Unexpected events can disrupt even the most carefully planned finances. While you can’t prevent all misfortunes, health insurance provides vital financial protection and peace of mind. However, insurance policies come with their own jargon of terms and conditions, which can seem overwhelming. That is why we’ve simplified key health insurance terms to help you make informed decisions and choose the best plan for you and your family.
Key Health Insurance Terms Explained
1. Insurance Premium
The insurance premium is the amount you pay to keep your policy active.
These premiums can be scheduled (monthly, quarterly) or paid as a lump sum.
If the premium isn’t paid on time, the policy could lapse, resulting in lost coverage.
2. Policyholder
The policyholder is the person who owns the insurance policy.
Responsible for premium payments and holds rights to make changes, file claims, and receive benefits.
3. Insurance Claim
An insurance claim is a request made to the insurer for compensation for a covered loss or expense.
For example, in a health policy, you may claim hospital expenses for treatment covered by the policy.
4. Sum Assured
The sum assured is the maximum amount payable by the insurer for a covered claim.
For instance, if your policy’s sum assured is ₹50,000, you can claim the upper limit.
5. Nominee
The nominee is the individual designated to receive policy benefits
Nominees are often family members, ensuring benefits are directed to the intended recipient.
6. Underwriters
Underwriters assess your risk profile based on health, age, and lifestyle factors.
They set your policy terms and determine premium amounts, ensuring the policy aligns with your risk level.
7. Policy Tenure
Policy tenure refers to the duration of the insurance coverage.
At the end of the tenure, the policy can be renewed or adjusted to fit changing needs.
8. Maturity Age
The maturity age is when an insurance policy reaches completion.
Once maturity is reached, benefits are typically paid out to the policyholder or nominee.
9. Maturity Benefits
Maturity benefits are payouts made when the policy tenure is complete.
Depending on the policy's structure, these can be a lump sum, regular payouts, or both.
10. Death Benefits
Death benefits are paid to the nominee if the policyholder passes away while the policy is active.
This is a key feature in life and health insurance, providing financial support to loved ones.
11. Tax Benefits
Health insurance premiums often qualify for tax deductions under sections like 80C of the Income Tax Act.
Benefits paid to policyholders or nominees are typically tax-exempt under Section 10(D), enhancing policy value.
12. Free-Look Period
A free-look period is a window after policy purchase where you can review terms and cancel if needed.
You can cancel without penalties and receive a full refund during this period.
13. Grace Period
The grace period is an extra window after the due date for paying overdue premiums without penalty.
This safety net helps policyholders avoid lapses in coverage due to missed payments.
14. Waiting Period
A waiting period is a set timeframe after policy purchase when certain benefits are restricted.
For instance, there might be a waiting period before accepting claims for pre-existing conditions.
15. Revival Period
The revival period allows you to reactivate a lapsed policy after the grace period ends.
To revive, pay outstanding premiums and possible penalties within this period to restore coverage.
16. Surrender Value
The surrender value is the amount refunded if you decide to end the policy before maturity.
Not all plans offer this, so check terms for surrender value eligibility and amounts.
17. No-Claim Bonus
A no-claim bonus (NCB) rewards policyholders who don’t file claims during a policy year.
This bonus can lower premiums or increase the sum assured, encouraging responsible policy usage.
18. Copayment or Coinsurance
Copayment (or coinsurance) is a fixed amount or percentage you pay for covered services.
For instance, with a 10% copay on hospital bills, you’d pay ₹100 for every ₹1,000 in covered expenses.
19. Deductible
A deductible is the initial amount you pay before your insurance covers expenses.
Higher deductibles often lower premiums but require more personal contributions for claims.
20. Exclusions
Exclusions are treatments or conditions that the policy doesn’t cover.
Common exclusions include certain pre-existing conditions, elective procedures, or experimental treatments.
21. Cashless Claims
Cashless claims mean the insurer directly settles bills with the hospital, so you don’t need upfront payments.
Available at network hospitals, this feature eases the financial burden during emergencies.
22. Top-Up Plans
Top-up plans provide additional coverage if your main policy’s sum assured is exceeded.
Useful for unexpected expenses, top-up plans activate after the base policy’s limit is reached.
Understanding health insurance terms helps you confidently choose a policy, ensuring it meets your needs and financial goals. With the right policy, you’re well-prepared for unexpected medical costs, ensuring both financial protection and peace of mind for you and your family.
This information is provided solely for general informational purposes and does not constitute advice of any kind. OneConsumer Services Pvt. Ltd is not liable for any direct or indirect damages or losses that may result from decisions made based on this content. Please consult a professional advisor before making any decisions.
