Health Insurance Jargons

03 June 2019

Decoding the terminology in Health Insurance for a healthy life

Key Terms in Medical Insurance:

Assignee: The person who get the benefits of the policy.

Claim: The payment request filed by the insured person to the Insurance company, for payment of Medical Expenses.

Co-payment: Co-payment is a cost-sharing requirement under a health insurance policy. In certain cases, the policyholder agrees to bear a certain percentage of the hospital bill, as per the conditions of the policy it is called co-payment. In doing so, insurer charges a lesser premium. It’s important to note that the sum insured in such cases remains the same and is not reduced. This feature is more likely to figure in a senior citizen health insurance plan.

Cumulative Bonus: Cumulative bonus is similar to NCB (No Claim Bonus). For every claim free year, the sum insured increases by a fixed percentage as per policy, but cannot exceed 50 per cent of the Main Sum Insured and is admissible only if the policy was renewed continuously.

Deductible: More the deductible amount, lesser the premium. A deductible is a cost-sharing requirement under a health insurance policy, which can be a fixed amount or a percentage of the claim amount. Under this provision, the insurance company will not be liable to pay for that fixed or percentage amount of the covered expenses. It is the liability of policyholder to pay the contracted deductible amount to the hospital.

Dependents: Spouse and/or unmarried children (whether natural, adopted or step) of an insured.

Exclusions: Conditions or circumstances for which there will be no benefit in the policy.

Grace Period: The specified period of 15 days immediately after expiry of the due date of premium payment. During this period the payment can be made to renew or continue a policy without loss of continuity benefits such as waiting periods and coverage of Pre-existing diseases. However, coverage will not available for the delayed period from the due date. Therefore, it's very important to keep renewing the health insurance policy as and when the premium is due. The waiting periods in health insurance policy range from 12-48 months depending on ailments. The continuity benefits are lost, where policy is not renewed even within the grace period.

Insurer: The insurance company.

Long-Term Care Policy: Insurance policies that provide specified services for a specified period of time. Such services usually include nursing care, home health care services, and custodial care.

Long-term Disability Insurance: Under this the company pays the insured a percentage of his monthly income, if he is incapacitated / disabled.

Premium: A fixed periodical amount an insured is required to pay to avail the insurance coverage benefit.

Policy: It is a legal contract between the insurer and insured. It contains conditions of the insurance.

Pre-existing disease: Pre-existing disease is, any condition, ailment or injury or related condition(s) for which insured had symptoms, and / or was diagnosed, and / or received medical advice / treatment within 48 months to prior to the first policy issued by the insurer. Although the pre-existing ailments get covered by the policy after a certain period, it is advisable to disclose any such existing ailment and ongoing medication, if any to the insurer. Non-disclosure may result in rejection of the claim by the insurer. Now, many health insurance plans have started covering even pre-existing ailments provided the policy is continuously renewed with the same insurer and that too without any claims for a continuous period of four years.

Network: A group of doctors, hospitals and other health care providers, who are part of the contract under the policy and who are obligated to provide services to insured persons at lower charges than their normal fees.

Sum Insured: Sum insured is the pay-out amount that the Insurance Company is liable to pay to the insured in case of an eventuality. It works on the principle of indemnity. For instance, where the sum insured is Rs 3 Lakh under health insurance and the hospitalization expenses are Rs. 2 Lakh, the company is liable to pay Rs 2 Lakh, towards the claim.

Waiting period: The period during which certain benefits of the policy will not be available to the insured, when a new health insurance policy is taken. This is usually a fixed period of time from the date of commencement of policy, after the completion of which, certain specific benefits of the policy take effect. For example, the usual waiting period for pre-existing conditions is 4 years.