In 2004 30% of Rural India and 20% or Urban India do not go for medical treatment purely for financial reasons.

Around 47% of hospital admissions in Rural India and 31% in Urban India are financed by loans and sale of assets.

Medical care facilities are already prohibitively expensive and at old age the need to fall back on medical care is only likely to increase.

Health insurance (Popularly known as Medical Insurance or MediClaim) protects you and your dependents against any financial constraints arising on account of a medical emergency. It sometimes includes disability and long term medical needs.

It is an insurance which usually provides either direct payment or reimbursement for expenses associated with illness, injuries and hospitalization as detailed in the scope of the policy cover. Some policies also cover pre- and post-hospitalization expenses.

The sum assured in a health insurance policy is guaranteed as per the terms of the policy as long as the premiums are paid regularly and the policy is in force.

Health insurance is not inflation protected, which means whenever insurance needs increase or cost of healthcare goes up, one needs to buy additional cover. It is an annual renewal policy in case of most policies across insurers.

The premium depends on insured’s age and state of health and premium frequency is annual and is tax deductible not exceeding Rs. 15, 000 (Rs. 20, 000 in case of Senior Citizens) under Section 80(D) of IT Act, 1961. Premium paid to keep in force insurance on the health of parent or parents of the assessed up to Rs.15, 000 is deductible.

Reading the fine print will help to know what the policy covers and what it excludes instead of finding the truth when it comes to raising a claim.

Here are a few common exclusions in most health insurance policies:

• No claim on pre-existing diseases that were in existence before the policy commencement, are not covered, even if you were unaware of their existence. Some companies now relax this requirement by reimbursing the treatment of such diseases after a period of 2-4 years of the policy. Some do so after four no claim bonuses.
• Cool off period – This is the period when claims are not paid on medical expense incurred on the treatment of any health related condition occurring within 30 days of the policy coming into force(except through bodily injuries due to accidents). Also, in some case, such as in a cataract surgery, there are sub-limits on reimbursement even after the exclusion period has passed.
• Eye expenses on laser treatment of eyesight, cost of spectacles or contact lenses are not covered.
• Dental expenses incurred on dental treatment of cosmetic surgery to get the right smile are excluded.
• War injuries due to wars, invasions or any claim directly or indirectly caused or contributed by nuclear weapons.
• Other treatments through non-allopathic methods are not paid for by most insurers.

Insurers restrict certain discretionary costs associated with hospitalization by introducing sub-limits for reimbursements. For instance:

• Room rent: 1.5% of the sum insured per day. If your insurance cover is Rs.2 lakh, room rent will be capped at Rs.3, 000 per day.
• ICU charges: 3% of the sum insured per day.
• Doctors’ fees: 40% of the sum insured.
• If your employer offers a group cover check what the policy covers – group health insurance covers sometimes more ailments than what it would for an individual.

Shariah Scholars are of the opinion that Group Health Insurance offered by the Employers can be availed by employees as the cost of this facility comes as CTC and forms a part of the compensation for the service provided to the employer.

Some Shariah Scholars are of the opinion that those who cannot afford the high costs of medical treatment be allowed to ones who cannot afford it. However, it needs clarity, and, in our opinion, they are referring to those people who are below the poverty line.

SenSage recommends creating a corpus for medical exigencies at an early stage of life and if unused the surplus can be transferred to any other goal bucket.