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Health Insurance Basic Terms For First Time Buyers

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By Author: Dipti Goel
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So it's time you are planning to buy health insurance, owing to the needs of today's times. With much confusion surrounding the terms and clauses used in a policy, there needs to be an understanding regarding the basic terminology used. While most of the queries you might be having would be dutifully clarified by company representatives, here are 5 basic terms that you need to know before purchasing the best health insurance plan.

1. Premium
Insurance premium refers to a specific amount calculated by the insurance provider, which the policyholder needs to pay at specified time intervals in order to maintain the actual coverage of insurance. An insurance premium is based on various factors which are applicable to the candidate. These include age, medical history, health deteriorating habits such as smoking, medical conditions, allergies, and many more which can lead to hospitalization. Such factors decide the amount of the premium. Young and healthier people generally have to pay lesser premiums compared to their older counterparts. Insurance companies hire actuaries for the purpose of determining the likelihood of a claim by individuals harbouring health related vulnerabilities across various age groups and lifestyles.

2. Waiting period
The waiting period can be defined as a specific time period which must pass after which your health coverage begins. This time starts from the day you purchase the insurance and goes on until the end date of the waiting time. No claims can be made during this period. Different kinds of conditions and coverage’s have a different set of rules and waiting periods applied to them. Terms and conditions pertaining to the waiting period vary from company to company, and also on various other factors concerning the policyholder. The reason why such a waiting period exists is to prevent the policyholder from buying the health cover in order to execute a planned claim.

3. Sub-limits
Sub-limit is the maximum cap on the amount of money insured, which can be made available to the policyholder in the events of a medical requirement. Simply put, a sub-limit is the total claim accessible to the policyholder for certain specific medical conditions, diseases or medical procedures. The amount is fixed and predetermined during the sale of the policy. The best health insurance plans contain relaxed or null sub-limits. Higher premiums are applicable to policies without sub-limits.

4. Claim
A claim can be called as an official request for coverage, made by the policyholder to the health insurance company, so as to receive the services and provisions offered by the company in times of a medical requirement. There are two ways in which a claim is settled; a cashless type claim or a reimbursement type claim. Medical expenses are directly paid for by the insurer to the hospital in the former type. In the latter type, the policyholder pays for the expenses first, and then later on files for reimbursement for the same from the insurer.

5. Deductibles
The deductible is the amount of loss to be borne by the policyholder. It's a cost-sharing requirement which states that the insurer won't be liable for a certain percentage of amount concerning the covered expense. When the claim amount is reimbursed, the deductible amount is deducted from the bill, as the policyholder is liable to pay that percentage of the amount. More the deductible, lower is the premium of any policy.

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