Health insurance

Health insurance covers the cost of medical treatment — mainly hospitalisation — up to an annual limit called the sum insured. Depending on the policy, it can also cover costs before and after a hospital stay, day-care procedures, ambulance charges and more. Claims are settled either cashless at network hospitals or by reimbursement.

Why it matters

One serious illness or accident can cost more than years of savings. Health insurance keeps that cost from derailing your plans, which is why it is usually treated as a foundation, alongside an emergency fund, before long-term investing.

How to read it

• Individual or floater. A family floater shares one sum insured among family members; individual policies give each person their own.
• Waiting periods limit what is covered in the early years of a policy.
• Co-payment and sub-limits. Caps on room rent, specific procedures or a share of each claim reduce what is paid.
• Restoration and no-claim bonus. Features that top up or increase cover differ between policies.
• Network hospitals decide where cashless treatment is available.

Common misconceptions

• “My employer’s cover is enough.” Group cover usually ends with the job and may not suit your family’s needs or later life.
• “A higher sum insured is all that matters.” Sub-limits, co-payments and exclusions shape what is actually paid.
• “I’ll buy it when I’m older.” Premiums rise with age, and existing conditions bring waiting periods.

In India: Health insurance is regulated by IRDAI. Its 2024 master circular capped the pre-existing disease waiting period at three years and cut the moratorium period to five years. Premiums may qualify for a deduction under the old tax regime, within limits. Check current rules and your policy wording.