When you read a paragraph, do you have trouble comprehending it? Everybody experiences it, especially when discussing a complex subject like insurance. It's easy to get lost in the insurance industry's jargon.
Learning these basic insurance terms is essential if you're new to health insurance.
To help you stay informed, here is a list of commonly used health insurance terms.
Your insurer will charge you a premium when you purchase an insurance policy. This is the amount you pay for the policy. In other words, an insurance premium is the monthly or annual fee you pay to be covered.
The insurance premium amount is not fixed and is rather influenced by multiple factors and varies from one payee to another. Some of the factors that influence premium amount include age, area of residence, medical history, income, smoking and other lifestyle habits of the person being covered by the policy. In addition, features of the policy like deductible amount, room-rent limit, copay etc also influence the amount of premium.
The insurer is a company that provides coverage for any losses sustained by the insured (person covered by the policy). in case of any event in exchange for regular premium payment.
The sum insured refers to the maximum amount for a particular year payable by the insurance company to you in case you are hospitalized. For eg, you have a health insurance policy with a sum insured of ₹3 lakhs. Your hospital bills for two hospitalizations in a particular year totaled "4 lakhs." But the sum insured on your health insurance policy was only "3 lakhs." As a result, the insurance company will reimburse you for 3 lakhs, leaving you to pay the remaining 1 lakh.
An insurer determines your eligibility for a specific sum insured based on various factors, including your age, income, and health conditions.
Policyholders can add family members such as their spouse, children or parents to health insurance plans to get benefits of financial coverage for healthcare expenses.
A deductible is the amount of money that an insured person has to pay every year for eligible healthcare services before one can make an insurance claim.
For example, if you have a medical emergency and the medical bill is ₹2,500, but your deductible is ₹500, then you will pay ₹500 and your insurer will cover the remaining ₹2,000. The higher your deductible is, the lower your premiums.
If your insurance coverage has a co-pay provision, you will be required to contribute a portion of the cost of the medical care, with the remainder being covered by the insurer.
For instance, if your insurance policy contains a 10% co-pay clause and your total medical costs are Rs.50,000, you will be responsible for paying Rs.5,000 out of pocket, and the insurer would pay the remaining Rs.40,000.
Copay can be charged as a fixed rate or levied as a percentage varying between 5-20%. The copay depends on the insurance company and the health insurance policy that you are opting for.
A coinsurance is an amount which the insurance company will pay to cover health care costs after any deductibles or copays as your share toward a claim.
Example: Let’s say you are availing the medical treatment totalling to Rs. 50,000, with Rs. 7,000 as Deductible and 20% as Coinsurance. So, once the Deductible is paid, the sum will come down to Rs. 43,000. Then 20% of that amount, which is Rs. 8,600, will have to be paid by you and the remaining Rs. 34,400 will be paid by your insurer.
The amount of time one needs to wait for, from the start of the policy, to be able to use the benefits of it. The duration of the waiting period and its terms and conditions vary from company to company.
In most cases, you won't get any reimbursement or coverage from your health insurance policy during the waiting period.
It is best to buy a policy with a minimal waiting period. The lower is the waiting period, the sooner you will be able to avail the policy.
Super Top Up can be considered as an extension of a health insurance which helps you in case your claim amount exceeds the threshold of your base policy.
Under a normal health insurance plan, the insurer pays the amount which an individual is insured for, but there could be cases when the expenses exceed this amount, which is where a super top-up plan comes into play.
IMT Care offers Super Top-up at just Rs 595/ year. For more details, log into IMT Dashboard
The cumulative bonus is a feature offered by all insurance companies.
This is a rewarding benefit offered to policyholders who have never filed a claim during their policy year. While the type of cumulative bonus may differ, the benefits granted on each claim-free year remain the same.
A pre-existing disease is an injury or illness that you had before you obtained insurance coverage. If you have a preexisting condition, it's important to ask your insurance company what exactly is considered a preexisting condition.
In a cashless hospitalization, the insurer pays the hospital directly. There is no need for you to pay the money.
If you get hospitalized in one of the "network hospitals" - hospitals associated with your insurer - you will be able to make a cashless claim. With IMT, you can access network hospitals with a single click via IMT dashboard.
Grace periods are the few days after the due date when you can still pay your health insurance premium so the policy does not lapse. Typically it is additional 30 days from the due date of your premium payment.
Ideally, paying your premium on time is strongly recommended to avoid any lapse in cover. The grace period ensures that you will have sufficient time to make payments without a gap in coverage, if you are pressed for time and cannot renew your policy in time.
There is a lot to understand about insurance, but knowing some common terms can help you plan for a better policy.
It is not always easy to decipher an insurance policy word by word. But, using this glossary as a reference, understanding the policy wording would be much easier than you imagined.