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A STUDY ON INVESTING IN MEDICAL PREMIUM FOR A MIDDLE CLASS INDIVIDUAL2
A STUDY ON INVESTING IN MEDICAL PREMIUM FOR A MIDDLE CLASS INDIVIDUAL2
INTRODUCTION
INSURANCE:
An Insurance act of 1938 was the first legislation governing all forms `of
insurance to provide strict state control over insurance business. It extends to the
whole of India. It shall come into force on such date as the Central Government may,
by notification in the Official Gazette, appoint in this behalf.
Insurance is a co-operative device that spread the loss caused by particular risk over a
number of persons. Always the word insurance is associated with the word risk. It
facilitates re-investment during crisis situation. Insurance is a social device to bit
uncertain losses arising through certain risk to a person or property of person insured
against it. It is a protection against financial losses arising on the happening an
unexpected event. As an individual life is subject to various risk in personal life, death
or premature death. In business, person business property is subjected to loss by fire,
theft and natural calamities. Insurance is a device by which loss suffered from various
risks to an individual can be minimized. Insurance provides indemnification against
loss arising from happening of some event.
Meaning:
An Insurance transaction is a contract between two parties i.e. insurer and insured
under which the insurer undertakes the compensate the insured for loss arising from
the risk insured against. Premium is the consideration of the contract of the insurance
which is paid by the insured to the insurer for the risk undertaken by the latter.
Insurance is a co-operative device that spread the loss caused by particular risk over a
number of investment during crisis situation. Insurance is a social device to bit
uncertain losses arising through certain risk to person or property of a person insured
against it. So insurance is a contract between two parties:
1. Insurer (company)
2. Insured (person)
The instrument containing the contract of insurance is called a policy. According to
law of contract, the contract requires all the essentials of a valid contract as
mentioned below:
Insurance involves pooling of funds from many insured entities (known as exposures)
to pay for the losses that some may incur. The insured entities are therefore protected
from risk for a fee, with the fee being dependent upon the frequency and severity of
the event occurring. In order to be insurable, the risk insured against must meet
certain characteristics in order to be insurable risk. Insurance is a commercial
enterprise and a major part of the financial services industry, but individual entities
can also self-insure through saving money for possible future losses.
Until 1999, insurance services were provided in India by two monopolistic public
sector organisations namely, life insurance corporation of India and general insurance
corporation of India. in order to provide better insurance cover to citizens and also to
ensure the flow of long- term sources of financing infrastructure the government
opened up the insurance sector and also set up a statutory Insurance Regulatory and
Development Authority in 1999.
Any class of insurance business in India can be carried out only by:
Thus, only Indian Insurance companies are permitted to carry out class of insurance
business after the commencement of IRDA Act,1999. An Indian Insurance company
is defined as a company formed/registered under companies act.
DEFINITION:
According to IRDA
In legal sense
In financial sense
Insurance involves sharing of risk which implies that insurance spreads the
financial losses of insured members over the entire community by
compensating the unfortunate few from the funds built up from the
contribution of all members.
The insurance provides capital to the business houses and industrialists by way
of lending the funds to them or making contribution to their share capital. In
other words, the funds accumulated by insurance companies by way of
premiums are invested in productive channels.
The insurance minimizes the worries and miseries of losses arising due to
death of insured or destruction of property. The carefree person can devote
himself in a better manner towards the achievement of objectives which
results in enhancing his efficiency and rapid economic growth.
Benefits of insurance
1. Insurance policy is a suitable way for providing for the future of most of the
people who find it difficult to save and accumulate funds for the evening of
their lives.
2. Insurance plays an important role in the expansion and promotion of foreign
trade.
3. Insurance helps in spreading education.
4. Insurance companies accumulate large funds which they held as custodians
and out of which claims and losses are met a large portion of such resources
are invested in various securities and social welfare purposes.
5. Confidence building and removal of fears from the minds of businessmen
and individuals against sudden losses, is a job done by the insurance.
6. The spreading of the financial losses of insured members over the entire
community in an equitable manner by compensation of the unfortunate few
Introduction from the funds built up from the contributions of all members is
done by the insurance.
7. It helps businessman in facing the competition and in expanding the size of
business units.
8. Insurance has considerable effect on the reduction of losses due to the loss
prevention measures of the insurers.
9. Insurance is an item of invisible exports and contributes significantly to the
balance of trade.
10. Insurance also increases the credit of a man as money can be easily
borrowed on the security of goods and property insured against fire or sea
perils or on the basis of a life policy.
11. Insurance takes care of some of the social problems which beset a modern
civilized society.
12. Insurance accelerates the process of economic growth in various ways. By
providing for events which may be anticipated, the insurance acts as a
stabilizer of economic growth.
Legal Framework:
The Insurance Sector in India is governed under two important acts i.e.
Insurance Act, 1938 and the Insurance Regulatory and Development authority
act, 1999. But there are some other acts also that have to be taken into
consideration.
1. The Companies Act, 2013
2. The General Insurance Business (nationalization) Act, 1972.
HEALTH INSURANCE
Introduction:
Health Insurance (popularly known 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. In
mediclaim, you pay a premium and in return the insurer commits to pay a
predetermined sum of money to, meet the claims. Health Insurance is new in Indian
context and is slowly catching up with the consumers. Consumers understand the
objective of health insurance and it’s offering to cover the ever rising medical
expenses.
A health insurance is a contract act between the insurance company and the
policy holder, wherein the insurer pays for the medical expenses incurred by the life
insured. The insurer will either provide the reimbursement for your medical expenses
or ensure you are eligible for cashless treatment for injures or illness covered under
the policy at one of the network hospital. You can also get tax deductions on premium
paid towards the health insurance under section 80D of income tax act, 1961.
Health is available and groups. However, premium for individual policy is
costlier than that of the group policy. An individual is the owner of his personal
policy. Whereas in group plans, sponsor is the owner of the policy and the registered
members are covered by the policy. You can take advantage of group health insurance
to overcome the shortage of your individual insurance. People with no policy or are
uninsurable due to one or the other reason can take good advantage of group plans
and be covered.
Under this insurance the insures undertake to indemnify the insured in
considerations of a friend price called premium. Health insurance provides direct
payment or reimbursement for expenses associated with illness and injures. Due to the
increase in the cost of health care and treatment, health insurance has become
essential in today’s world. However, before buying a health insurance policy, plan
your requirement carefully. It will save you from buying a policy which might not be
appropriate for you and can also be expensive.
What is Health Insurance?
The term health insurance (popularly known as Medical Insurance or
Mediclaim) is a type of insurance that covers your medical expenses. The concept of
Health insurance is new in India but its awareness is growing fast. Health insurance
comes in handy in case of severe emergencies. Life is unpredictable, insurance can
make it safe and secure from bearing huge financial loss. A health insurance policy is
a contract between an insurance company and an individual. Sometimes it is
associated with covering disability and custodial needs. The contract is renewable
annually.
Health insurance is affordable and carries the assurance and freedom from
insecurities that threaten normalcy now and then. The type and amount of health care
costs that will be covered by the health plan are specified in advance. Health plans are
available in two formats, individual and group plans. In an individual policy you are
personally the owner of the policy. While in a group plan, the sponsor owns the policy
and the people covered under it are called its members.
The Indian government (center & state) have launched numerous medical insurance
schemes to improve healthcare and make it accessible for the weaker sections of
society here is a list of health insurance scheme provided by the government:
Medicare or medical costs are rising year on year. As matter of fact, inflation
in Medicare is higher than inflation in food and other clothing is in single digits,
medicare costs usually escalate in double digits. For individual who hasn’t saved that
much money, arranging for funds at the eleventh hour can be a task. This is
particularly daunting for seniors, given that most ailments strike at an advanced age.
Cashless Treatment:
When you are covered under a health insurance policy, you can avail
cashless treatments which essentially means that you can receive
medical treatments without having to pay the hospital from your own
pockets. As your insurance company would work in collaboration with
various hospital networks.
Transportation Charges:
In case you hold health insurance policy and get hospitalised the plan
will cover the costs incurred on using an ambulance to transport you
from your home to the hospital or vice versa.
Medical Checkup:
Insurance policy also provide options for health checkups. Most health
insurance policies offer free health check-ups. However, most
insurance companies only offer these check-ups for free depending on
your no claim bonus.
No Claim Bonus:
If you hold a health insurance policy and do not make any claims over
the course of an entire policy year, you will be rewarded in the form of
a no claim bonus.
Room Rent:
Tax Benefits:
Having a health insurance policy can offer tax benefits as well. The
premium payments you make towards your health insurance plan
quality for tax deductions under sections 80D of the income tax act.
Renewal:
The renewal of your health insurance policy can also be done online.
There is also a lot of flexibility when it comes to renewing your
insurance plan. You can alter the terms of coverage based on what you
think will work best for you.
Cover of OPD Expenses:
. Health insurance acts as a safety net for an individual finances in case he/she
meets with unforeseen accident. A Health insurance policy equips you to get the best
health care treatment without worrying about the huge costs payable at the time of
discharge. Therefore knowing about the claim process is an essential piece of
information that the insured individual should be aware of at all times. There are two
types of health insurance claim which an individual can choose from when making a
claim are:
Taking health insurance and paying premium is one story and filling for claim
is another. Claiming benefits can be quiet tricky at times so you have to be smart and
careful while filing for the claim. To file a health insurance claim with your insurance
company one has to keep the following things in mind:
Eligibility Criteria
When you wish to purchase health insurance, the insurance company could
ask you to take certain medical examinations. After your age, your health is the
second most crucial factor that aids an insurance company in assessing your
premiums. Currently, majority of the health insurance companies in India provide
coverage to individuals under 45 years of age without the need for medical exams.
However, your pre-existing conditions, if any, will certainly be taken into
consideration by the health insurance company. If your insurer does not insist on
taking a medical exam, you will be asked to furnish a declaration of good health in
addition to disclosing your pre-existing conditions such as hypertension and diabetes.
Having no pre-existing conditions and being younger will help you find plans for
lower premiums.
1. Age Proof:
Any one birth certificate, 10th or 12th mark sheet, driving
license, passport, voter ID, etc.
2. Identity Proof:
Driving license, passport, voter ID, pan card, aadhar card,
which proves one’s citizenship.
3. Address Proof:
Electricity bill, telephone bill, ration card, driving license,
passport, should clearly mention the permanent address.
4. Some Plans Require a Medical Check-up:
(usually for elder people above the age of 45 years)
5. Passport Size Photo
Tax Benefits on Health Insurance
The amount you pay towards health insurance premium claimed as a tax-
saving deduction under section 80D. you can claim RS.25,000 annually for a health
insurance policy for yourself. If you also pay the premium for a health insurance
policy for your parents, you can claim up to RS.30,000 for the same as well. Earning
money is not at all useful if you don’t have a life. You are eligible for tax benefits on
the premium you pay for your health insurance. You can avail tax benefits for the
premium paid for the health insurance policy according to section 80D of income tax
act,1961.