How Health Insurance Works: Costs, Cover and Claim Information

Understanding a few policy terms makes it easier to ask useful questions before buying health insurance. Always check how those terms are defined in the particular policy. A quotation, summary or comparison page cannot replace its wording.

Premium, sum insured and deductible

The premium is the price payable for insurance on the agreed terms. The sum insured is the stated cover limit, subject to any benefit limits, exclusions and other conditions. A deductible is an amount or threshold applied to eligible claims as the policy specifies; it is not a separate premium that necessarily has to be paid before the policy starts.

A co-payment is another possible condition requiring the insured person to bear a stated share of an eligible claim. How it interacts with a deductible or sub-limit depends on the policy. Ask for a written worked example that uses the product's actual terms.

Read claims statistics carefully

A claim-settlement ratio and an incurred-claims ratio measure different things. The latter relates claims costs to premium income over a reporting period. Check the definition, reporting year and business category before comparing figures from different sources.

No single claims ratio proves that an insurer is financially secure or guarantees approval of your claim. A 70–90% incurred-claims ratio is not a guarantee against closure. Financial standing, regulatory information, servicing and the policy's terms need separate consideration. Use the insurer's current public disclosures and IRDAI's published reports, rather than an unexplained percentage.

Questions for your comparison

• Which expenses are covered and which limits apply?
• What do I pay through deductibles, co-payments or exclusions?
• What waiting periods and disclosure requirements apply?
• How do I request a cashless authorisation or reimbursement?
• Where can I find the insurer's grievance contact?

Keep the Customer Information Sheet and full policy wording. IRDAI's health insurance guidance explains why these details matter. Choose using your circumstances and the written terms; no website description promises a particular claim outcome.