Health Insurance falls under the general insurance category, and is one of the most important insurance products both from its utilitarian perspective as well as in terms of investment. It is a type of insurance product that helps individuals be prepared for sudden medical expenses. Analysing the illness pattern of the individuals, their hereditary medical issues and age, insurance companies formulate different products for the applicants. Health insurance policies also provide tax incentives under section 80D in India. Health insurance policies cover the cost of medical treatments. Dental insurance, like medical insurance protects policyholders for dental costs.

A health insurance policy is also a type of contract between an insurance provider and an individual or his sponsor. The contract can be renewable on a periodic basis or it can be lifelong in the case of private insurance, or be mandatory for all citizens in the case of national plans. The type and amount of health care costs that will be covered by the health insurance provider are specified in the terms of the contract.

Popularly known as Mediclaim in India these kinds of policies cover hospitalization, expenses incurred during medical tests and for medicines. One can also get coverage for medical expenses by opting for the Critical Illness rider available with life insurance policies. Therefore as per the rules of the contract it means that in case of a critical illness during the policy tenure, one will be paid the amount as proposed in the policy. In case of health insurance the benefits are regulated by the regulatory body, IRDA.

Types of Health Insurance:

Individual Mediclaim:

This is the simplest form of health insurance product that is available and is known as the Individual Mediclaim policy covering the hospitalisation expenses for the individual up to the sum that is assured by the contract of the policy. The extent of the coverage depends on the premiums paid earlier and also on the duration of the policy.

For example if there are say 3 family members, there can be three independent policies for each of them independently covering them up to say 2L inclusive of the hospitalisation and other medical expenses.

Family Floater policy:

These are the extended versions of the Mediclaim policy. The sum assured value can be utilized by anyone of the family members. i.e. Each of the family member comes under the policy, and it covers expenses for the entire family up to the sum assured limit. The premium for family floater plans is typically less than that of a separate insurance cover for each family member.

For example suppose a family has 3 members and there is a combined policy of 6L on which any one of the members can lay claim. Now suppose one person gets hospitalised and requires say 4L then the amount in the fund for that year goes down by that amount. So now if any other member wants to lay claim only 2L will be available in that case. Next year again however the policy will start with 6L again. These plans are suited for families as each member is covered for a large amount and usually the probability of more than one member getting hospitalised in a family at the same time is very low.

Unit Linked Health Plans:

Different health insurance companies have introduced Unit Linked Health Plans. These plans are still a new concept and are in the development phase. This kind of product is recommended for those who actively invest in equities and have a high risk taking capacity as the quantum of returns is directly linked with the prices of the equities in which the money gets invested. These plans integrate health insurance with investment and pay back an amount at the end of the insurance term depending upon the performance of the market.

Health Insurance Products in India currently:

Shown below are illustrations for Health Insurance policies for a 30 year old individual. Policy tenure is 1 year.

Institution Name Product Name Coverage Amount Premium
Apollo DKV Easy Health Individual -Standard Plan Rs. 1,00,000 Rs. 1,095
Apollo DKV Easy Health Individual -Standard Plan Rs. 1,00,000 Rs. 1,095
STAR Health Medi Classic Rs. 1,00,000 Rs. 1,200
STAR Health Medi Classic Rs. 1,00,000 Rs. 1,200
New India Mediclaim policy Rs. 1,00,000 Rs. 1,270
Oriental Individual Mediclaim Policy Rs. 1,00,000 Rs. 1,310
National Mediclaim Rs. 1,00,000 Rs. 1,377
STAR Health STAR Medi premier Rs. 1,00,000 Rs. 1,488