Health insurance: Types and legislation

Why health insurance?

Health insurance is easily the most important insurance product in your portfolio. It is a policy that covers you against the huge expenses of medical or surgical treatments. There are some terms in health insurance that you must be aware of while buying a policy. Like ‘provider’, this is a term that refers to the clinic, doctor, hospital, or health and wellness institute that is providing you with treatment. ‘Insured’ is the person who is the owner of the policy.

There are mainly two categories of health insurance, one that makes the reimbursement of payment made for the treatment by you and another that makes a direct payment to the provider.  Below given are the types of health insurance that companies offer:

  1. Individual health insurance – This plan is for an individual policyholder and thus the premiums are low.
  2. Senior citizen health insurance – This plan is designed to benefit the senior citizen that is an individual above the age of 60 years. These plans are usually offered with discounts.
  3. Family floater health insurance – This scheme enables you to buy a single policy for the whole family. It saves your efforts and money of buying different plans for every member.
  4. Critical illness health insurance – This plan covers you against critical-illnesses like cancer, heart attack, kidney failure, organ transplant, etc.
  5. Maternity health insurance – As per the name suggests, this plan is for women who are expecting a child. It provides cover at the pre-natal stage, delivery and post-natal stage.
  6. Group health insurance – This type of health insurance plan is offered by employers to offer employees health insurance in bulk for better discount and other advantages.
  7. Preventive healthcare – Critical illnesses like cancer and other diseases need many treatments and care like check-ups and screenings, etc. All such expenses are covered under this policy.
  8. Personal accident insurance – Personal accident insurance covers you against the expenses incurred due to unforeseen accidents.

Insurance Regulatory and Development Authority (IRDAI) wants to ensure health insurance policies are more customer-friendly so that every individual secures his/her life with one. To achieve this goal, it has made many changes in the health insurance legislature.

  1. One of the most important changes made in the history of health insurance is that now you can make payment of the premium in instalments. That is on monthly, quarterly or half-yearly.
  2. IRDAI has instructed health insurance companies to mention pre-existing diseases for which cover is not provided up to a certain period of not more than 4 years. Now policyholders can declare any disease contracted up to three months after the issue of policy.
  3. IRDAI has increased the maximum age limit for the issue of a health insurance policy. Generally, this age limit is 65 years of age.
  4. Insurance regulators have also asked insurance companies not to exclude diseases like mental illness, stress, neurodegenerative disorders and psychological disorders from health insurance policies.
  5. Health insurance companies are allowed to increase or decrease the amount of premiums by 15% pertaining to the changes made in policies by IRDAI.
  6. As per IRDAI regulations change in premium amount causing increase can only be done if the product has completed 3 years from its launch or modified date as per regulator’s approval.
  7. The insurance company must provide the policyholder with the list of TPA’s at the time of selling the policy. A policyholder is allowed to change the TPA while renewing the policy.

All these changes in regulations of health insurance legislature ensure a wider cover, easy payment method, and thus a better deal for policyholders.

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