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  • Health Insurance Glossary - Terms & Definitions

    Health Insurance
    • Premiums as low as Rs12/day for coverage of Rs.4 Lakhs*
    • 10,000+ hospitals for cashless treatment
    • Claim up to Rs. 55,000 deduction under section 80D**

    In the recent years, health insurance companies have simplified the ways in which customers can access insurance policies. Most of the top insurers in the market now offer online health insurance policies which is just a click away and requires very minimal documentations. Though the process of buying medical insurance has been simplified, many customers still face difficulties understanding the jargons commonly used in the industry.

    To help you with understand the health insurance in a better way, here is a glossary page with a list of commonly used terms:

    Actuary

    An actuary is a person skilled in the field of mathematics and statistics. They have the skills to analyse the risks associated with an insurance cover. They use their deep understanding of financial systems to derive premium rates and set the range of benefits offered to policyholders.

    Add-on Cover

    Add-on covers, also know as rider covers, are additional insurance covers that can be bought alongside a health insurance policy. These are bought mainly to enhance the coverage offered under a regular policy. Some of the common add-on covers include personal accident cover, critical illness cover, restoration of sum insured, air ambulance cover, etc.

    Agent

    An agent is a state-licensed insurance professional who acts as a bridge between a policyholder and an insurance company. Insurance agents sell policies on behalf of a company and charge commissions for their sale.

    Alternative Medicine

    Any non-allopathic treatment is considered alternative medicine. Some of the common forms of alternative treatments include acupressure treatment, magnetic therapy, aromatherapy, naturopathy, etc. Most medical insurance companies do not provide any coverage for alternative treatments. However, some insurers have started providing coverage for Ayurveda, Unani, Siddha, and Homeopathy treatments in the recent days.

    Attending Physician Statement (APS)

    This refers to the official statement issued by the physician treating the patient. A physician usually provides detailed information about the policyholder’s health condition in his/her statement. The insurer may request the APS to gain a full understanding of the applicant’s health condition.

    Amount charged versus Amount allowed

    A health insurance company specifies the amount up to which it will reimburse the medical expenses incurred by an individual. But the amount charged by the healthcare provider may be more or may be less than the amount allowed. Network hospitals, in most cases, take the amount allowed into consideration while charging the patient for the medical expenses.

    Bed Days/1000

    A measure used by insurance companies to indicate the number of inpatient hospitalisations per 1000 persons covered under a specific health insurance policy.

    Benefit Package

    The range of benefits offered by a health insurance policy. Health insurance policies typically list out the extent of benefits in their policy document.

    Balance billing

    Balance billing is referred to the process of billing the insurance company up to the limit specified under the policyholder’s plan and billing the remaining amount to the policy holder.

    Cashless Treatment

    Cashless treatment is provided in the network hospitals of a particular insurer. When policyholders get admitted in these hospitals, they can get treatment without spending any money. However, they have to get prior authorisation from the insurer regarding this treatment. Once the treatment is over, the hospital will send the bill to the insurer and get reimbursed.

    Claim Amount

    This refers to the total medical expenses incurred by the patient during a hospital stay. Based on the provisions included in the health insurance policy, the claim amount may include day care treatment expenses, pre and post hospitalisation expenses, domiciliary hospitalisation expenses, etc.

    Copayment

    Copayment refers to the part of a claim that a patient must pay from his own hand. For instance, a health insurance plan may require senior citizens to copay 10% of the claim amount. In this case, the patient must pay 10% of the claim amount and the insurance company will reimburse the remaining 90%.

    Cumulative Bonus

    This refers to the bonus amount provided by an insurer for not making any claim during a policy year. Most insurers offer cumulative bonus of 5% or 10% every claim-free year subject to a maximum of 50% of the sum insured.

    Chronic Condition

    A chronic condition is a long-lasting or permanent condition as against an acute condition. Some health insurance plans have certain provisions for chronic conditions.

    Deductible

    A deductible refers to a specific amount that a policyholder must pay out of hand during every claim. Some health insurance plans have voluntary as well as involuntary deductible. If the deductible is Rs.1 lakh, the health insurance company will only pay for claims that come in excess of Rs.1 lakh.

    Dependent

    A dependent is a member of the primary insured’s family who is not financially independent. In most cases, dependents include spouse and children. Certain plans may also include the parents and siblings of the primary insured.

    Domiciliary Hospitalisation

    This refers to the treatment process in which a patient takes medical treatment from home without visiting a hospital. This may happen when a patient’s health condition prevents him/her from taking medical treatment from a hospital.

    Eligibility Criteria

    This refers to the set of conditions that must be met by a person before enrolling in a health insurance cover offered by a company.

    Employee Contribution

    In group health insurance offered by an employer, employee contribution refers to the part of the premium amount deducted from the employee’s salary.

    Exclusions

    Specific illnesses or injuries for which health insurance coverage is not provided by the insurer. For instance, self-inflicted injuries are not covered by most insurance companies in the market.

    Experimental Procedures

    These are unproven procedures that are not approved by any medical council. Insurance companies do not provide coverage for experimental procedures.

    Grace Period

    This refers to the additional time period offered by a company after the date of expiry for the payment of premiums. In health insurance, companies offer grace period for up to 15 days.

    Group Health Insurance

    Group health insurance is offered for members belonging to a particular group. The most common form of group health insurance is the insurance cover offered by employers for their employees. This is a generic cover where various factors like sum insured, policy term, etc. are predetermined by the employer.

    Hospice Care

    This refers to the care provided to terminally ill patients, and it includes tending to their emotional and spiritual needs. Hospice care is usually provided for patients who have life expectancy less than 6 months.

    Inpatient Treatment

    The type of treatment in which the patient gets admitted in a hospital for a period of at least 24 hours. Most inpatient treatment expenses are covered by a regular health insurance policy.

    Indemnity

    The compensation provided to a victim against any loss suffered. This could be against any accident that causes damages to the victim.

    Reimbursement Benefit

    When a claim is made by the insured after a medical treatment, the insurance company reimburses the expenses incurred for hospitalisation. In order to get the reimbursement benefit, the insured must submit various documents including medical bills and physician certificate.

    IRDAI

    It stands for Insurance Regulatory and Development Authority of India. It is the governing body for all insurance services in the country. The IRDAI comes up with the rules and regulations for providing insurance coverage.

    Lapse

    It refers to the situation in which a policy gets terminated due to lack of payment of premiums.

    Lifetime Limit

    There are health insurance plans that place a limit on the overall claim that can be made during one’s lifetime. In India, there is no explicit lifetime limit on health insurance claims. Most plans offer coverage as long as they are in effect.

    Maternity Coverage

    This refers to the coverage provided for any expenses related to pregnancy and childbirth. Some insurers provide maternity insurance as an add-on coverage. However, there are some plans that have maternity coverage in-built in their regular cover.

    Moral Hazard

    This occurs when a customer gains undue advantage by providing misleading information to the insurance company.

    Named Illness

    Any illnesses mentioned in the policy schedule of the insurer. In critical illness covers, the list of diseases covered is provided beforehand to customers. Coverage will be provided only for these named illnesses.

    Network Hospital

    A network hospital refers to the hospital that has a tie-up with the insurer to provide cashless treatment for policyholders. Top insurers have tie-ups with multiple hospitals in all major cities and towns across the country. It is better to choose an insurer that has an extensive list of network hospitals.

    Outpatient Treatment

    An outpatient is someone who receives medical care in a medical facility for a period less than 24 hours. These patients do not get admitted in a hospital to receive treatment.

    Overseas Mediclaim Policy

    This policy provides coverage for an insured person even when he/she is traveling overseas. Most health insurance policies offered in India do not provide overseas coverage. Overseas mediclaim policy is intended for frequent travellers, foreign exchange students, business people, etc.

    Personal Accident Cover

    This is a fixed benefit policy that offers lump sum payment upon the occurrence of accidental death or disability. This policy does not provide coverage for the medical expenses incurred by the policyholder. Rather, the sum insured amount (percentage might vary based on the disability) is paid to the policyholder as an one-time payment.

    Portability

    Portability refers to the transfer of an existing policy to another service provider. By porting the existing policy to another insurer, a policyholder will not lose out on any accumulated benefits including renewal credit on waiting period, no claim bonus, etc. Most companies allow portability only at the time of policy renewal.

    Pre-existing Disease

    A disease is pre-existing if it already existed at the time of signing up for a policy. Insurance companies require policyholders to declare their pre-existing conditions. Most insurance companies provide coverage for pre-existing diseases only after a specific waiting period.

    Premium Amount

    This refers to the cost of insurance. The premium charges might vary based on multiple factors like age of the insured, location, sum insured chosen, number of family members, policy term, etc. Premium should be paid continuously for a medical insurance policy to be active.

    Proposer

    A proposer is the one who seeks health insurance protection from an insurer. A proposer could also take health insurance to protect his/her family. If a father takes a health insurance policy for his dependent son, the father is the proposer and the son is the beneficiary.

    Renewal

    In health insurance, renewal happens when you pay premiums for the next policy term. If a policy is not renewed on time, it will be lapsed and the insured will lose out on accumulated benefits.

    Standalone health insurer

    A standalone health insurance company is an insurance service provider that specialises exclusively in providing health insurance. Most standalone health insurers also have the license to issue policies in travel and personal accident domains. Unlike general insurance companies, standalone health insurers do not deal with other services such as motor insurance, home insurance, commercial insurance, etc.

    Rider Policy

    Rider is another name for add-on insurance.

    Sum Insured

    This refers to the maximum coverage amount the insurer is liable to pay in case of an event that may give rise to a claim. Any reimbursement or cashless treatment claims can be made only within the sum insured range. If the sum insured chosen is Rs.3 lakh, the insurer will reimburse medical expenses up to Rs.3 lakh.

    Second Opinion

    This is performed to reaffirm an illness that was diagnosed. This could also be done to determine the course of treatment for a specified illness. A second opinion is usually opted for major critical illnesses.

    Third Party Administrator

    Third party administrators (TPA) are those authorised by insurance companies to perform various administrative tasks including premium collection, processing, claim settlement, customer service, etc. TPAs are licensed by IRDAI to provide insurance administration service. They charge a certain commission for the services they provide.

    Tertiary Care

    This refers to the use of specialized procedures for treating a condition. Tertiary care would be needed for major illnesses that require sophisticated facilities and highly skilled medical service providers.

    Top-up Policy

    Top-up health insurance cover is typically taken in addition to the existing cover to boost the sum insured amount available under a policy. Top-up plans are available for a cheap price, and they will provide coverage only when a certain level of deductible is exceeded.

    Underwriting

    Underwriting refers to the process by which the risk of insurance is assessed by an insurer. Based on the assessed risk, the company will determine whether to extend coverage to the individual.

    Waiting Period

    The fixed period of time for which insurance coverage will not be available for certain illnesses. For instance, pre-existing diseases have a waiting period of 2 years to 4 years depending upon the insurance company.

    Income Tax Relief

    The premium amount paid for health insurance is eligible for income tax relief according to Section 80D of the Income Tax Act. There are specific deduction limits set by the government for claiming income tax relief. For instance, the deduction limit for insurance policies covering self, spouse, and children is Rs.25,000.

    Waiver of Premium

    In certain types of health insurance, future premiums will be waived upon the diagnosis of a specific illness. For instance, critical illness covers waive off future premiums following the diagnosis of any of the named illnesses.