health insurance plans with the same company for a period ranging from one year to four years depending on their terms and conditions.

Taking a health insurance plan at an early age helps individuals cross the waiting period at that stage of life where specified illnesses, which are generally excluded during the waiting period, do not tend to happen to a healthy individual. This enables policyholders to avail full benefit of the insurance cover at an early age.

4. No Claim Bonus

Health insurance not only covers the medical expenses of those who have to seek hospitalization for illness or accidental injury but also rewards those who do not have to avail the benefits of health insurance and do not make a claim in the policy period. Such individuals are rewarded by way of increasing their insurance cover sum insured without charging any additional premium.

A “No Claim Bonus” can be earned up to 100% of the original sum insured in the policy. This feature enables an individual to double the cover without any additional cost and is useful at older age bands when specified illnesses are likely to happen. These include cancer, diabetes, hypertension and heart-related complexities. 

5. Income Tax Rebate 

While an individual pays the insurance premium for a health insurance, there is an immediate financial benefit in the form of income tax rebates on premiums paid by an individual. In India, health premium rebates are as follows:

• Health insurance for self and family (spouse and children) is INR 25,000
• If individual or spouse is 60-years old or more, the deduction available is INR 50,000
• An additional deduction for insurance of parents (father or mother or both, whether dependent or not) is available to the extent of INR 25,000 if less than 60 years old and INR 50,000 if parents are 60-years old or more.

The effective cost of a health insurance policy is thus reduced by the deduction that is allowed in an individual’s annual income tax. This is a built-in double benefit of protection against financial strain as well as saving tax.

6. Age No Barrier

Health insurance today is available for all life stages. An individual can combine the base hospitalization cover with a top-up health insurance cover to manage the cost of insurance and still get reasonably large protection for medical emergencies. 

• At a young age, when tax saving specific products are available with a low hospitalization cover, an individual can enjoy protection and tax benefits.

• At the family stage, an individual can buy a family floater cover and also look for covers that offer maternity benefit, preferably with a waiting period. One can look at covers that offer outpatient department (OPD) expenses and the expenses for children’s consultation for vaccination among others that are available.

•  At a mid age, one can look at expanding the sum insured to individuals with a reasonably high cover as illnesses due to lifestyle habits and growing age start kicking in. 

• At a post-retirement age, it is difficult to obtain sufficient and reasonable coverage due to restrictions on entry age and pre-existing illness. It is advisable for individuals to take a health insurance cover at an early age to better plan their retirement as post-retirement medical expenses are one of the few big-ticket items of an individual’s monthly expenditure