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Types of Health Insurance Plans in India

Karen Menezes Karen Menezes 26 September 2016

Which type of health insurance plans are available in India? What should you be choosing? Learn all about the various types of health insurance plans.

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If I ask you about your favorite ice-cream what will your answer be? Among vanilla, chocolate, strawberry, mint chocolate chips, etc. which one is your poison? Just as there are so many varieties of ice-creams, there are also many varieties of a health insurance plan.

The health insurance sector is seeing revolutionary changes in the range of plans which private insurers are offering to customers. These plans are designed keeping in mind the actual and varied requirement of customers. So don’t be surprised if you see a diabetes care plan in the market or a plan specially designed for cardiac patients. As is in the case of ice-creams, health insurance plans also are of various types.

This revolution in the health insurance market is brought about by the increased need for a health insurance cover. The rising cost of medical treatments, inflation and the increased incidence of diseases in today’s age have made health insurance a compulsory requirement for every individual. While earlier people in their mid-30s or early 40s bought a health plan, today, young adults in their mid-20s are buying a health plan for covering against huge hospital bills. A health insurance plan covers against hospitalization expenses by meeting your hospital bills. With a host of different plans available, understanding the types of health plans becomes difficult. To simplify, we can say that health plans are divided into two broad categories, each of which also has sub-categories. Let us take a look –

Indemnity Plans

The word ‘indemnity’ means compensation for losses or damages. In case of insurance, the word defines the intention of the insurer to put the policyholder in the same financial position as he was prior to incurring the loss. Indemnity health plans compensate the policyholder by reimbursing the actual hospitalization costs incurred by him subject to a maximum of the chosen Sum Insured. For instance, if a policyholder buys a plan of Rs. 1 lakh and faces a bill of Rs. 85,000. The company will pay only the actual cost up to Rs. 85,000 as claim. On the other hand, if the bill would have amounted to Rs. 1.25 lakhs, Rs. 1 lakh would have been the maximum compensation and Rs. 25,000 would have to be paid by the policyholder himself. Indemnity plans are again of three types which are -

• Mediclaim Plans

The most common and the most popular plan is your plain old vanilla mediclaim plan. The plan provides for hospitalization cost, pre and post hospitalization cost, expenses on surgeries, ambulance costs, etc. You pick an amount of Sum Assured and pay the requisite premium and the plan will cover you against hospital bills reimbursing the actual cost of hospitalization.

• Top-up Plans

These plans aim to do what their name promises, top-up or increase your coverage amount. Top-up plans can be taken as supplementary plans for enhancing the coverage at very minimal costs. There is a concept of ‘deductible limit’ in the plan which is the threshold up to which the plan will not meet your claim.

If the claim exceeds the deductible limit, the plan is triggered and the excess is paid. These plans prove beneficial if you already have an existing mediclaim plan and the deductible limit of the top-up plan coincides with your base Sum Assured under the mediclaim plan. For instance, for the above mediclaim plan of Rs. 1 lakh, if you would have bought a top-up plan of Rs. 2 lakhs with a deductible limit of Rs. 1 lakh, the additional claim of Rs. 25, 000 would have been met by your top-up plan.

• Super Top-up Plans

A move over top-up plans is the Super top-up plan. It works on the similar premise as that of a top-up plan but is better than a top-up plan. Under a top-up plan, each claim is considered to trigger the plan. If every individual claim falls below the deductible limit, the top-up plan does not pay.

In case of super top-up plans, aggregate claims incurred in the policy year are considered and if the aggregate claims cross the deductible limit, the claim is triggered. So if you have two claims of Rs. 80, 000 and Rs. 70, 000 in any policy year where the deductible limit is Rs. 1 lakh, top-up plans will not pay while super top-up plans will pay the extra Rs. 50, 000.

Defined Benefit Plans

Also called fixed benefit plans, these plans are an exact opposite of indemnity plans. These plans pay a pre-specified amount in case of claim irrespective of the actual expense. For instance, in the event of hospital daily cash plans, the plan might pay a fixed benefit of Rs. 5000 for every day of hospitalization whereas the actual amount might be Rs. 4000 or Rs. 6000. Different types of benefit plans are –

• Critical Illness plans

Plans which are gaining popularity, critical illness plans provide specialized coverage against a list of specified critical illnesses. Although the list of illnesses covered varies from plan to plan, yet on the diagnosis of any of the covered illness, the insurer pays a lump sum amount to the policyholder irrespective of the subsequent treatment costs.

• Hospital Daily Cash Plans

As the name suggests and as I exemplified in the earlier paragraph, a hospital cash benefit plan will provide a fixed sum of money for each day of hospitalization if you are hospitalized. The amount of money provided does not depend on the actual hospitalization expense but is pre-fixed as per the plan feature.

No one settles for the plain old vanilla ice-cream when there are so many flavors to enjoy. Gone are the days when health insurance was offered solely as a simple mediclaim policy. There are various other plans in the market today which can be taken for an increased scope of coverage. An indemnity health insurance plan is a basic plan which is a must and the other varieties can be added if you are looking to get the best out of your health insurance without having to burn your pockets in the process.

So, opt for a critical illness plan for an all-around protection or go for a super top-up plan to increase the level of coverage, but, whatever you do, explore!! After all with so many types of plans, why settle for a simple cover?

Karen Menezes
Written by Karen Menezes
An optimist at heart, Karen loves to see the world through a pair of rose-tinted glasses. An award-winning blogger, she loves to dream with her eyes open. Writing is not her passion, it’s an OCD! If at all she isn’t writing, you can find her shopping online or experimenting with DIY recipes.