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How Does Health Insurance Work

Published On Aug 02, 2022 12:00 PM By InsuranceDekho

Health Insurance is an essential requirement in these times. It provides coverage against the cost of medical treatment and other associated expenses. Some of the common items covered under this insurance are hospitalisation expenses, pre and post hospitalisation expenses, ambulance charges, room rent, doctor’s consultation expenses, day-care procedure charges, evacuation charges, critical illness-related expenses, etc. But even though people invest in this insurance, they have a question: how does Health Insurance work? Here are some of the questions answered below. 

Here Is How Health Insurance works in India

  • The process for the insured begins when he purchases the Health Insurance policy. Depending on the coverage provided, the inclusions, the exclusions, and the premium, you can pick an insurance policy. That’s when your relationship with the insurance company begins.
  • The insurance company will determine the premium you will pay on your Health Insurance policy depending on your age and income. It will also conduct a comprehensive medical test to assess your general health. Depending on these factors, it will set a yearly premium and the sum assured will be approved. Any claims made within the sum assured limit will be cleared based on other conditions such as deductibles and co-payments.
  • In case of hospitalisation, you need to check whether the policy is a cashless insurance policy or not. If it is a cashless policy, you need to approach the Third Party Administrator (TPA) in the network hospital. The TPA will get your hospital bill directly reimbursed. If the treatment is not cashless, you will have to pay the bills, and the insurance company will then reimburse your expenses.
  • Some insurance policies include hospital cash, which is a daily limit that will be paid to you based on the number of days spent in the hospital. This is meant to cover daily expenses that may incur in the hospital.
  • If the policy is not cashless, you need to take the hospital bills, the reports, the doctor’s summary, the discharge report, and make a claim to the TPA. These TPA’s will collect your documents, verify them and ensure your claim application is complete. Once the application is complete, they will file the claim with the insurance company. The insurance company will accordingly process the claim and reimburse the bills. There may be a few disallowances, for example, a portion of expenses may have to be borne by you. This is called co-payment. There may be few items that the insurance company will pay proportionately. These are called deductibles. The insurance company pays some expenses in a particular proportion and deduct the rest. The insurance company will directly credit this amount in your bank account.
  • The entire claim related process is hassle-free. It is not very time consuming, and most insurance companies are helpful in clearing the claims.
  • In case you do not make any claim in a particular year, some insurance companies reward you with a no claim bonus. This may be in the form of a discount in premium or an addition to the sum assured.


Understanding how Health Insurance works is an important component of investing in these policies. Having complete information can only help you make strong claims and make the best of your Health Insurance policy.

Also Read: 

Is Kotak Health Insurance Good?

How To Claim National Health Insurance


This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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