Common Health Insurance Terminology 101

Important Update (Dated May 30, 2024) – Good news for Health Insurance policyholders! According to the Master Circular on Health Insurance Business 29052024 rolled out on May 29, 2024 by IRDAI, insurers are to decide on the request for cashless claims within 1 hour of receiving the request. Also, the final claim is to be granted within 3 hours after the policyholder’s discharge from the hospital. Insurers have been directed by IRDAI to establish necessary systems and procedures for this process by July 31, 2024. The Master Circular on Health Insurance Business 29052024 circular is available here - https://irdai.gov.in/document-detail?documentId=4942918

A-Z Health Insurance Terms in India 

To make it easier for you to understand health insurance terminology better, here is a closer look at the most important phrases and words you should know. The health insurance terms and their definitions have been sorted in alphabetical order for your convenience. Let’s get started. 

A. Add-on Cover

An add-on cover is an additional cover or rider that you can purchase along with your base health insurance policy. You need to pay additional charges for this add-on cover. Some common riders or add-on covers include room rent waiver, maternity cover, critical illness cover and personal accident cover. 

Age limit

Age limits are the minimum and the maximum ages at which a person can apply for a new health insurance policy or renew an existing plan. Check the age limits before you purchase health insurance, to make sure that you are eligible for the policy. If you are below the minimum age or above the maximum age, you will be ineligible.

 

Agent

 

This is a health insurance term that you may be familiar with, since it applies to other kinds of insurance as well. An agent is an intermediary who connects the insurance provider with the customer or the policyholder. If you wish to buy a health insurance policy, you can choose to purchase it online, or through a health insurance agent. 

 

In case you choose the latter, the agent will help you fill out the application form and get the paperwork in order. They will then submit the form to the health insurance provider on your behalf, and be the point of contact between you and the insurer.

Ambulance Cover

Ambulance cover is an additional cover that some health insurance plans offer. It covers the costs incurred while transporting the policyholder in an ambulance to the hospital. Without this additional cover, the costs of transporting via an ambulance can be quite steep to bear.

 

Any One Illness

 

This phrase in health insurance terminology refers to a continuous period of illness. This includes a relapse of the condition within 45 days of discharge from the hospital.

 

AYUSH

 

Another important term in health insurance jargon, AYUSH is an acronym for Ayurveda, Yoga, Unani, Siddha and Homoeopathy. These are alternative treatments, and some health insurance policies offer coverage for medical assistance sought through these channels. Before you buy a health insurance plan, make sure you check if it covers AYUSH treatments.

B. Beneficiary 

The beneficiary is the person named in the health insurance policy as the recipient of the benefits payable under the plan. Typically, the policyholder is the beneficiary for all medical benefits offered under health insurance. However, in case of the benefits payable on the policyholder’s demise, the beneficiary will be the nominee assigned in the plan.

Bodily Injury

This term refers to any physical injury caused to the beneficiary's person, such as cuts, bruises, fractures or other injuries. They are caused due to unexpected circumstances, and the costs of treating these injuries are covered under a regular health insurance plan.

C. Cancer Insurance

Cancer insurance is a kind of health insurance cover that covers the costs of cancer treatment. These policies offer coverage for different types and different stages of the disease. If you have a family history of cancer, it is advisable to purchase a cancer insurance plan when you are young and healthy, so you can secure your future against any eventualities. 

Cashless Facility 

This health insurance term refers to a facility that many leading health insurers offer. In a cashless health insurance plan you do not have to pay for healthcare and treatment costs out of pocket at network hospitals. Instead, the health insurance provider directly settles the bill with the hospital.

Claim

This is another key health insurance term that you should be aware of. A claim is a formal request that you will have to raise with your health insurance provider in case any of the covered medical contingencies occur. A health insurance claim intimates the insurer that such a contingency has occurred and requests them to pay the compensation due under the policy. 

Claim Settlement

Claim settlement is the process of paying out the benefits due under a health insurance plan after the policyholder has raised a claim on the policy. Claim settlement occurs in any one of the following two methods — cashless claims and reimbursement claims. 

 

Cashless claims are directly settled by the insurer with the network hospital. In reimbursement claim, however, you will have to pay the costs out of pocket first, and your insurer will reimburse the expenses later. 

Claim Settlement Ratio

Claim settlement ratio is the percentage of the claims received during the year that the insurance provider has actually settled. The higher the claim settlement ratio is, the better the chances are that the insurance provider will settle your claims when the time comes. You can use this metric to choose a good health insurance service provider when you are shopping for health insurance. 

Co-payment

Copayment in health insurance is an arrangement where the medical costs and liabilities are shared between the insurance provider and the policyholder. So, the policyholder pays a part of the costs out of pocket, while the health insurance provider bears the rest of the expenses. The higher the co-payment, the lower the premium will be. 

Complimentary Health Checkup

Some health insurance plans offer complimentary annual health checkups. Depending on the terms and conditions of the policy, this benefit may be offered in any one of two ways. The insurer may either cover the costs of the health checkup, or may offer it free of cost. 

Coverage Period

The coverage period is the duration over which the benefits of the health insurance plan remain in force. This period ranges from the date of purchase of the policy till the date of expiry. As a policyholder, you will be eligible to claim the health insurance benefits under your plan only during the coverage period. After this period, you can renew your policy to continue enjoying the cover. 

Critical Illness 

This health insurance term may often be used in the policy document. It refers to any life-threatening medical condition or illness that requires advanced and substantial medical care. Some examples of critical illness include cancer, kidney failure, heart attacks, organ transplants and multiple sclerosis. While regular health insurance policies may or may not offer extensive coverage for critical illnesses, you can always opt for a critical illness rider to enjoy comprehensive coverage in case of any critical illness diagnosis.

Cumulative Bonus

Also known as a No Claim Bonus or NCB in health insurance is a monetary benefit that you will receive if you do not raise any claim during a policy year. The benefit is offered in the form of an increase in the sum assured during the subsequent policy year. The bonus may range from 5% to 10% of the sum assured each year, and insurers typically have a cap on the maximum amount up to which your cover can increase. 

D. Daily Hospital Cash

Some health insurance plans offer this benefit. It is a fixed sum of money that is paid out to you — the policyholder — for each day you remain hospitalised. These payouts can help you cover the costs that are not otherwise included in your health insurance policy. You can opt for the daily hospital cash benefit as an add-on cover, or you can bundle it with your regular health insurance plan, depending on the terms and conditions involved. 

Daycare Procedure

A daycare procedure is any medical treatment that requires hospitalisation for 24 hours or less. Some examples of daycare procedures include chemotherapy, tonsillectomy, dialysis, cataract surgery and angiography. The costs of such procedures may not be covered in traditional health insurance plans, but some new-age plans cover these expenses too.

Deductible

This is another common word you may hear as a part of health insurance terminology. It is a fixed sum of money that you have to pay out of pocket before you can file a claim with your health insurance provider. 

 

For example, say you have a health insurance plan with a deductible of ₹20,000. Now, if you are hospitalised and your medical bill comes up to ₹80,000, you will have to pay ₹20,000 out of pocket (since it is the deductible), while your insurer will pay the remaining ₹60,000.

Dependent

The term dependent typically includes the spouse and the children of the policyholder. In addition to this, some health insurance policies may also consider any dependent parents of the policyholder as a part of this category. 

Domiciliary Hospitalisation

Some patients may not be able to visit a hospital for various reasons. In such cases, medical care may need to be provided to them from the comfort of their own home. Such treatments and procedures are categorised as domiciliary hospitalisation procedures. Before you buy a health insurance plan, check if the policy covers domiciliary treatment.

E. Emergency Care

This is also a key health insurance term that you should know about. It refers to the medical treatment offered in case of any unforeseen and unexpected emergencies, such as a sudden and severe illness that requires immediate medical assistance. Not providing emergency care can result in significant complications for the patient, or may even lead to their death. 

Exclusions

A health insurance plan does not cover every kind of medical treatment or illness. Some conditions and expenses may not be covered by your policy, and these are termed as the exclusions under the plan. Make sure you read the list of exclusions before choosing a health insurance plan, since the particulars of what’s not covered differs from one policy to another.

 

Some common exclusions under health insurance typically include the following —

• Pre-existing diseases or medical conditions

• Cosmetic treatments

• Expenses related to pregnancy and childbirth

• Dental expenses 

• Injuries on account of suicide attempts

F. Family Floater Policy

A family floater policy is a single health insurance plan that offers medical coverage to the policyholder as well as their dependent family members. The list of dependents typically includes the spouse and children of the policyholder. In some cases, it may also include the policyholder’s dependent parent(s). The fixed coverage offered under a family floater health insurance policy can be availed in case any of the members covered are diagnosed with any of the illnesses covered. 

 

First Diagnosis

 

This is a health insurance term that not many people may be aware of. It indicates the first time the policyholder is diagnosed with a specific illness or disease that is covered under the policy. 

 

Free Look Period

 

A free look period is a short window of time during which you can terminate your health insurance plan without incurring any additional penalties or charges. The free look period in most health insurance policies is around 15 days from the date of receipt of the policy. In the case of electronic policies, the free look period may be 30 days. 

G. Grace Period

This is another key term in the health insurance glossary. If you forget to pay your renewal premium on time, your health insurance plan does not immediately lapse. Instead, the grace period begins. This is a window of time during which you can still pay the renewal premium along with any late fees that may be levied.

 

The grace period allowed is typically up to 30 days from the date the renewal premium is due. If you do not pay the premium even during this period, your health insurance plan will lapse and you will lose all the benefits it offers.

Group Health Insurance 

Group health insurance is a kind of health cover that is taken for a group of people. Commonly group health insurance plans are purchased for the employees of an organisation by the employer. Each employee needs to pay a nominal premium for the cover, and in exchange, gets to enjoy the benefits offered by the health insurance plan. 

H. Health Insurance Premium

This is one of the most common health insurance terms you will come across. It is the amount that you — the policyholder — will have to pay the insurance provider in return for the health insurance coverage they offer. The health insurance premium is generally charged on an annual basis, although some plans may offer the option to pay the premium on a monthly, quarterly or semi-annual basis too.

 

If you opt for an add-on rider along with your base health insurance plan, you will have to pay an additional premium for the rider (or riders) that you purchase.

Hospitalisation

The term hospitalisation refers to the instances when you are admitted to a hospital for medical treatment for a minimum period of 24 hours. If your admission falls under this category, you can claim the hospitalisation benefits offered by your health insurance plan. Hospitalisation can be planned (in case of an illness that is diagnosed) or unplanned (in case of accidents and other medical emergencies).

I. ICU Room Rent

This is the cost you incur in case you are admitted to the Intensive Care Unit (ICU) in a hospital. The charges for ICU room admission are typically higher than the rent charged for regular hospital rooms. So, not all health insurance plans may cover room rent. Check if your policy offers reimbursement for these charges before you purchase it. 

Individual Health Insurance

An individual health insurance plan is a policy that offers coverage for a single individual. In case the individual covered incurs any of the medical expenses included under the policy, the insurance provider will offer coverage for those costs.

In-Patient Treatment

This phrase in health insurance terminology refers to any medical treatment that is given to a patient who is hospitalised for a minimum period of 24 hours. Regular health insurance policies typically cover in-patient treatment costs. 

Insured

The insured or the insured person is the beneficiary named in the policy. This is the person who will receive the financial benefits specified under the health insurance plan. It is the insured person who can raise a claim with the insurance provider.

Insurer

The insurer or the insurance provider is the health insurance company that offers the cover to the insured person. In the event of a claim, it is the insurer who pays out the monetary benefits due under the plan. 

IRDAI

The Insurance Regulatory and Development Authority of India or IRDAI is a regulatory body that has been set up under the Ministry of Finance in India. It oversees and regulates the insurance industry in the country and protects the interests of the insured. 

L. Lapse

A health insurance policy lapse occurs when the policy is terminated or becomes expired due to non-payment of the premium due. Once your policy lapses, you will not be eligible for any of the benefits due under the plan. 

Long-Term Care Policy

Long-term care refers to any prolonged medical care and nursing that may be required for patients who are diagnosed with any chronic illness or disability. These conditions require regular management and care, and long-term care policies offer coverage for the expenses related to such long-term medical assistance. 

M. Maternity Cover

Regular health insurance plans do not offer any coverage for the expenses related to pregnancy and childbirth. A maternity cover is an add-on cover that you can purchase with your base health insurance plan, so you can enjoy coverage for such maternity expenses too. You will have to pay an additional rider premium for the same.

N. Network Hospital

Health insurers tie up with leading hospitals in the country. The hospitals that partner with health insurance providers are known as network hospitals. If you receive medical treatment at a network hospital, you can file a cashless claim with your insurance provider. Here, the insurer will directly settle your bills with the network hospital.

Non-Network Hospital

Non-network hospitals are hospitals that are not part of the network that the insurer has partnered with. If you receive medical treatment at a non-network hospital, you can only file a reimbursement claim with your insurance provider. Here, you need to first pay for the costs out of pocket, and the insurer will then reimburse you for these expenses. 

Nominee

A nominee is the person nominated by the policyholder to receive the benefits under the policy, in case of the demise of the policyholder. 

O. Out-Patient Department (OPD) Treatment

The Out-Patient Department in any hospital is that branch that offers medical treatment for patients who require no hospitalisation. The treatment typically takes less than 24 hours. Some common examples of OPD treatments and procedures include scans, vaccinationations and root canal treatments. 

P. Policy Coverage 

The health insurance term ‘policy coverage’ refers to the expenses and scenarios covered by the plan. You can only file a claim with your insurer for the items included in the policy coverage.

 

Policy Period

 

This is the duration over which the health policy is valid. It typically lasts from the date of commencement of the cover to the date of policy expiry. You can raise a claim with your insurer for any expenses covered only during the policy period.

 

Portability 

 

Portability is a lesser known concept in health insurance terminology. Portability in health insurance is the process by which you can port or transfer your health insurance policy from one insurance provider to another, in case you are not satisfied with your current insurer.

 

Pre-Existing Condition

 

A pre-existing condition is any illness or disease that you may suffer from at the time of purchasing your health insurance plan. Make sure you disclose the details of such conditions in your application. Some health insurance plans may cover pre-existing illnesses too, although only after a specific waiting period. 

 

Pre and Post Hospitalisation Charges

 

When it comes to medical treatment, the expenses are not just limited to your stay at the hospital. You may incur many costs before and after hospitalisation too. Most regular health insurance plans today offer coverage for these expenses. 

 

The costs incurred before hospitalisation are called pre-hospitalisation charges. Some examples of this include the costs of scans and the consultation fees for doctors. The costs incurred after hospitalisation are called post-hospitalisation charges. Some examples of this include the costs of follow-up consultations and tests. 

R. Reimbursement 

This health insurance term pertains to the claims raised with the insurer. In a reimbursement claim, you will first have to pay the medical costs out of pocket. Then, you can file a claim with your insurer, who will reimburse you for the costs to the extent covered under your policy. 

Renewal

Renewal of health insurance plan is the process of extending the period over which you can enjoy coverage under the policy. To renew your health insurance plan, you simply have to pay your renewal premium. Your policy will then be extended for another period (which can be a block of 1 to 5 years, depending on the policy).

Riders

Riders are also known as add-on covers. They are additional benefits that you can purchase along with your base health insurance plan, by paying a nominal additional rider premium. Riders in health insurance offer coverage for expenses that are not covered by the base plan. Some examples of health insurance riders include —

• Maternity cover rider

• Accidental disability rider

• Room rent waiver

• Critical illness rider

• Hospital cash rider

S. Sum Insured

This is an important phrase in the health insurance glossary. The sum assured essentially refers to the maximum coverage offered under a health insurance plan. This is the maximum amount for which you can raise a claim, subject to sub-limits in the plan. The premium for a health insurance plan depends on the sum insured under the policy. 

Survival Period

Survival period is the duration for which the insured person should survive after they have been diagnosed with any of the illnesses covered. This period can range from 14 to 30 days. If the person does not survive this period, no benefits will be payable under the plan. 

Sub-Limit

A sub-limit is a cap on certain specific expenses covered by a health insurance plan. The sub-limits for such expenses is set either as a fixed sum, or as a percentage of the overall sum assured. You can only raise a claim with your insurer for an amount up to the sub-limit specified under your plan.

 

For example, say you have a health insurance plan that offers an overall sum assured of ₹10 Lakhs. However, the sub-limit on room rent is capped at ₹5,000 per day. And let’s say your hospitalisation costs for 1 week come up to ₹49,000 (at the rate of ₹7,000 per day). 

 

In such a case, although your total expenses are well within the sum assured limit, you can only raise a claim up to the sub-limit under the plan. This means that your claim amount will be ₹35,000 only (at ₹5,000 per day, for 1 week).

T. Terminal Illness

A terminal illness is any health condition or disease that cannot be cured. It can only be managed. The health of patients with a terminal illness is expected to get worse over time, ultimately leading to their demise. Some examples of terminal illness include advanced cancers, dementia and lung diseases. 

Third Party Administrator (TPA)

This is another common health insurance term you may come across. A Third Party Administrator or Health Insurance TPA is an organisation that health insurance providers partner with, to make the process of filing claims easier for customers. 

 

TPAs help customers file cashless or reimbursement claims with their insurance providers. If you have a health insurance cover and you need to submit a claim, you can approach the Third Party Administrator at the hospital where you’ve been admitted.

W. Waiting Period

The waiting period in health insurance is a specific window of time during which you cannot raise any claims on your health insurance policy. This clause is generally applicable to pre-existing conditions. The waiting period for such health conditions may be around 4 years. So, during this period, you cannot raise any claim with your insurer for expenses related to these pre-existing illnesses. This clause exists to protect insurers from any fraudulent claims that may be made for already diagnosed illnesses.

Conclusion

These health insurance terms will be very helpful when you set out to buy a health insurance policy. Buying health insurance has become extremely easy and hassle-free today. You can take a look at the various health insurance policies available on Bajaj Markets and choose a plan that fits your needs.