The A to Z of Insurance Explained

Scared at the very thought of going through your policy document? Does your mind begin to wander off the minute you hear the ruffle of your insurance papers? Do you think of it all as one huge, boring and impenetrable wall of jargon you just can’t seem to break? Well, don’t worry! We have the A to Z of insurance sorted for you, so that you can easily understand the basics of insurance, without losing a lot of your valuable hair and time. So, let’s start!

A is for automatic restoration. Imagine that your policy’s sum insured is completely exhausted whilst you were hospitalized once. But if your insurer offers automatic restoration, the sum insured of your policy will be replenished immediately, without you having to file any paperwork for the same.

B is for Beneficiary. In term insurance, this is the individual who has been specifically identified by the insured person to benefit from the policy’s proceeds upon his/her demise. This is different from a nominee, who’s job is to simply ensure that the beneficiary receives his/her rightful benefits.

C is for co-payment. Simply put, this clause, while lowering your overall premium, mandates that the insured pays a specific percentage of the total bill presented, out of his/her pocket. So, in case of a 20% co-payment clause, where the bill is Rs 10,000 the insurance company will only pay Rs 8,000. The remaining Rs 2,000 will be paid by the insured.

D is for deductible. This is the amount over and above which the health insurance company will start paying for a particular claim you’ve made. Say your cover has a deductible of Rs 10,000. The moment your bill goes over Rs 10,000, the insurer will start paying.

E is for exclusions. These are simply items or treatments that your policy will not pay for.

F is for a free-look period. This is the maximum time within which you can get a full refund in case you buy a policy and then find it to be unsuitable or inadequate for you. In most cases, this ranges from 15 days to a month. If you want to return the policy after the free-look period is over, some portion of your premium will be deducted before refund.

G is for grace period. Forgot to pay your premiums on time? Or defaulted on paying it? In any case, the insurer gives you a small window to pay it, sans any penalty. Post this period has lapsed, late-fee charges will be levied.

H is for Hospital Cash Rider. This is an add-on you can affix to your insurance policy, in order to cover expenses you might incur during your hospitalization, other than that of the actual treatment. So, having this rider can cover for other tertiary expenses like travel, food etc.

I is for in-patient coverage. These are treatments or procedures which need you to be admitted in the hospital for over 24 hours, or 1 day.

L is for lapse. Your policy lapses, or does not remain in effect any longer, if you do not pay your premiums on time, or fail to renew the policy after its tenure has expired.

M is for maternity cover. This offers insurance coverage for all expenses associated with childbirth. Think hospitalization, vaccinations, pre and postnatal care, a maternity cover takes care of it all.

N is for network hospitals. These are institutions your insurance company has partnered with. You can avail cashless treatments in network hospitals, something that might not be possible in institutions who are not on your insurer’s network.

O is for OPD. These treatments do not require admission for over 24 hours in hospital, unlike in-patient treatments. This simply entails visiting the doctor and getting a prescription.

P is for pre-existing diseases. These are ailments you suffer from since before buying the insurance policy. Generally, the insurance company only begins such pre-existing conditions after a certain time or waiting period has elapsed. Depending on the condition, each individual might have a different waiting period.

R is for renewal. When you decide to continue with your insurance policy after the policy’s tenure is over, that is known as renewal.

S is for sum insured. This is the maximum amount your insurer will pay per the policy. Higher the sum insured, higher the premiums payable, and vice versa.

T is for Top-up. Think of it as a second protective layer over your regular policy. A top-up will kick into effect if the original sum insured under your plan is exhausted.

W is for waiting period. This is the minimum time a policyholder must wait before coverage for specific conditions and his/her pre-existing conditions begins under an insurance policy.

So, that’s it! Now, you can sift through your insurance policies with some confidence, thanks to this ready reckoner.