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Insurance Terminology Set-3 by Dr. Gaurav Garg

Deductible
● A deductible is the amount the policyholder agrees to pay out-of-pocket before the insurance company shoulders
the cost. Typically, the higher the deductible, the lower the premiums as the insurers bear less financial risk.
● In other words, the insurance company is liable to pay the claim amount only when it exceeds the deductible.
● If the deductible of your policy is Rs 30,000 and the claim by the insured is Rs 40,000, then the insurance
company is liable to pay only Rs 10,000. However, if the claim amount is less than the deductible, the insurer is
not liable to pay any amount. For high deductible policies, the premium is lower while the low deductible policies
have a higher premium.
● Deductibles prevent people from making trivial claims or go in for unnecessary treatment and hospitalization just
because they have insurance cover.

Co-pay clause in health insurance

● A co-pay is a fixed amount that the insured has to pay for a covered medical service and the insurer takes care of
the rest of the amount. The co-pay amount depends on the nature of the treatment and medications. If your policy
has a co-pay clause of 10% and your claim is Rs 50,000, then you will have to pay Rs 5,000. The remaining
amount will be covered by the insurer.
● The purpose of co-pay clause is to discourage people from making trivial or unnecessary claims and also to
reduce burden on the insurers. If people have MEDICAL INSURANCE, they assume they can undergo treatment
at the most expensive hospitals. Co-pay acts as a deterrent.

No-claim Bonus
● Health insurers offer a benefit termed as No-Claim Bonus (NCB), in which the policyholder is rewarded for not
submitting a claim in the preceding years.
● The NCB is a discount ranging between 20%-50% and is given to the insured while renewing a policy. The NCB
discount is offered on the premium amount during renewal.

Inclusions
● The policy features and benefits that the insurer will bear the expense for is known as coverage benefits or
inclusions. It includes hospitalization expenses, ambulance charges, surgery, hospital room bills, anaesthesia,
medicines, and treatment-related expenses.

Exclusions
● These are the conditions and situations under which your health insurance claims can get rejected. Exclusions are
the stated legal conditions under which the insurance company will not pay your claim even for events or risks
covered by an insurance policy.
● Example – In health insurance, policies may not cover what they deem to be ‘cosmetic’ like sex change
operations, plastic surgery, or dental surgeries.

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What is cashless treatment in health insurance policy?
● The conventional reimbursement process is where the policyholder submits documents for the incurred medical
expenses after the treatment is completed. That means the policyholder pays from his pocket at the time of the
treatment. Also, if there is slight mistake or delay in the necessary paperwork submission, the claim might also
get rejected. The situation becomes all the more critical if you need to pay heavy amount upfront for an
emergency or urgent surgery. In all such situations, health insurance with cashless facility comes as a blessing in
disguise.
● These are those insurance plans wherein the policyholder has the option to avail of cashless treatment at an
insurer’s network hospital. In case of cashless treatment, all your medical bills are settled between the insurer and
the hospital.

Automatic Restoration
● The restoration benefit helps the sum insured of your health insurance policy to be restored up to the maximum
limit as soon as it gets exhausted after a claim.
● This benefit is offered under health insurance plans available for individuals as well as families. Commonly
known as the refill benefit, it is also available as an add-on cover to your existing policy and comes in handy in
case of a second hospitalisation within a single policy year. It. Consider it your backup plan in times of need.

● Complete Exhaustion
○ Once the entire sum insured is exhausted, this type of restoration benefit comes into play. Most health
insurance policies offer a restoration benefit for the complete exhaustion of the sum insured.
○ For example, A claim of Rs 4 lakh is made on a health plan with a sum insured of Rs 5 lakh. Post claim
payment, you will have the remaining sum insured of Rs 1 lakh. In the case of a second claim made in the
same policy year, the restoration benefit will not be applicable. Only when the remaining sum insured is
also exhausted, the restoration benefit will get activated and your sum insured will be fully restored.

● Partial Exhaustion
○ With this option, the restoration benefit comes into play even when only partial exhaustion of the sum
insured takes place. When it comes to being more beneficial, this type of restoration benefit should be
your pick.
○ For example, If you have a sum insured and have made a claim of Rs 4 lakh, Rs 1 lakh would be left.
Nonetheless, the restoration benefit would apply and the sum insured would be restored to Rs 5 lakh,
which will be available for any future claims.

Family Floater Health Insurance

● Family floater health insurance also known as family health insurance covers your entire family under a single
plan. The sum insured under this plan floats upon all the family members insured in it. The key individual, spouse
and children are covered while there are plans for the parents, parents-in-law and siblings as well.

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Top-up Health Insurance Plans
● A top-up health insurance plan helps you enhance your existing health insurance policy at a cost-effective price.
It is an additional health plan that acts as a backup to your regular health insurance policy, providing additional
financial security.
● In case your primary health insurance plan’s sum insured gets exhausted, then you can avail of a top-up health
insurance plan.
● However, a top-up plan comes with a mandatory deductible and provides coverage only after the insured has paid
the deductible amount.
● Usually, the premiums for health insurance with top-up plans are relatively lower compared to health insurance
with a high sum insured.

SUPER Top-up Health Insurance Plans

● A super top-up health plan covers the total hospital bills up to the limit specified in your super top-up plan above
the deductible amount. Hence, once your deductible is paid, the super top-up policy becomes active for
subsequent claims. It covers cumulative expenses unlike a regular top-up plan that covers single clams over and
above the deductibles.

Example:
● Suppose you have a health insurance of 10 lakh and top up and super top up of 8 lakh

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To Download Current Affairs PDFs join this Telegram Group of Dr. Gaurav Garg - https://t.me/StudyIQPremiumUsers
 To Buy Gaurav Sir's Current Affairs click on the below link -
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For any Assistance Please Feel Free to Contact at - 95544 43351

To know more, download Study IQ APP

https://play.google.com/store/apps/details?id=com.studyiq.android

To Download Current Affairs PDFs join this Telegram Group of Dr. Gaurav Garg - https://t.me/StudyIQPremiumUsers
To Buy Gaurav Sir's Current Affairs, Static GK & Banking Awareness (Static) Courses, click on the
below links (गौरव सर के करट अफेयस, े िटक जीके और बिकंग अवेयरनेस ( े िटक) कोसज खरीदने के िलए, नीचे
िदए गए िलंक पर क कर) -
1. Gaurav Sir's Current Affairs
2. Gaurav Sir's Static GK
3. Gaurav Sir’s Banking Awareness (Static)

For any Assistance Please Feel Free to Contact at - 95544 43351

To know more, download Study IQ APP

https://play.google.com/store/apps/details?id=com.studyiq.android

To Download Current Affairs PDFs join this Telegram Group of Dr. Gaurav Garg - https://t.me/StudyIQPremiumUsers