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Medical Insurance

Medical insurance aims to reimburse specified medical expenses incurred owing to health issues faced by an individual. The insured person pays an annual insurance premium which is based upon multiple factors such as amount of cover, type of medical ailments covered, age of insured, any pre-existing medical history, etc.

If a person who has medical insurance faces hospitalisation and is suffering with covered health issues, the cost of medical expenses can be settled by the hospital directly with the insurance company. This facility is known as cashless settlement. Where the hospital does not support cashless settlement, the insured person initially pays the hospital bills and later on recovers the hospitalisation expenses from the insurance company after filing a claim application.

An element of 'Excess' charge generally applies for claims made against medical insurance. 'Excess' means that out of the medical expense claim made by the claimant, the first x amount shall not be paid by the insurance company. This x amount can generally range from Rs. 500 onwards and varies across different insurance companies.

For some people their employers provide group mediclaim benefit where the employer takes on a group medical insurance policy for all its employees. An employee is also provided an opportunity to add their family members at specially negotiated rates.

While choosing a medical insurance policy, care must to be taken to evaluate on a minimum the following points:
  • Types of medical ailments included / excluded by the policy;

  • Excess amount specified under the policy;

  • Coverage for pre-existing diseases;

  • Cover for pre & post hospitalisation expenses;

  • Reputation of the insurance company and ease of filing a claim;

  • Support for cashless settlement of expenses; and

  • Number of recognised hospitals that honour cashless settlements.

As per the current tax laws, medical insurance premiums paid by a person uptoRs. 15,000 are allowed as deduction in computing the taxable income for the respective person.
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