Terms commonly used in health insurance plan

It serves as a dictionary to help you understand common terms used in health insurance.

October 10, 2012 3:35 IST | India Infoline News Service
Before you plan to buy an adequate health insurance cover become an informed consumer. Read the definitions of commonly used health insurance terms. It serves as a dictionary to help you understand common terms used in health insurance.

Beneficiary: The beneficiary or the insured person enrolled in a health insurance plan and receives benefits through those policies.

Co-pay: An insured person is responsible to pay some percentage of the total claim, even after the mandatory waiting period is over.

Critical illness policy: A critical illness is a serious possibly terminal disease, which is strictly defined by the insurer. Conditions such as cancer, multiple sclerosis, major organ transplants are deemed as critical illness. Most critical illness policies provide for the payment of a lump sum benefit if the policyholder is diagnosed as suffering from one of a number of specified terminal conditions.

Cumulative bonus: Each claim free year ensures that you get a benefit known as ‘cumulative’ bonus

Exclusions: Not all diseases & services are covered under a mediclaim policy.

Floater policy: This policy is issued with a single sum insured covering all members of the family. The cover can be used any member of the family any number of times.

No claim discount: It is a discount on the basic premium if there is a claim free year of the policy. If the insured does not make any claim on his policy, then he gets a discount from 5% to 25% on basic premium for every claim free year.

Personal accident policy: These policies are issued as fixed benefit policies whereby specified sums are paid on the occurrence of specified events. These events could be death or disability.  This payout is not related to the expenses incurred.

Portability: Transferring your existing health insurance policy to a new insurer without losing any benefits of your existing health insurance policy.

Pre-existing disease: The term refers to any ailment or disease that a person is already suffering from at the time of purchasing health insurance.

Pre-authorisation: Insured must contact the health insurer before hospitalisation and receive approval for the healthcare service.

Deductible: The amount that the insured must spend from his pocket before the health insurer pays its share.
Sub-limits: A limitation in an insurance policy on the amount of coverage available to cover a specific type of loss. Usually the caps are on room rent, ambulance services, doctor's fees

Network hospital: Insurance companies has tie-up with various hospitals where the insured can avail cashless facility.

Third party administrator (TPA): TPAs are the authorised claim settling agents of the insurer. A TPA examines the expenses incurred with regard to coverage under the policy. The insured needs to interact with them for settlement of claims. A TPA also empanels hospitals to be part of the network to facilitate cashless settlement of claims.

Read more:

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What is a critical illness cover?

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