Mind your terms

Here is a jargon buster for the terms one comes across in health insurance:

Deductible: This is the amount of money one pays out of one’s own pocket before the health insurance cover kicks in. For example, if you buy a health insurance with a deductible of ₹20,000, the insurance will cover your medical expenses only after you pay for expenses worth ₹20,000 first.

Taking a deductible-based health insurance can help you lower your insurance premium significantly.

However, make sure you choose a deductible amount that suits your pocket, which doesn’t force you to overspend.

Co-insurance : This is an arrangement where the insured and the insurer pay a pre-decided percentage towards the medical bills of the insured.

For instance, if you go for an 80-20 insurance scheme, for a total medical expense of ₹1,000, the insurer will contribute ₹800 and the remaining ₹200 will be paid by the insured. The common co-insurance schemes are 90-10, 80-20 and 50-50.

Co-insurance is commonly used together with deductible. This arrangement can also bring down your health insurance premium significantly allowing you to go for a bigger insurance cover.

Co-payment : Co-payment is much like co-insurance except for one difference. Instead of paying a certain percentage of the medical expense, the insured is required to pay a fixed amount of money.

To illustrate, if you take a co-payment of ₹500, for all your doctor visits and prescription drugs, you will have to pay ₹500 while the rest of the amount will be paid by the insurer. It is ideal to opt for co-payments to bring down the cost of small medical expenses, such as doctor consultation, which are otherwise not covered under your health insurance policy.

Surviving period : This is the minimum time period one needs to survive with a particular ailment in order to be eligible to claim the health insurance benefit for it.

To explain, if an individual is detected with cancer, he/she needs to survive for a particular period of time — which differs from insurer to insurer — before he/she can buy a health insurance policy.

Waiting period : This refers to the time window you need to wait before any claim arising out of a policy you bought can be paid out by the insurer. This is to say that if you are diagnosed with a critical illness within a week of buying a health insurance policy, then you may not qualify for claiming the insurance cover.

(The writer is CEO and co-founder, Policybazaar.com)

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