Understanding The Common Terms Used In Health Insurance

When purchasing health insurance, you will be presented with a number of different documents. These documents include important details about your insurance, including any unique terms and restrictions. For you to evaluate the level and scope of the financial protection provided, you must read and comprehend each of these things.

It might be challenging to understand some of the terminology used in health insurance, though. You run the risk of making critical errors if you don't fully understand your policy's details. 

Common Terms Used In Health Insurance

Following are some of the common terms which you may come across while buying a health insurance plan, thus knowing them can be really helpful - 

1. Assignee: The individual who receives the policy's benefits is the assignee.

2. Claim: The payment request for medical expenses made by the covered party to the insurance company.

3. Co-payment: Under a health insurance coverage, co-payment is a cost-sharing requirement. In some circumstances, the policyholder consents to pay a portion of the hospital bills.

4. Cumulative Bonus: Comparable to NCB, cumulative bonus (No Claim Bonus). The amount insured rises by a specified percentage in accordance with the policy for each year without a claim, but it cannot exceed 50% of the Main Sum Insured and is only admissible if the policy was constantly renewed.

5. Deductible: The lower the premium, the higher the deductible amount. A health insurance policy's deductible is a requirement for cost-sharing and can be either a set amount or a percentage of the claim's total cost.

6. Dependents: A policyholder's spouse and/or any unmarried children (natural, adoptive, or stepchildren).

7. Exclusions: Situations or conditions for which the policy won't provide coverage.

8. Grace Period: The designated window of time, usually 15 days, following the end of the due date for premium payments. During this time, payments for renewing or continuing a policy may be made without jeopardising continuity benefits like waiting periods and coverage for pre-existing conditions. 

For the postponed period following the due date, coverage, however, will not be offered. Therefore, it's crucial to renew your health insurance whenever your premium is due. Depending on the condition, the waiting periods for health insurance policies range from 12 to 48 months. When a policy is not renewed, not even during the grace period, the continuity advantages are lost.

9. Insurer: The insurer is the insurance provider.

10. Long-Term Care Policy: Insurance plans that cover certain treatments for a predetermined length of time are known as long-term care insurance. These services often consist of nursing, home health, and custodial care.

11. Long-term Disability Insurance: If the insured person becomes incapable or disabled, the firm will pay him a portion of his monthly income.

12. Premium: To receive the benefits of insurance, an insured must pay a premium, which is a set amount due on a regular basis.

13. Policy: A policy is a binding agreement between an insurer and an insured. It includes the insurance's terms.

14. Pre-existing Disease: It refers to any illness, injury, or condition for which the insured had symptoms, was identified, and/or got medical guidance or treatment within the previous 48 months to the initial policy provided by the insurer.

15. Network: A network is a collection of physicians, hospitals, and other healthcare providers who have signed on to the terms of the policy and are required to deliver services to policyholders at a reduced cost from their standard rates.

16. Sum Insured: The sum insured is the payout amount that the insurance company owes the insured in the event of hospitalisation. It operates under the indemnity principle. For instance, if hospitalisation costs are Rs. 2 Lakh and the health insurance policy's sum insured is Rs. 3 Lakh, the company is responsible for paying Rs. 2 Lakh towards the claim.

17. Waiting Period: When a new health insurance policy is purchased, there is a waiting period during which the insured will not be eligible for some policy benefits. This is typically a set amount of time from the insurance's start date, after which certain specified advantages of the policy start to apply. For instance, there is often a 4-year waiting period for pre-existing medical conditions.

Conclusion

Now that you are familiar with all the fundamental terms used in health insurance, you can tell what makes a coverage acceptable or unsuitable. Approach your insurance provider for additional help if you're still having problems understanding the terms used in health insurance.

Also read: How You Can Save On Health Insurance Premiums?

Know Who Should Buy Critical Illness Rider To Their Health Plans?