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Common Health Insurance Jargons Made Simple

One must understand common healthcare and insurance terms to make a comprehensive decision while choosing a quality healthcare cover and provider. The following health insurance terms are quite common:

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The rising cost of healthcare is driving higher demand for health insurance. Though the concept of insurance is not alien to us anymore, some health insurance terminologies can be tricky to understand. While one may have difficulty understanding the different terms used in the policy document, insurers now have started explaining difficult terms in simpler language and it is advisable for policyholders to know about important terms. Insurance, if taken, without proper understanding of policy details, leaves a scope for making serious mistakes, which may lead to compromised financial aid during medical emergencies. However, with a little patience, one can understand that these terms are not as daunting as they seem.  

One must understand common healthcare and insurance terms to make a comprehensive decision while choosing a quality healthcare cover and provider. The following health insurance terms are quite common:

  • Accumulation Period: It refers to the period just after purchasing a new health insurance plan, where the insured is not eligible for any claim. This period varies from company to company and policy to policy, but it is usually 30 days. Any medical expenses incurred by the insured during this period will go towards deductible. This also to be commonly referred as Initial waiting period. 

  • Deductible: A deductible is a fixed amount that a policyholder must pay every year from the claim amount. It is only after the payment of the deductible that an insured individual can make a claim. It is a fixed amount that is usually stated in the policy and not a percentage of any medical bill. For instance, if the claim is INR 10000 and deductible mentioned is INR 1000, Insurance company deducts the INR 1000 that the policyholder has to pay and settles INR 9000. This is a fixed amount and will not change based on the claimed amount.

  • Co-payment: Co-payment refers to a payment that the insured must make against the hospital bill, irrespective of having insurance. A policy with a co-payment clause usually has the co-payment percentage mentioned in the policy satisfaction of a deductible. For instance, a 10 per cent co-payment policy will require the insured to pay INR 100 against a bill of INR 1000. The INR 900, which is the remainder, will be borne by the insurance company.  Not All policies have co-payment and if one opts to take an insurance with co-payment the premium might be lesser. But it will also require you to pay the deductible amount every time you claim.

  • Waiting Period: It is the period one must wait for before filing for a health insurance claim after policy purchase. The waiting period for a standard health insurance policy is usually one month. But in the case of pre-existing diseases, the waiting period is generally set at four years. However, some insurers offer waiting periods as short as one day with coverage at a higher premium for pre-existing diseases. 

  • Cumulative Bonus: A cumulative bonus is awarded to a policyholder who goes an entire year without making any claims. One full year without claims will result in an additional 5 per cent included in the sum insured. However, the bonus can never exceed 50 per cent of the capital sum insured.  

  • Day-care procedures: Day-care procedures are those which require an admission that lasts less than 24 hours. These are usually routine procedures conducted for which the patient is generally admitted and discharged on the same day. It includes dialysis, chemotherapy, radiation, fracture reduction, cataract and other similar procedures. The cost of these treatments is usually not included in an insurance policy unless specified.  

  • Congenital anomaly: It refers to a condition, which is abnormal in the structural form or position of an individual and is present since birth. There can be an internal and external congenital anomaly. Internal congenital anomaly refers to a condition that is not in the visible and accessible parts of the body. On the other hand, external congenital anomaly refers to any condition that is in the body’s visible and accessible parts. Congenital internal conditions which are found post issuance of policy are considered subject to waiting periods.

  • Tertiary Care: It is in line with the term tertiary, which means an advanced level of care. It refers to an advanced and specialised medical care unit dedicated to complex medical illnesses that require super specialist consultants like neurosurgeon, neurologist, spine surgeons and reconstructive surgeons.

  • Condition precedent: It means the policy terms and conditions which is mentioned in the policy contract. The insurance company will be liable to pay the claim money only if the insured adheres to the terms and conditions like payment of premium by the due dates mentioned in the policy document.

The documents that one must read through while buying a health insurance policy will include vital information regarding the coverage, including special terms and conditions. One needs to understand each point mentioned in the policy document to assess the coverage offered. However, it is better to approach the insurance provider for further advice rather than opt for the policy under assumptions. This way, one does not have to face any complications in financial aid during medical emergencies. 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Vivek Chaturvedi .

The author is Head of Marketing, Digit Insurance

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