All about medical insurance

Life is full of uncertainties: an untoward event can strike an individual anytime, any place. It is for such a reason that individuals need to be prepared and plan their finances better.

This is where a Mediclaim policy comes to an individual's rescue and helps him not only tide over a potential crisis but also protects him from a disproportionate and/or unplanned outflow of his personal finances.

Simply put, a Mediclaim policy is a non-life insurance policy, which covers the expenses incurred by an individual in case of an injury/hospitalisation.

Mediclaim covers not only the expenses incurred during hospitalisation but also the pre and post-hospitalisation expenses (subject to conditions).

Individuals have to pay a minimal premium for buying medical insurance. An illustration will help in understanding this better.

Medical Insurance Premium

Suppose an individual aged 30 years, decides to buy a Mediclaim policy from ABC Company Ltd. The policy cover for the same is Rs 200,000. The premium he will have to shell out is approximately Rs 2,721.

Conversely, if he decides to buy the same policy from XYZ Company Ltd, he will have to shell out Rs 2,200 for it.

God forbid, if this individual meets with an accident two years later and has to be hospitalised. Since he had bought a Mediclaim policy, he will be entitled to receive hospitalisation expenses incurred by him to the tune of Rs 200,000.

Not only will these expenses be covered but also expenses incurred by him for buying medicines, post-discharge expenses and any other medical expense post-hospitalisation.

Mediclaim policies have a host of added benefits too. Some of these benefits accrue over the policy tenure if an individual keeps renewing his policy. For example, certain insurance companies increase the policy cover by a certain percentage for the individual for every claim-free year.

Conversely, some companies decrease the amount of premium. This benefit though, ceases to exist on the first occurrence of a claim (subject to conditions).

Another benefit some companies offer is that they give a discount of say, 10 per cent if the individual decides to buy Mediclaim cover for the entire family.

There are other benefits too; for example, a certain company will reimburse the money an individual pays for a regular medical check-up once every four years if he keeps renewing his policy from them.

Tax benefits are also available for Mediclaim policies under Section 80D under the income tax act where upto Rs 10,000 premium paid for such policies is eligible for deduction. Individuals can therefore, get the most out of such policies by maximising the medical cover.

Individuals though have to be aware that they have to comply with certain formalities to get a reimbursement of expenses. For example, they have to get themselves treated from a hospital, which has a tie-up with the said insurance company.

Of course, in case of emergencies or where it's not possible for individuals to get themselves treated from the said hospitals, there are certain guidelines, which the individuals have to adhere to.

Also, there is third party administration involved. So the individual has to make sure that all his documents/paperwork is in order for him to file a claim successfully.

As can be seen from the above discussion, Mediclaim should form an essential part of every individual's financial planning. For, not only does Mediclaim cover the expenses incurred by individuals during a medical emergency but it also eases the burden on their finances. It is also for this reason that a Mediclaim should be viewed separately from life insurance.

Points to remember

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