In the modern age, everybody is aware of life insurance products and various benefits offered by insurance companies. Offerings like unit linked insurance plans (ULIPs) have done their bit to draw individuals towards the insurance segment. Also tax benefits under Section 80C of the Income Tax Act have also contributed to their allure and helped in popularizing insurance products. Conversely there are products like medical insurance or commonly known as mediclaim that can add value to an individual’s insurance portfolio, but are relatively lesser known.

Medical insurance gives the reimbursement of hospitalization expenses for illnesses or diseases suffered or accidental injuries sustained during the policy period. In other words, subject to the insurance cover and the rules and regulations of the policy, the insurance company undertakes to compensate the policy holder for hospitalization expenses that he incurs, during the policy’s term.

To avail of the insurance cover, the policy holder has to pay a premium. This premium amount depends on factors such as the age and health of policy holder. The premium amount rises in line with an increase in the insured’s age, among other factors. In case of an existing policy, wherein an insurance claim has not been made, the insurance company compensates the policy holders by offering a higher insurance cover or by lowering the premium for the subsequent years.

Insurance companies are known to offer discounts in premiums when members of a family opt for medical insurance together vis-à-vis applying for insurance in their individual capacities. Generally, most policies cover up to 30 days of pre-hospitalization and up to 60 days of post-hospitalization expenses. However an additional cost might have to be borne for the same.

Many companies also give the facility of cashless hospitalization by collaboration with third party administrators (TPAs). In other words, policy holders can avail of medical treatment without incurring any expenses during hospitalization. Conversely, they would be required to undergo medical treatment at their expense and subsequently file a claim with the insurance company.

Medical insurance premium paid is eligible for a deduction from gross total income under Section 80D of the Income Tax Act. At present, the eligible amount is Rs.10, 000; in case of senior citizens, the same is Rs.15, 000. From the financial year 2007-08, the eligible premium was Rs.15, 000. In case of senior citizens, the same is enhanced to Rs.20, 000. The premium payment has to be made by cheque, to keep in force or affect the medical insurance.

The best time for taking medical insurance is younger age when he is not suffering from any ailments or sicknesses. It is important because as one ages, there is a greater likelihood of developing ailments. Existing ailments are not covered at the time of opting for medical insurance. Hence it would be prudent to opt for the insurance cover at an early age. In addition, taking a policy earlier can also save the trouble of undergoing a medical check up.

Now-a-days, insurance companies have increasingly started giving senior citizens a cold shoulder which is ironical given that most individuals need hospitalization or medical treatment at that age, it makes sense to start early. Finally, before purchasing medical insurance, you should check for the ailments or diseases that are excluded and you can also check whether expenses arising for treatment due to war, riots or a terrorist attack are covered or not. You should check the ailments that will not be covered in the initial years of the policy and also check if cashless hospitalization is included and also the number of hospitals where this facility can be availed.

You should also enquire about the compensation provided in case of partial or total disability. In case, the medical insurance policy is for dependants like parents, check the maximum entry age, you should ensure a complete understanding of the benefits accrued, in the event of no claims being raised.