Health insurance policies, though beneficial in covering medical expenses, can prove difficult to understand given their technical aspects. Health insurance plans contain various terms which escape the understanding of common individuals who are not an expert in insurance. As such, it becomes your duty to help your customers understand the difficult terms and concepts of health insurance plans. When the policy’s aspects are completely clear for your customers, they can buy a plan without hesitation which would, ultimately, help in boosting your sales. So, let’s have a look at some of the most common health insurance terms which you should help your clients understand better –
- Sum insured vis-à-vis sum assured
There is often confusion in the term sum insured and sum assured when buying insurance. Your customers might use these two terms interchangeably but these terms are quite different from one another. Sum insured is used to denote the coverage under health insurance plans while sum assured is used for life insurance plans.
- Co-payment
Co-payment is short for compulsory payment. It is used to represent the proportion of claim which is payable by the policyholder every time that a claim is made. So, if the policy states a co-payment of 20%, it means that 20% of each claim would be paid by the policyholder while the insurance company would pay the rest. Co-payment can be applicable in health insurance plans for different cases. For instance, when senior citizens are covered, there is usually a co-payment.
- Pre-existing diseases (PED)
Pre-existing diseases are those medical conditions which the insured member suffers from at the time of buying the policy. So, if your client suffers from diabetes when buying a new health insurance plan, diabetes would be considered to be a pre-existing disease. Coverage for PED is allowed under health plans after a waiting period which might range from 12 months to up to 48 months.
- Deductible
The concept of deductible is usually used in top-up and super top-up health plans. Deductibles are specified limits up to which claims are not covered. Only if the claim exceeds the deductible does the health insurance plan pay the excess claim. So, if in a health plan, there is a deductible of INR 2 lakhs, claims up to INR 2 lakhs would not be paid. If the claim is INR 2.5 lakhs, the policy would pay INR 50,000 which exceeds the deductible of INR 2 lakh.
- Lifelong renewability
Health insurance policies offer lifelong renewability to insured members. This means that if the policy is renewed on time, without any lapse, it can be renewed for as long as the insured member is alive. There is no maximum age up to which renewal would be allowed.
- Day care treatments
Almost all health insurance plans allow coverage for day care treatments. Day care treatments are those treatments wherein you don’t have to be hospitalised for 24 hours. Such treatments require only a few hours of hospitalisation because of the advancement in the treatment techniques. Had these advancements not happened, the treatment would have resulted in a hospitalisation of 24 hours or more. Thus, even though day care treatments do not require 24 hours hospitalisation, they are covered up to the sum insured.
- Pre and post hospitalisation expenses
These expenses are those expenses which are incurred before and after the insured member is hospitalised. Pre hospitalisation expenses are expenses incurred before hospitalisation related to the illness or disease which results in hospitalisation. Such expenses are covered for 30 to 90 days depending on the policy. Similarly, post hospitalisation expenses are those which are incurred after the insured is discharged from the hospital after treatment. These expenses are incurred on monitoring the health of the insured post discharge and in recovery. Post hospitalisation expenses are covered for 60 to 120 days after hospitalisation depending on the policy selected.
- No claim bonus
If there is no claim in a policy year, health insurance plans allow a reward which is called no claim bonus. Under this bonus the policyholder is either allowed an increase in the sum insured free of cost or a discount in the renewal premium.
- Portability
Portability of health insurance policies means the facility to change the health insurance plan from one insurance company to another while retaining the renewal benefits. So, if your clients have a health insurance policy from one company and they want to switch to the policy of another company, they can port their health insurance policy to another company. When the policy is ported, your clients would get the benefit of reduction in the waiting period and accumulated no claim bonus of the last policy.
- Grace period
There is a due date within which the renewal premium should be paid for renewing the health insurance policy. If your clients fail to renew the policy within the due date, the policy lapses. However, a grace period is provided for premium payments. This is an additional period allowed after the expiry of the due date. Though coverage is not allowed, if the premiums are paid during the grace period, your clients can retain the no claim bonus of their policy.
- Room rent capping
In some health insurance plans there is a limit on the room rent which is covered under inpatient hospitalisation benefit. This limit is usually expressed as a percentage of the sum insured. If the client’s room rent is within the imposed sub-limits, the entire cost of inpatient hospitalisation is covered under the health insurance plan. However, if the actual room rent exceeds the capping, the claim is reduced. In that case, the claim is paid in proportion to the capped room rent to the actual room rent. For instance, if the capped room rent is up to INR 5000 and the actual room rent is INR 6000, the claim for inpatient hospitalisation would be reduced. If the cost of inpatient hospitalisation comes to INR 60,000, the amount of claim would be INR 50,000 (INR 60,000 * INR 5000 / INR 6000)
- Maternity expenses
Some health plans allow coverage for maternity expenses. Maternity expenses include expenses incurred on child birth, pre and post hospitalisation as well as pre and post-natal care. Coverage for maternity expenses is allowed up to a specified limit. Moreover, the coverage is allowed after a specific waiting period.
Your clients trust you to have an in-depth understanding of insurance. So, it is your responsibility to simplify health insurance plans for your clients. Educate yourself about the afore-mentioned health insurance terminologies so that you can educate your clients too and sell the suitable plan for their needs.