Explained | Four types of health insurance plans and its benefits

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From a variety of health insurance plans, it might get slightly difficult to choose a particular plan for oneself. The aftermath of Covid-19 pandemic has triggered the awareness and need for an effective health insurance cover to absorb the financial shocks that come in the form of healthcare expenses. The medical infrastructure in India may be spread from end to end but is hardly affordable for the middle class and lower middle-class Indian families. Thus, it becomes crucial to understand the features and benefits of various health plans to be able to pick the best for individual needs.

There is no thumb rule to select the best health insurance policy because medical conditions are unique to each individual. The severity of a particular disease also varies from person to person. The impact of the Covid-19 virus, for example, has followed no rule book. For some, the pandemic was like another viral flu while it became a life-threatening disease for others. Therefore, choosing comprehensive health insurance with maximum coverage should be the ideal goal.

Let us give you a quick roundup:

Individual health insurance plan

An individual plan is popular amongst young, first-time earners with zero dependents. Since such policies are bought in the individual name, the premium is based on the buyer’s age and total sum assured. These are indemnity policies that reimburse the actual expenses incurred up to the amount of the cover. They cover expenses only if you are hospitalised for more than 24 hours.

It covers surgery costs, room rent, physician’s fee and laboratory tests. Besides, the insured has to pay a predetermined amount for certain health care services. This is known as co-payment. Pre and post hospitalisation expenses are also covered under this plan.

Family floater plans

A family floater plan is similar to an individual health insurance plan except that sum insured can be availed by any or all members of the family and not a single person. The benefits remain the same. For example, instead of buying Rs 3 lakh health insurance cover separately for each family member (suppose 3), you can simply buy a family floater plan for Rs 9 lakh. Since the sum assured is divided between all the family members, the premium for these plans is lower compared to individual health insurance plans.

The entire sum insured floats among the covered family members in family floater plans. Any covered family member may use any amount up to the insured amount. For example, if you purchase a Rs 20 lakh family floater plan, any family member can use any amount up to the sum insured. A family in a metropolis should look into a policy with a sum assured of Rs 15-25 lakh.

Critical illness plans

A typical critical illness cover offers lump sum benefits for the treatment and recovery expenses arising from specific life-threatening illnesses insured under the plan. In case the insured is left with a surplus, it can also be used to pay any impending debts. Most insurers cover as many as 36 specific illnesses in a critical illness plan. Moreover, one can certainly buy multiple critical illness covers and each would be liable to pay for your illness. Some of the diseases covered in critical illness plans include cancer, heart attack, stroke, bypass surgery, kidney failure, major organ transplant paralysis, among others.

Such type of cover will lapse soon after the insurer executes the payment. As per the rule, the lump sum amount is paid to the insured after a survival period that extends up to 30 days after contracting the illness. Critical illness cover should serve as an additional layer of protection after buying health insurance and life insurance.

Hospital cash plans

Under this, the insurer pays a fixed amount on a daily basis when the policyholder gets hospitalised. Irrespective of the hospital bill including the room rent, doctor fees and other charges, the hospital cash plan will pay the amount basis number of days the plan is opted by the insured. A daily hospital cash plan would determine the coverage based on daily allowance chosen under the plan. The range of daily cash available is from Rs 500 to Rs 3000.

Meanwhile, if the insured is admitted in the ICU, the daily cash allowance doubles up. Some plans also allow additional multiple of the cash allowance in case of a surgery.