Health Insurance: Protect Your Savings From Medical Bills
Health insurance pays for hospital and treatment costs, so one illness does not drain the savings your family spent years building.
What Is Health Insurance?
You pay a yearly premium, and the insurer pays eligible medical expenses up to the sum insured you choose. Treatment can be cashless, where the insurer settles the bill directly with a network hospital, or by reimbursement, where you pay first and claim later.
Why Do You Need It?
• Hospital, surgery and medicine costs keep rising every year.
• A single serious illness can use up years of savings.
• Illness and accidents can happen at any age, not only in old age.
• Employer cover may end when you change or leave a job.
• Premiums are lower and waiting periods end sooner when you start young.
Types of Health Insurance
Plan | How it works | Best for |
Individual | One person, one sum insured. | Singles, or parents who want separate cover |
Family floater | One sum insured shared by the whole family. | Young families |
Senior citizen plan | Designed for people above 60, with wider cover for age-related needs. | Parents and elders |
Critical illness | Pays a lump sum on diagnosis of a listed illness such as cancer or heart attack. | Add-on to a regular plan |
Top-up and super top-up | Extra cover that starts after your claims cross a chosen limit. Costs much less than a big base plan. | Raising cover at low cost |
Group or employer cover | Given by the employer, usually with a lower limit. | Extra support, not a full replacement |
Personal accident | Pays for accidental death or disability. | Earning members |
What Is Usually Covered?
• Hospital stay, room rent and ICU
• Doctor, surgery and nursing charges
• Medicines, tests and diagnostics during treatment
• Day-care procedures
• Pre- and post-hospitalisation costs
• Ambulance charges
• AYUSH treatment, as per the policy
Usually not covered: cosmetic procedures, injuries from adventure sports or self-harm, and illnesses within the waiting period. Always read the exclusions in the policy document.
Key Terms to Know
Term | Meaning |
Waiting period | Time before certain illnesses are covered. |
Pre-existing disease | An illness you already have when you buy the policy. |
Co-pay | The share of every claim that you pay yourself. |
Room rent limit | A cap on room charges that can also reduce the overall claim. |
Restoration | The insurer refills your sum insured after you use it up. |
No-claim bonus | Extra cover for each year you make no claim. |
Rules That Protect You (IRDAI)
• The waiting period for pre-existing diseases cannot be longer than 3 years.
• After 5 years of continuous cover, the insurer cannot reject a claim for non-disclosure, except in proven fraud.
• There is no upper age limit for buying a health policy.
• Waiting-period credit moves with you when you port a policy to another insurer.
How Much Cover Do You Need?
Many planners suggest at least ₹10 lakh for a family in a metro city, with a super top-up for larger bills. Your own number depends on your city, family size, age and health history. Buy cover for parents separately, so one claim does not reduce your own family’s cover.
Tax and GST Benefits
• GST: individual health insurance premiums, including family floater and senior citizen plans, have been exempt from GST since 22 September 2025. Group policies still carry 18% GST.
• Section 80D: premiums are deductible under the old tax regime, with higher limits for senior citizens and for parents’ cover. Preventive health check-ups are included within the limit.
How to Choose a Plan
1. Check the network hospitals near you for cashless treatment.
2. Compare claim settlement ratio and how quickly claims are paid.
3. Look at room rent limits, co-pay and sub-limits.
4. Check waiting periods and the list of exclusions.
5. Disclose your health history honestly in the form.
6. Renew on time so waiting-period credit does not break.