New Delhi: Buying a health insurance policy may have been on your mind for a while now but the long list of jargon that you have to decode before zeroing down on a policy might make you lazy.
"Unless a policyholder understands the various terms in a policy and what they mean, he or she won't be able to effectively use it," said Abhishek Bondia, principal officer and managing director, SecureNow.in. To make your purchase easier and help you pick the right policy, we demystify some of the common health insurance terminologies for you. Read on.
This is the time span during which you cannot file a claim on your health insurance policy. Duration of the waiting period varies from insurer to insurer.
"Waiting period is the duration after which the said ailment gets covered. Until then the ailment is effectively uninsured," said Bondia.
Typically, there are three kinds of waiting period. First is the initial waiting period where in if you get hospitalised within the first 30-90 of buying the policy, your claim will not be accepted, unless the hospitalization is on account of an accident. In case of an ailment, you will be eligible for the claim benefit only once the initial waiting period is over. Second is the waiting period for pre-existing diseases. Typically, you are required to undergo a health check up before buying a health insurance plan. You're also required to declare specific diseases you've been treating for or are undergoing treatment for. Such diseases are known as pre-existing diseases and there's a waiting period before which your insurer will not accept a claim. The waiting period for pre-existing conditions can last from one to four years. The third kind of waiting period is on specific ailments. The insurer specifies the waiting period during which time it won’t entertain a claim for specified ailments and this waiting is usually for a year to two years. While these are the common waiting periods, there could be some more like in case of maternity benefits. A few health insurance plans offer maternity benefits only after a waiting period of 9-36 months, depending on the policy and the insurer.
Certain policies come with a co-payment clause. This means if and when you file a claim, a part of the claim amount will have to be borne by you. This would be your out-of-pocket expense and is usually expressed as a percentage of the claim amount. For example, if you file a claim of ₹10,000 and have a co-payment clause of 10%, you'd have to spend ₹1,000 from your own pocket.
Typically, insurers insert the co-payment clause where the risk is high; for instance, a health insurance policy for a senior citizen.
"Deductible is a fixed amount of deduction. Claim amount only exceeding this threshold will become payable," said Bondia. Simply put, deductible is the uninsured part of your claim amount. As a policyholder, you have to pay this amount before your insurer steps in and takes over to cover for damages as per the policy terms and conditions. Deductible amount is usually decided at the time of policy purchase. Say your deductible is ₹10,000 and you make a claim of ₹60,000, then your insurer will cover you for the remaining ₹50,000 after you've paid the ₹10,000.
NO-CLAIM BONUS (NCB)
Insurers give cumulative bonus, also known as NCB, if you don’t make any claim. Usually, your insurance cover, or the sum insured, is increased by 5% for the year you don’t make a claim up to a maximum of 50%. The type of NCB offered and the discount rate provided vary from one insurer to another. For instance many insurers now bump your sum insured by a 100% instead of 50%. However it’s important to understand the impact a claim may have on your accumulated bonuses, so do ask your insurer about it. "In case of a claim, the insurance company will reduce the no-claim bonus at the same rate at which the NCB was increased when it rewarded you for a no claim. However, this does not affect the base sum insured for which you have paid," said Mahavir Chopra, director of health, life and travel insurance, Coverfox.com
You may have bought a health insurance policy on somebody's suggestion and might realise a little later that the benefits and terms and conditions don't suit your needs. Here's when the free-look period helps. Free-look period gives you an opportunity to review the policy you've bought and return it in case it doesn't fit the bill.
Almost all health insurance policies come with a free-look period of up to 15 days from the date of receiving the policy documents and can go up to 30 days in case of some insurers. In case you do choose to return the policy, the insurance company will refund the premium paid after deducting a specific amount. Charges such as stamp duty, expenses incurred towards the medical test and so on are deducted from the refund.