What is Health Insurance? All You Need to Know in 2025
In today’s time, the only thing we all often pray for is good health. No one plans to fall sick. But, as they say, medical emergencies don’t come with a warning. Thus, there is a need to believe in financial wellness and follow one strong financial habit: buying health insurance. Now, what is health insurance, and why is it an important investment for you?
Let us understand the benefits of health insurance.
What is Health Insurance?
Health insurance is a type of financial protection that helps you cover medical expenses in case of illness, accidents, or hospitalizations. It ensures that you and your family get quality healthcare without worrying about high medical costs.
Let us say that you get admitted for dengue treatment that costs ₹70,000. If you have a health insurance policy that covers hospitalisation, your insurer can pay this amount (either fully or partially), depending on your plan.
Health Insurance Meaning
It is basically a financial agreement between you and an insurance company. You pay a fixed amount called a premium, and in return, the insurer promises to cover your medical expenses, like hospital bills, surgeries, and medicines. However, it all depends on your health insurance plan.
Types of Health Insurance in India
As per the insurance companies, there are various types of health insurance plans in India that serve various needs:
| Type of Health Insurance | Description |
| Individual Health Insurance | Covers only one person. |
| Family Floater Health Insurance | Covers the entire family under a single policy. |
| Senior Citizen Health Insurance | Designed for people above 60 years. Covers age-related medical expenses. |
| Critical Illness Insurance | Offers a lump sum if diagnosed with serious illnesses like cancer or stroke. |
| Mediclaim Policy | Covers hospitalisation costs like doctor fees, room charges, and surgeries. |
| Group Health Insurance | Provided by employers. Covers employees’ medical expenses. |
| Top-up & Super Top-up Plans | Help cover medical costs beyond your existing insurance limit. |
| Maternity Health Insurance | Covers pregnancy-related expenses, including pre and post-natal care. |
1. Individual Health Insurance
Suitable for young individuals, students, homemakers, and freelancers.
If you don’t get health coverage from your employer, this is your first safety net. It covers only one person and gives you all the control to choose what benefits you want. Premiums are usually lower when you’re younger and have no health issues.
You can also include add-ons like maternity or room rent benefits.
Tax deductions under Section 80D are an added bonus that most people overlook.
2. Family Floater Health Insurance
Suitable for families who want one affordable plan for all members.
Instead of buying separate policies, one plan protects everyone under a shared sum insured.
For example, if you choose a ₹5 lakh plan, any family member can use it during the year.
This works well for nuclear families, especially when one person may fall sick more than others. The premium is often more cost-effective than buying separate covers.
Just remember, the age of the oldest family member affects the overall cost.
3. Senior Citizen Health Insurance
Suitable for people above 60, especially retired parents.
It is designed to cover age-related problems like diabetes, cataracts, or heart conditions.
These plans may also include annual health checkups, daycare procedures, and home visits. They usually come with a waiting period, so buying early is better.
Even though premiums are higher, the financial support during emergencies is unmatched.
Many plans offer cashless hospitalisation, which makes things easy during stressful times.
4. Critical Illness Insurance
Suitable for life-threatening illnesses like cancer, stroke, kidney failure, and heart attack.
Unlike regular policies, this gives a one-time lump sum amount after diagnosis. That money can be used for anything, including treatment, recovery, or daily bills. It is a good option if you are the sole earner or have a family medical history of such diseases.
You can use this along with your regular health insurance for stronger protection. It also helps when treatment needs to be done in private hospitals or abroad.
5. Top-Up and Super Top-Up Plans
Suitable for people who already have basic insurance but want to boost coverage.
They act as a backup when your existing policy amount is not enough. Super Top-Ups are more useful as they cover multiple hospitalisations in a year. These are ideal for those with office insurance that only covers ₹3–5 lakh. These plans come at a lower cost compared to buying a completely new policy.
This type of insurance is good for families or individuals living in metro cities where treatment can be expensive.
What’s the Difference Between a Mediclaim Plan and a Critical Illness Insurance Plan?
A Mediclaim plan helps cover your hospital expenses. If you’re admitted due to an illness or accident, it either reimburses your bills or settles them directly with the hospital.
Looking for long-term financial security? Explore how term insurance can protect your family’s future.
A Critical Illness plan, on the other hand, gives you a lump sum amount if you’re diagnosed with a serious illness like cancer, heart attack, or stroke. You can use this money however you need, for treatment, recovery, or even daily expenses.
In short, Mediclaim covers hospital bills, while Critical Illness insurance gives you a one-time payout when you’re diagnosed with a major illness.
How Health Insurance Works in India
It is time to insure smartly. Here are a few things that you must know!
- Choose a Plan – Select a policy based on your needs, age, and budget.
- Pay the Premium – This can be done monthly, quarterly, or yearly.
- Get Cashless Treatment – If your hospital is in the insurer’s network, bills are settled directly.
- Reimbursement Option – If you get treated at a non-network hospital, you can claim reimbursement by submitting bills.
- Claim Settlement – The insurer verifies documents and approves the claim as per the policy terms.
What is the Claim Process for Health Insurance?
There are two main types of health insurance claims:
a) Cashless Claim (for treatment at a network hospital):
Simply show your health insurance card at the hospital, fill out a pre-authorization form, and once approved, the insurer pays the hospital directly.
b) Reimbursement Claim (for treatment at a non-network hospital):
You pay the medical bills upfront, collect all necessary documents (bills, reports, discharge summary), fill out a claim form, and submit them to the insurer for verification and reimbursement.
What are the Benefits of Health Insurance?
The real importance of health insurance cannot be ignored.
Health insurance plays an important role in protecting your savings during medical emergencies. With rising healthcare costs in India, even a small treatment can result in huge expenses. Health insurance makes sure you get the necessary treatment without worrying about money.
Let’s look at the key benefits of having a health insurance policy.
1. Covers Medical and Hospitalization Expenses
This is the main feature of any health insurance policy. If you or a family member gets hospitalised due to illness or an accident, the policy covers the cost of treatment, including room rent, doctor’s fees, surgery, medicines, and more.
Ravi had to undergo gallbladder surgery, and the hospital bill came to ₹85,000. Since he had health insurance, the entire amount was paid by his insurer.
2. Cashless Treatment at Network Hospitals
Most insurance companies have a list of tie-up hospitals known as network hospitals. If you get treated at one of these hospitals, you can avail of cashless treatment. That means you do not need to pay the hospital from your own pocket. The insurer settles the bill directly with the hospital.
3. Covers Ambulance Charges and Pre & Post-Hospitalization Costs
Health insurance not only covers the hospital stay but also the cost of:
- Ambulance services
- Medical tests and doctor consultations before admission (pre-hospitalization)
- Follow-up treatment, medicines, and check-ups after discharge (post-hospitalization)
While health insurance helps during emergencies, life insurance helps long after. Understand the difference.
Aman had to be taken to the hospital by ambulance, which cost ₹2,000. He also had tests worth ₹6,000 before his operation and ₹4,000 worth of medicines after discharge. All these expenses were covered under his health insurance plan.
4. No-Claim Bonus (NCB)
If you don’t make any claim during a policy year, insurance companies offer a no-claim bonus. This can either reduce your premium or increase your sum insured without any extra cost.
5. Covers Alternative Treatments
Many insurance plans today also cover AYUSH treatments—Ayurveda, Yoga, Unani, Siddha, and Homeopathy. These are popular treatment methods in India and are now included in many policies.
Key Factors to Consider When Choosing Health Insurance
Health insurance is not just a document you buy and forget. It is your backup in times of medical emergencies.
Here are the key factors to keep in mind to ace it while choosing the best health insurance plan for yourself or your family.
1. Sum Insured – How Much Coverage You Need
The sum insured is the total amount your insurer will pay for your medical expenses in a year. If you live in a metro city where treatment costs are high, choosing a low-sum insured can be risky.
Tip to take a leap forward:
Go for a plan with at least ₹5–10 lakh sum insured if you live in a city like Mumbai, Delhi, or Bengaluru.
2. Network Hospitals – Go Cashless with Ease
Look for the list of network hospitals. These are hospitals where you can get cashless treatment. A wider hospital network near your home makes it easier during emergencies.
3. Pre and Post-Hospitalization Coverage
Many expenses happen before and after hospitalization—like doctor consultations, tests, and medicines. A good plan should cover at least 30 days before and 60 days after hospitalization.
4. Waiting Period for Pre-existing Diseases
If you have conditions like diabetes, BP, or asthma, check the waiting period. This is the time you need to wait before these are covered—usually 2 to 4 years.
Ace it with this tip:
Some insurers offer shorter waiting periods. If you have health issues, pick one with a lower waiting time.
5. Room Rent Limits and Sub-limits
Some plans cap your room rent or set limits on how much you can spend on specific treatments. This may affect the quality of service you get
7. AYUSH Coverage
Many Indians still trust treatments like Ayurveda and Homeopathy. If you prefer traditional treatments, make sure your policy covers AYUSH options.
8. Lifetime Renewability
Health needs can increase with age. So always pick a plan that offers lifetime renewability, so you are covered even after retirement.
Plan Better. Pay Smarter.
Use jUMPP Expense Tracker App to manage your health insurance expenses today.
Why Do You Need Health Insurance Now?
This is because,
1. Medical costs are high, and even a simple hospital visit can be expensive.
2. Health insurance covers hospital bills, reducing your out-of-pocket expenses.
3. Many plans provide cashless treatment, so you don’t need to pay upfront.
4. You can also enjoy tax benefits under Section 80D of the Income Tax Act.
Final Thoughts
Health insurance is a must-have for every Indian family. Whether you’re a young professional, a parent, or a senior citizen, choosing the right health insurance plan can protect you from unexpected medical expenses in 2025 and beyond. Compare different policies, check the benefits, and make a smarter choice for a healthier future!
What is Health Insurance: FAQs
Health insurance is a plan that helps you pay for medical and hospital expenses. It protects your savings during health emergencies.
It covers hospital bills, cashless treatment, ambulance charges, and more. Some plans also give bonus benefits for not making a claim.
It depends on your city, family size, and health needs. For bigger cities and families, higher cover may offer better protection.
The earlier you start, the better it is. Young buyers usually get lower premiums and fewer health check-ups.
It refers to the Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PM-JAY). It offers ₹5 lakh health coverage per year to eligible low-income families.
It refers to the Pradhan Mantri Suraksha Bima Yojana (PMSBY). For ₹12 per year, it gives accidental insurance cover of up to ₹2 lakh.
It depends on your lifestyle, city, and medical needs. Higher cover may help if you want better protection against rising healthcare costs.
You’ll need your policy number, hospital documents, bills, reports, and a filled claim form. Some cases may also need doctor’s prescriptions or pre-authorization.
It covers hospitalization, surgeries, doctor fees, diagnostic tests, and sometimes pre- and post-hospitalization expenses. However, the overall coverage depends on your policy terms.
It usually doesn’t cover cosmetic treatments, pre-existing diseases (initially), or injuries from risky activities. You must always check the policy exclusions for details.
