Health Insurance Glossary: A to Z Basic Insurance Terms Everyone Should Know


Health Insurance Glossary: A to Z Basic Insurance Terms Everyone Should Know

Have you ever been in the middle of reading a paragraph just to realise you only understand half of it?

It turns out that it happens to most of us, especially when discussing difficult insurance terminology and phrases. To stay informed, you don't need to know every insurance term. As important as having insurance – whether life, health, or liability – it is also critical to understand what it covers and states. To fully comprehend it, we must first understand a few insurance words and terms that are commonly used in the policy wording. 

In this article, we will define common health insurance terms or jargon so that you will understand them the next time you read an insurance policy. Here you go!

Age Limit: Every health insurance policy has a minimum and maximum age limit. Policy seekers within the specified age range are eligible to apply for a health insurance policy. 

Add-on Cover: In health insurance, an add-on is an additional or optional coverage that a policyholder can add to a base policy by paying some extra amount.

Ambulance Cover: Ambulance coverage compensates a health insurance policyholder for transportation costs incurred to get to the closest hospital for treatment.

Benefits: A general insurance terminology for any service covered by a health insurance plan in the normal course of a patient's healthcare, such as an office visit, laboratory test, surgical procedure, etc. is said as a benefit. 

Cashless Hospitalization: A service provided by the insurer to the insured in which the insurer pays the medical bills directly to the network provider or hospital.

Claim Settlement Ratio (CSR): The claim settlement ratio indicates the insurers’ ability to settle the claims. It is calculated by comparing the total number of claims paid out to the total number of claims received. Thus, it assists customers in determining the insurer's potential to meet their claim demands. A health claim settlement ratio of more than 80% is generally regarded as satisfactory.

Co-payment: The co-payment is the percentage of the claim that the insured agrees to pay out of pocket, regardless of the claim amount.

Critical Illness Insurance: Critical illness insurance is supplemented coverage for medical emergencies such as heart attacks, strokes, and cancer. 

Daycare Treatment: The term daycare refers to treatment procedures that require hospitalisation for less than 24 hours.

Domiciliary Hospitalization: A domiciliary treatment is any medical treatment that the insured receives at their homes while under professional care. 

Eligibility: It is the determination of whether an individual meets the financial and non-financial requirements to receive health insurance plan benefits.

Exclusions: It includes many conditions, illnesses, diseases, or ailments that the insurance policy does not cover. Therefore, before selecting the right plan, it is important to review the list of exclusions.

Family Floater Plan: A family floater is a type of health insurance policy that covers the entire family. Every family member who is covered by a floater receives benefits from a larger common sum insured.

Free Look Period: A free look period is a time period during which a policyholder can cancel the policy without penalty. Insurance companies offer this option without penalty, and the period can last up to 15 days.

Group Health Insurance: A Group Health Insurance plan is a type of health insurance that covers a group of people who work for the same company. This is frequently offered as a valuable benefit to employees as the premium is borne by the employer.

Hospitalisation: It entails being admitted to the hospital for at least 24 hours. This criterion applies to both planned and unexpected hospitalisation.

Insurer: An insurer is an organisation that offers financial assistance for the medical expenses incurred by its policyholders.

Insured: An eligible family member of the policyholder who enrolls in insurance, pays the appropriate premium, and is thus considered an insured person under the terms of the policy.

In-patient: A treatment that necessitates the patient being hospitalised for at least 24 hours for a policy-covered treatment.

Individual Health Insurance: Individual health insurance is a type of insurance that provides medical coverage to individuals on a personal sum insured basis. It refers to a type of health insurance policy that must be bought individually for each member of the family.

IRDAI: In 1999, the Insurance Regulatory and Development Authority of India (IRDAI) was established. The IRDAI regulates and promotes the Indian insurance industry. As a result, all insurance companies, agents, and brokers must comply with the IRDAI.

Lapse: Lapse is the phrase used to describe when an insurance coverage expires or terminates owing to non-payment of premium.

Maternity Insurance: The insured can receive financial assistance for medical expenses incurred during childbirth. It covers medical expenses for childbirth (both normal and cesarean), pre and post-natal care, etc.

Network Hospitals: A network hospital is any hospital or nursing home impaneled to the insurance provider, where one can avail cashless treatment. Seeking treatment at a network hospital may require paperwork as the insurer settles the bills directly to the hospital authority.

Out Patient Department(OPD): OPD treatment is when an insured person visits a clinic or healthcare center and avails the treatment without getting hospitalised. 

Premium: To obtain health insurance coverage, you must pay a fee to your insurance provider. Such insurance-related payments are typically charged annually and are referred to as the premium.

Pre and Post Hospitalization Coverage: Pre-hospitalisation expenses are medical expenses incurred by the insured before admission to a hospital. Medical costs incurred after being discharged from the hospital are referred to as post-hospitalisation expenses.

Portability: Health insurance policyholders have the right to transfer their policy to another insurance company, without losing the benefits availed such as waiting period for pre-existing illness. 

Pre-existing Disease: A pre-existing condition is any disease or health condition that the policyholder already has at the time of purchasing health insurance.

Room Rent: It is a charge for the use of a hospital or nursing home room. In most cases, the policy schedule specifies a ceiling for room rent.

Renewable: Paying the required premium on or before the renewal date to extend the duration of validity of the health insurance policy for another period is essential.

Reimbursement: If you choose to seek treatment at a non-network hospital, you will be required to pay the complete medical bill out of your pocket. A claim is to be filed later to reimburse the incurred amount. 

Restoration Benefit: If the sum insured is exhausted, the insurance company will recharge or re-fill the sum insured through the benefit.

Sum Insured: This is the maximum amount payable under the insurance policy. The policyholder cannot claim excess of the sum insured. The policy premium is determined by calculating the sum insured.

Sub Limit: The insurance company's additional limit for specific medical care. Certain illnesses cannot be treated beyond the specified sub-limit. Room rent, doctor's consultation fees, ambulance charges, and pre-planned medical treatments such as cataract surgery, plastic surgery, and so on are commonly subject to sub-limits.

Senior Citizen Plan: Some health insurance policies are available to meet the needs of policyholders over the age of 60 but under the age of 70. These policies are tailored to the needs of senior citizens and include benefits such as domiciliary care coverage, AYUSH coverage, psychiatric treatment coverage, etc.

Third-Party Administrator (TPA): Third-Party Administrators, or TPAs, are those who have been authorised by the insurance provider to provide administrative services to customers or policyholders. Their primary responsibility is to process claims, collect premiums, settle claims, etc.

Top-up Cover: These are plans that can be purchased in addition to a standard health insurance policy. When the standard plan's sum insured is consumed, the top-up policy will cover the medical expenses.

Waiting Period: The waiting period is the amount of time when a claim won’t be entertained until and unless it is an accidental case. There is an initial waiting period of 30 days to follow. Besides the waiting period for pre-existing diseases is generally set at four years, whereas the waiting period for other conditions is shorter. 

While the list doesn’t stop here, these are some of the most common definitions that will get you started. But, since this isn't a test, don't be concerned if you haven't memorized them all! 

If you still don't understand the health insurance jargon, contact your insurance provider for help or to buy a new policy. You can choose a Health Insurance Plan by Care Health Insurance for financial help, appropriate healthcare services, and comprehensive medical coverage in case of medical contingencies.

Disclaimer: The above information is for reference purposes only: Policy Assurance and Claims at the underwriter's discretion.

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