What is Health Insurance?

Health Insurance is a type of insurance that offers medical coverage to the policyholder for medical expenses during a health emergency. A health insurance plan chosen by the insured provides cover for different emergencies like surgical, day-care, and critical illness etc. To be more precise, a health insurance policy is a contract between the insurer and policyholder providing the benefit of reimbursement of medical expenses or cashless treatment during the policy term.

Importance of Health Insurance

• Protection from Unforeseen Expenses : Since health emergencies do not come with prior notice, it is essential to have health insurance. Owing to our modern life of convenience, more people are becoming prone to lifestyle diseases in India. With an increased demand for quality healthcare services, medical treatment has become quite expensive, especially in private hospitals. Without insurance, the hospital bills are enough to drain one’s savings. Therefore, a health insurance plan becomes necessary as it offers coverage to the insured family members and the policyholder against exorbitant medical expenses. 

• Tax Deduction Benefits : There is a growing trend among Indians who are understanding the value of health insurance. The more aware Indian is not just an intelligent workforce but also a smart businessman. Availing the government’s tax deduction benefits under section 80D is a good example of this.

• Financial Backup : Health insurance cover acts as a financial backup and helps you meet the rising cost of healthcare in India. Costs of hospitalization have gone up by 35%-40% over the past two years, and a health insurance policy helps people to be able to pay for expensive medical treatments, hospital bills, etc. Unfortunately, only 20% of the total population in India has health insurance coverage. Additionally, only 18% of the total population residing in urban areas and 14% of the total population in rural areas have any form of health insurance coverage. 

• Rising Cost of Consumables : A health insurance policy can pay for medical expenses, medication and laboratory test costs, ambulance, doctor fees, etc. Some health plans also cover OPD expenses up to a limit. It helps in minimizing the out-of-the-pocket expenses with a cashless medical treatment facility in the network hospitals. Nowadays, amid the coronavirus outbreak, consumables comprise a whooping 25%-30% of total medical bills. Hence it is essential to have or buy medical insurance to cover the cost of treatment, including PPE kits, masks, ventilators, ICU charges, etc. 

• Securing Future Hospitalization : Health insurance has become a prerequisite even for those planning a family to get maternity and newborn baby cover. With a medical insurance policy, the cost of surgeries like liver transplantation, open-heart surgery, and day-care treatments like cataract surgery, varicose veins, etc., is taken care of by the insurer. A health insurance policy helps you keep your peace of mind without worrying about future hospitalization or medical emergencies, which may drain a substantial portion of your savings.