Common Health Insurance Glossary You Need to Understand


When you buy a health insurance plan, you come across several terms that you do not understand. This may lead to higher premium and reduced coverage. With that in mind, we have listed here come the most common health insurance glossary. This will enable you to understand your policy more clearly.

Let’s explore them.

Assignee: Assignee is referred to the person who gets the benefits of the health insurance policy.

Claim: A claim is ‘financial help’ received by the insured person from his insurer due to medical expenses.

Co-payment: Co-payment is a portion of the claim amount that the policyholder pays from his pockets while the remaining amount is covered by the insurance company. In some cases, the insured is ready to pay a certain amount from his pocket at the time of a medical emergency. So, the insurance company charges a lesser premium. This feature is more likely to available in senior citizen health insurance.

Reimbursement – Rearmament is the term that reimburses your amount if determine to get medical treatment at non-network hospitals. When you file a claim with your insurer, you will be given to receive reimbursement for the treatment.

Cumulative Bonus: In health insurance, the cumulative bonus is similar to the No Claim Bonus (NCB). For every claim-free year, the sum insured is increased by a fixed percentage as per policy. For example, if one claim-free year the sum insured increases by 5% and you experienced 5 successive claim-free years in a row, then your cumulative bonus is 25%.

Deductible: Deductible is the fixed amount of medical costs that a policyholder needs to pay each year when filing a claim. Note that deductible is a fixed amount and not a percentage of the total costs. For instance, let’s say that your deductible amount is Rs 10,000 annual. In this case, you can only claim the policy benefits after you have paid Rs 10,000 as your deductible amount in any given year for the treatment.

Claim Settlement – It is the process through which you are allowed to get the claim money. There are two modes of claim settlement.

  1. The reimbursement – It is a process where you can pay for your treatment at a non-network hospital and apply for the reimbursement of the amount from your insurer.
  2. Cashless Claim – In Cashless Claim, the insurance company directly settles your medical bills with the network hospital. So, you need not pay anything while getting treatment at the hospital. Note that cashless claim can only be availed at network hospitals. 

Exclusion: Exclusions are circumstances or conditions for which no health insurance coverage is available. Some permanent exclusion is intentional injury, suicide, hospitalization due to consumption of drugs, alcohol, and more.

Grace Period: The grace period is 15 days immediately after the due date of your health insurance premium. During this period, you need to pay the premium and renew your policy without loss of continuity benefits, such as coverage for pre-existing diseases and a waiting period. It is therefore important to renew your policy within the grace period. Don’t skip it.

Insurer – An insurer is the health insurance company from where you buy health insurance.

Long-term Disability Insurance: A health insurance plan with a long-term disability allows the insurer to pay the insured a percentage of his monthly income if the insured becomes disabled.

Premium: A premium is a fixed periodical amount you pay to avail health insurance cover. In general, the premium is charged every year depending on the policy tenure to renew it.

Policy: Policy is a legal contract between you and your health insurance company. It contains conditions of the insurance.

Pre-existing disease: Pre-existing disease is an ailment, condition or injury-related condition for which the insured person is having symptoms, or was diagnosed, received treatment within 48 months prior to the first policy issued by the insurer. Every health insurance company covers pre-existing diseases after a certain period of time. It is advisable to disclose to your insurer any such existing ailment and ongoing medication. If you do not disclose, your claim may be rejected.

Network: Network is a group of hospitals, healthcare centres, doctors who are part of the contract under the policy. They are obliged to offer services to insured persons at lower charges than their actual fee.

Daily Hospital Cash – Daily Hospital Cash benefit is a specific cover designed to offer a fixed financial payout for each day the policyholder remains hospitalized. The exact amount is determined when buying the policy. Note that daily cash is available as a standalone cover and as a rider for standard healthcare policies.

Sum Insured: Sum insured refers to the maximum financial benefits in a year offered under the policy. You need to choose the sum insured amount while signing up for the policy. The premium payable for the policy is based on the sum insured amount. If you have a plan with Rs 5 lakh of the sum insured amount, then will get treatment for a minimum of 5 lakh.

Waiting period: When you buy a health insurance policy, you will not getting some benefits up to a waiting period. A waiting period generally a fixed period of time from the date of commencement of the policy, after the completion of which, certain specific benefits of the policy take effect.

Free Look Period – Free-look period is the time duration during which you are free to look for other insurance providers without incurring additional charges or any penalties. In general, the free look period extends up to 10-15 days from the date the policy is purchased.

Restoration Benefit – A policy with restoration benefits means the plan leads to reinstatement of your sum insured once the sum insured is exhausted.

Refill Sum Insured – In many cases the sum insured amount is run out when filing claims with the insurer. With the refill sum insured or reload facility, your exhausted sum insured is reinstated. However, certain conditions apply. For instance, once the sum insured that got refilled cannot be utilized to cover the cost of treatment of the same disease as before.

Riders – Also called Add-ons, Riders give extra protection to policyholders. Generally, AYUSH, Maternity, etc. are some of the instances that are not covered under plans. To add them to your policy coverage, you should buy riders by paying extra premiums.

These are some of the most common health insurance glossaries you should know before purchasing health insurance policies.

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