Health Insurance: Your Financial Shield Against Medical Emergencies

The age-old saying, “Health is Wealth,” has never been more relevant than it is today. The global outbreak of COVID-19 was a stark reminder of how fragile health and financial stability can be. Many families faced unforeseen medical expenses, exhausting years of savings in a matter of months. As life returns to a “new normal,” one thing is certain—health insurance has emerged as an essential component of a sound financial strategy.

Let’s understand why health insurance is not just a necessity but a critical financial shield for your family.

What is Health Insurance?

At its core, health insurance is a contract between the policyholder and the insurance company. In exchange for a premium, the insurer agrees to cover specified medical expenses, including hospitalization, surgeries, day-care procedures, pre- and post-hospitalization costs, and more. When a covered medical emergency occurs, the insurer indemnifies the eligible expenses, ensuring that healthcare costs do not derail your financial goals.

10 Key Features to Consider Before Buying Health Insurance

1. Coverage Amount and Pricing

Choosing the right sum insured is the foundation of an effective health insurance plan. While there’s no one-size-fits-all formula, here are some guiding principles:

• Individual vs. Family Floater: An individual cover applies solely to one person, whereas a family floater covers multiple family members under a single sum insured.

• Assess Medical Costs: Consider treatment costs in your locality and the highest claim amount you’ve encountered in your circle.

• Pre-Existing Conditions: Family medical history plays a crucial role in determining the required coverage.

• Starting Point: Young earners can begin with a minimum of ₹5 lakh coverage and gradually increase it through super top-up plans or policy upgrades.

• Rule of Thumb: Some financial advisors recommend a coverage amount equivalent to half of your annual salary for emergency preparedness.

2. Room Rent Limits

The room rent limit directly impacts other hospitalization expenses like doctor fees, nursing charges, and medical services. Opt for a policy with no capping on room rent or one offering higher room rent limits to avoid unnecessary out-of-pocket expenses during hospitalization.

3. Waiting Periods and Coverage for Pre-Existing Diseases

Most health insurance policies impose waiting periods:

• Specified Diseases Waiting Period: Around two years.

• Pre-Existing Diseases (PED) Waiting Period: Up to four years.

A shorter waiting period for pre-existing conditions is always preferable. Always check these clauses carefully before purchasing a policy.

4. Co-Payment Clause

Co-payment refers to the percentage of the claim amount you must bear. Some policies have mandatory co-payment clauses, especially for senior citizens. While opting for co-pay can reduce the premium, it can be burdensome during high medical expenses. Prefer policies with zero co-payment for greater financial relief at the time of claims.

5. No Claim Bonus (NCB)

• Higher NCB percentages (100% or 150%) over time offer significant additional coverage.

• Bonus vs. Discount: Choose policies that add to the sum insured rather than only offering premium discounts.

6. Sum Insured Restoration

The restoration benefit automatically reinstates the sum insured if it gets exhausted due to claims within the policy year. Different insurers have varying terms:

• Restoration for related/unrelated illnesses.

• Available multiple times during the year.

• 100% or 150% restoration limits.

Ensure your policy includes unlimited or multiple restoration benefits for comprehensive protection against consecutive illnesses.

7. Health and Wellness Benefits

• Annual Health Check-ups: Keep track of your health status.

• Wellness Rewards: Earn points for healthy activities like daily step counts, gym visits, or regular checkups.

• Chronic Disease Management: Some plans offer OPD consultations and medicine discounts.

Look for policies that encourage preventive healthcare through robust wellness programs.

8. Network Hospitals

It is crucial to ensure:

• Your preferred hospitals are on the insurer’s list.

• There’s a wide network in your city or town.

Choosing an insurer with an extensive hospital network ensures seamless claim settlements and greater peace of mind during medical emergencies.

9. Claim Settlement Ratio (CSR)

The Claim Settlement Ratio (CSR) indicates the insurer’s efficiency in processing claims:

• High CSR (>85%) means most claims are successfully settled.

• Look into claim ageing reports to see how quickly claims are processed.

• Fewer customer complaints per 10,000 claims is a positive indicator.

10. Incurred Claim Ratio (ICR)

• Moderate ICR (60%-90%) is ideal.

• Very low ICR could suggest reluctance in claim approvals.

A healthy ICR signals the insurer’s financial discipline and ability to honor claims over the long term.

Popular Health Insurance Plans in India (As of 2025)

Disclaimer: Always review policy brochures and terms before purchasing, or consult a qualified financial advisor.