Aditya Birla Sun Life Insurance Company Limited

What Is Health Insurance: Meaning, Benefits & Types

Icon-Calender June 9, 2025
Icon-Clock4 min
Rated by reader
https://lifeinsurance.adityabirlacapital.comnullCLOSE-BUTTON

Plan Smarter, Live Better!

*Min 3 characters allowed
+91
*Please enter a valid 10 digit Mobile No
https://lifeinsurance.adityabirlacapital.comnullCLOSE-BUTTON
ICON-TICK

Thank you for your details. We will reach out to you shortly.

https://lifeinsurance.adityabirlacapital.comnullCLOSE-BUTTON
ICON-TICK

Currently we are facing some issue. Please try after sometime.

  • Icon-Index
    Table of Contents

Staying healthy is our top priority, but let's face it, medical bills can add up quickly. Imagine unexpected hospital stays, surgeries, or even regular check-ups leaving a dent in your savings. This is where health insurance comes in as a superhero, your financial shield against unforeseen medical expenses.

Think of it like an umbrella for a rainy day, but instead of protecting you from the weather, it safeguards your wallet from healthcare costs. But with so many options and terms floating around, understanding health insurance can feel overwhelming. Worry not, this blog is your friendly guide to demystifying health insurance in India!

What is Health Insurance?

In simple terms, health insurance is a contract between you and an insurance company. You pay a regular premium (like a monthly subscription fee), and in return, the insurance company agrees to cover a portion of your medical expenses if you fall sick or get injured.

It's like putting aside a little bit of money every month, so you have a bigger pool of funds to tap into when needed. This financial support ensures you can access quality healthcare without stressing about hefty bills, allowing you to focus on getting better.

Types of Health Insurance in India

TypeDescriptionBenefits
Individual Health InsuranceCovers the medical expenses of a single person.An affordable option, customisable coverage, suitable for young and healthy individuals.
Family Floater PlanCovers the medical expenses of the insured person and their dependent family members under a single sum insured.Cost-effective for families, reduces paperwork, ideal for families with young children.
Senior Citizen Health InsuranceDesigned for people above a certain age (typically 60 years), addressing pre-existing conditions and age-related medical needs.Comprehensive coverage for seniors, peace of mind for them and their families, helps manage rising healthcare costs for older adults.
Critical Illness InsuranceProvides a lump sum payout upon diagnosis of a specific critical illness (cancer, heart attack, etc.).Financial support during critical times, helps manage treatment costs, reduces the financial burden on the family.
Top-up Health InsuranceActs as an additional layer of coverage over your existing health plan, covering expenses exceeding the sum insured of your primary plan.Enhanced coverage beyond existing plan, suitable for people with higher healthcare needs, affordability compared to increasing primary plan sum insured.
Group Health InsuranceOffered by employers to their employees, covering medical expenses of the employees and their dependents.Affordable coverage for employees, tax benefits1 for employers, reduces the financial burden on employees.
Hospital Daily Cash Benefit PlanPays a fixed daily amount during hospitalisation, irrespective of actual medical expenses.Additional financial support during the hospital stay, covers incidental expenses like food or transportation, peace of mind during hospitalisation.

Benefits of Health Insurance

Having health insurance offers a multitude of advantages, not just financially but also for your peace of mind and overall well-being. Here are some key benefits:

  • Financial Protection: It covers a significant portion of your medical expenses, preventing financial hardship due to unexpected healthcare costs.
  • Improved Access to Healthcare: Encourages timely diagnosis and treatment by reducing financial barriers, leading to better health outcomes.
  • Peace of Mind: Knowing you have coverage reduces stress and anxiety associated with potential medical bills, allowing you to focus on getting better.
  • Tax Benefits1: Premiums paid for health insurance are eligible for tax deductions under section 80D of the Income Tax Act.1
  • Enhanced Coverage: Various plans offer additional benefits like maternity cover, ambulance services, and OPD cover, providing holistic healthcare support.

How Health Insurance Works?

Now that you understand the different types and benefits of health insurance, let's delve into how it works:

  1. Choosing a Plan: You select a health insurance plan that suits your needs and budget. Consider factors like coverage amount, network hospitals, exclusions, and premium affordability.
  2. Paying Premiums: You pay a regular premium (monthly, quarterly, or annually) to the insurance company. Think of it as an investment in your future health.
  3. Making a Claim: In case of illness or injury, you seek treatment at a network hospital (if your plan has one) or any hospital (depending on your plan).
  4. Claim Settlement: If you're at a network hospital, cashless treatment allows you to avoid upfront payments. The hospital bills the insurance company directly.
  5. Reimbursement Process: For non-network hospitals, you pay the bills upfront and submit them to the insurance company for reimbursement, following their claim process.
  6. Claim Approval: The insurance company assesses your claim based on your policy terms and exclusions. Upon approval, they either settle the claim directly with the hospital or reimburse you based on the agreed coverage amount.

Remember: Claim settlement depends on various factors like policy terms, pre-existing conditions, exclusions, and claim documentation. Always keep clear records and understand your policy terms to ensure a smooth claim experience.

How to Choose a Health Insurance Plan?

Choosing the right health insurance plan is crucial. Here are some key steps:

  1. Assess Your Needs: Consider your age, health status, family size, and potential medical risks.
  2. Define Your Budget: Determine how much premium you can comfortably afford to pay regularly.
  3. Compare Plans: Research different plans offered by various insurance companies, comparing coverage amounts, network hospitals, exclusions, and claim settlement ratios.
  4. Read the Policy Document: Carefully understand the terms and conditions, exclusions, and claim process before buying a plan.
  5. Seek Expert Advice: If needed, consult a financial advisor or insurance agent for personalised guidance.
    Remember: Don't just go for the cheapest plan. Choose one that offers adequate coverage for your needs at a sustainable premium. Regularly review and update your plan as your needs evolve.
    By following these steps, you can choose a health insurance plan that provides you with the right coverage and peace of mind, ensuring you're financially prepared for any unforeseen medical situations.

Things To Avoid While Buying A Health Insurance Policy

Choosing the right health insurance plan is important, but so is avoiding these common pitfalls:

  • Ignoring Your Needs: Don't just buy any plan; choose one that aligns with your age, health status, lifestyle, and potential risks.
  • Being Misled by Premiums: Don't solely focus on low premiums; consider coverage, exclusions, and claim settlement processes.
  • Hiding Medical History: Honesty is key! Disclosing pre-existing conditions ensures smooth claim settlement.
  • Ignoring Policy Exclusions: Understand what's not covered to avoid claim rejections.
  • Relying Solely on Agents: Do your research, compare plans, and ask informed questions.
  • Ignoring Network Hospitals: If network coverage is important, choose a plan with a wide network.
  • Buying Without Reading the Policy Wordings: Thoroughly understand terms, conditions, and claim procedures before buying.
  • Underestimating Future Needs: Choose a plan with flexibility to increase coverage as your needs evolve.
  • Renewing Late: Timely renewals ensure uninterrupted coverage.

Should I buy a Mediclaim plan or a Critical Illness Insurance plan?

There is no “correct” answer to whether you should buy a mediclaim plan or a critical illness insurance plan as it depends entirely on your needs. Let’s look at the features of both so that you can make an informed decision.

FeatureMediclaim PlanCritical Illness Insurance
Coverage TypeReimburses hospitalisation and treatment expenses.Provides lump sum payout upon diagnosis of a specific critical illness.
Suitable forIndividuals and families seeking broader coverage for various medical conditions.Individuals seeking additional financial support for specific critical illnesses.
Benefit AmountReimbursement is based on actual medical expenses, up to the sum insured.Fixed lump sum payout upon diagnosis, regardless of treatment costs.
ExclusionsPre-existing conditions, specific treatments, preventive care, etc.Certain critical illnesses may be excluded, check the policy wording.
PremiumGenerally lower than critical illness plans due to broader coverage.Generally higher than Mediclaim plans due to specific coverage focus.

Remember: Both plans have their advantages. Choose the one that best suits your needs and budget. Consult a financial advisor or insurance agent for personalised guidance.

Conclusion

Health insurance is a valuable investment in your well-being and financial security. By understanding the different types, benefits, and how it works, you can make informed choices and choose a plan that provides the right coverage for you and your loved ones. Remember, don't wait until you need it to get covered. Start your journey towards a healthier and financially secure future with the right health insurance plan today!

How much helpful you found this article?

Rating_Star
Rated by 0 reader
/ 5 ( 0 reviews )
Not helpful
Somewhat helpfull
Helpful
Good
Best
RatingTick

Thank you for your feeback

Don’t forgot to share helpful information in your circle

FAQs

The validity of a health insurance policy depends on the type of plan you have:
● Individual and Family Floater Plans: These typically have a validity of one year. You need to renew them annually to maintain coverage.
● Long-Term Health Plans: These plans offer coverage for 2-3 years, eliminating the need for yearly renewals. However, the premium is paid upfront for the entire policy term.
● Senior Citizen Plans: These plans can have varying validity periods (specify period range) depending on the insurer which may vary from regular plans.

A waiting period is a specific timeframe during which certain medical conditions or treatments are not covered by your insurance plan. This period usually starts from the policy start date. Common waiting periods include:
● Initial Waiting Period: This is typically 30 days and applies to most claims except for accidents.
● Pre-existing Conditions: These conditions diagnosed before policy purchase may have a waiting period of 2-4 years.
● Specific Treatments: Certain procedures like maternity care or cosmetic surgeries might have specific waiting periods.

It's crucial to pay your premiums on time to avoid any lapse in coverage. Here's what happens if you miss a payment:
● Grace Period: Most insurers offer a grace period of 15-30 days to make the payment without any lapse in coverage.
● Policy Lapse: After the grace period, your policy lapses, and you lose coverage. To reinstate it, you'll need to pay the outstanding premium along with a late payment fee and might have to undergo fresh medical checkups if the lapse period is on higher side. Insurer may ask you to sign Good Health Declaration and/or undergo medical check up.
● Renewing Lapsed Policy: Some insurers might allow reinstating a lapsed policy after a waiting period and re-evaluation of your health status.

Yes, you can usually add family members like spouse, children, and dependent parents to your existing health insurance plan. This is called adding dependants. The process and eligibility criteria varies depending on the insurer and plan type. Some plans offer family floater options that automatically cover dependents under a single sum insured.

Yes, you can take multiple health insurance policies, but there are some things to consider:
● Duplicate Coverage: Ensure the policies don't offer overlapping coverage for the same medical expenses.
● Claim Settlement: Each insurer might have different claim settlement processes, potentially leading to complexities.
● Premium Costs: Having multiple policies means paying multiple premiums, increasing your overall financial burden.
It's generally recommended to choose a single comprehensive health insurance plan that adequately covers your needs instead of multiple overlapping policies. You are advised to consult a financial advisor or an insurance agent who understands your specific needs and provides the best suitable option to you.

Show All
Hide

Thank you for your details. We will reach out shortly.

Thanks for reaching out. Currently we are facing some issue.

Give ₹1,00,000 for 6 years
and Get ₹14.48 lakhs#

This field is required
+91
Please enter valid 10 digit Number
*This field is required.

ABSLI Akshaya Plan

Whole Life Insurance with Cash Bonus

ICON-CLICK

Flexible Bonus Payouts

ICON-CLICK

Two options for benefit payouts

Icon-Whole life cover

Life Cover

ICON-CLICK

Tax Benefits^

Give:
₹1 lakh for 6 years

Get:
₹14.48 lacs#

ABSLI Akshaya plan is a non-linked participating individual savings life insurance plan. (UIN: 109N136V04)
#Scenario: ABSLI Akshaya Plan, Age 35, Healthy Male, Premium Payment Term: 6 years, Policy Term: 25 years, Benefit Option: Long Term Income, Premium Rs.1lakh p.a. (Rs.100,000X6), Cash Bonus Payout Frequency: Annually in Arrears, Sum Assured: Rs 710,000. Assumed @8% p.a., Cash Bonus (if declared) p.a. = Rs 23,004, Total Cash Bonus (if declared) (A)= Rs 5,75,100, Terminal Bonus (If declared) + Sum Assured (B) = Rs 8,73,300, Total Benefit (A+B) = Rs 14,48,400. Assumed @4% p.a., Cash Bonus (if declared) p.a. = Rs 8,520, Total Cash Bonus (if declared) (A)= Rs 2,13,000, Terminal Bonus (If declared) + Sum Assured (B) = Rs 7,95,200, Total Benefit (A+B) = Rs 10,08,200.
1Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details.
The information provided above is intended solely for general reference and educational purposes and is subject to terms, conditions, and regulatory guidelines on health insurance products.
ADV/6/25-26/345

Subscribe to our Newsletter

Get the latest product updates, company news, and special offers delivered right to your inbox

Thank you for Subscribing

Stay connected for tips on insurance and investments

*Please enter a valid Email ID
whatsapp-imagewhatsapp-image