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Know the jargons before buying Health Insurance

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Published on May 6, 2021. EST READ TIME: 4 minutes

We have a human tendency to look out for things and gather as much knowledge as possible. The curiosity remains until we figure out everything we need to know about the topic. A common person learning about financial terms and understanding the jargons becomes difficult; also, before buying or investing in anything, it's imperative to know about the same. Similarly, if you are buying health insurance for the first time, you might not be aware of the various jargon and phrases mentioned in the policy wordings. It's always advisable to know the policy and various exclusions to avoid any surprises in the future. For better understanding, there are some jargons which are commonly found in the policy.

Sum Insured:  Sum insured is the maximum value for a year that your Insurance Company can pay if you are hospitalised. Any amount above and beyond the sum insured will have to be taken out from your pocket. This works on the principle of indemnity. It will cover the loss arising out of the damage caused to you.

Claim settlement ratio:  Claim Settlement Ratio in health insurance is one of the most vital factors to be considered while choosing a health insurance company. It tells you about the claim settling ability of the insurance provider. If the company is unable to settle the claims, then the whole purpose of purchasing insurance gets wasted. The Claim Settlement Ratio or CSR of an insurance company reflects its reliability, which helps the policy buyers in decision making when planning to buy a new health insurance policy. After understanding CSR, you may want to know what a good ratio is. Generally, a health insurance claim settlement ratio exceeding 80% is considered good. However, you mustn't use this ratio as the only factor to choose your insurer.

Network hospitals:  When an individual buys a health insurance plan, the insurance company will give him or her a list of network hospitals. This record, i.e. the hospital list, can also be found on the health insurance company's website. These hospitals have a tie-up with the insurance company to provide the insured the benefit of cashless hospitalisation. Here, the policyholder does not have to run around making arrangements to raise the money. Instead, the health insurer will directly settle all the hospital bills.

Grace period:  While the health plan is active only for a predetermined period, you can renew the same by paying the premium on time. If you are unable to meet the premium payment deadline, your insurer will offer grace or an extended period within which you can renew the policy. In this period, your existing policy benefits remain active. An insurer usually offers a grace period of 15 days to one month.

Health check-up:  Before insuring you, a health insurance company may ask you to get a detailed medical examination done. However, this is not required if you renew the policy on time. If your existing health plan lapses and you plan to buy a new one, you may have to get a medical examination done again.

Copayment:  A health insurance copayment is a fixed amount set by an insurance plan for sharing the cost of covered services between the plan and the customer. The cost-sharing system is a critical selling point for each plan because it breaks down how much you'll owe for services, prescriptions, doctor visits, and more.

It's essential to understand the cost-sharing details of any health insurance plan you're considering, especially for frequently used services or prescriptions. 

No-claim bonus:  If you do not file a claim against your health insurance, your insurer will offer a bonus or discount in the premium amount. It is called the no claim bonus, and it is cumulative. So, if you do not raise a claim for the entire year and renew your policy within the grace period, you will be entitled to it. However, if you fail to renew your health plan in time, you lose the bonus and suffer a financial loss during medical emergencies.

Waiting period:  Every health insurance plan also has a waiting period or qualifying period. It is the number of days you have to wait before you can benefit your health plan. In case you file a claim within this period, your insurer will deny it.

The waiting period is implied on pre-existing diseases, maternity expenses, newborn cover, annual health check-up, and more. Some policies also have an initial waiting period of about 30 days. However, there is no qualifying period for accidental hospitalisation.

While buying health insurance, these jargons might come in handy and enable you to understand the policy better. It's always good to read about the policy wordings and documents before buying health insurance. 

Disclaimer- - The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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