scorecardresearchWhat is health insurance?

What is health insurance?

Updated: 14 Apr 2022, 11:16 AM IST

Nobody expects to get sick or harmed, but serious sickness can strike at any time. The cost of treating the condition might put a significant strain on any funds you've built up over time. This is where health insurance comes into play. To gain a better understanding, read ahead!

Health insurance is the coverage received by the insured in case of some medical emergency, surgery, prescription drugs.

Health insurance is the coverage received by the insured in case of some medical emergency, surgery, prescription drugs.

Health insurance is the coverage received by the insured in case of some medical emergency, surgery, prescription drugs. It helps the insured to cover the expenses which occur due to the medical emergencies so that the burden of the expenses don’t fall at the time of difficulties. As medical expenses reaching the sky, health insurance makes sure to pay the hospital bills with some extra benefits like no claim bonus, portability option, family policies etc.

Health insurance also has a feature of cashless claim where the policyholder does not have to make any payment in the hospitals, the insurance company and the hospital directly get in touch and take care of the same.

How does Health Insurance work?

Health insurance aims to pay the whole or most of the amount which comes under medical expenses. Let’s have a look on how the insurance works -

Right Cover

The investor should choose the policy, which is compatible with their needs. For example, if the individual has a family to look after then they should opt for family floater but if the individual has parents who are in the age of 60 years or above then they should opt for a senior citizen plan. Health insurance plans vary according to the needs for the insured, it is advisable to always conduct a decent amount of research before choosing the cover.

Sum Assured

Sum assured is the amount the policyholder gets at the time of emergency. An individual should select the plan which offers coverage which meets financial requirements of the policyholder as well as their family.

Claim Process

There are two ways through which the claim can be processed - first being cashless and the second being reimbursement. In cashless no movement of the money takes place, the insurance companies have networks with some hospitals where only showing of policy papers take place and all the further formalities are looked over by the insurance company. While in reimbursement the individual needs to pay all the bills and later need to submit all the bills to the insurance company so that the claim can be transferred to the respective bank account.

Renewal and Policy Lapse

Different health insurance have different tenure for the maturity. Mostly a policy matures in a year and the insured forgets to renew then the policy will lapse. In such cases the insurer provides a period of 6 months to the policyholder to pay the outstanding premium and reinstatement costs.


In case the insured doesn’t claim the coverage in a particular year, then the person is entitled to get no claim bonus. The bonus can be claimed either in the form of deduction in premium or increase in the amount of sum assured.

There are various benefits of health insurance, it not only acts as a financial security for the uncertain future but also offers tax exemptions which vary from different age slabs.

During the current times where health is the top priority of both individuals and governments all around the world, health insurance is a must which can look after the policyholder and their loved ones in the time of need.


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First Published: 14 Apr 2022, 11:01 AM IST