Advantages and Disadvantages of Health Insurance

What is a Health Insurance?

A health insurance policy is a type of insurance coverage that covers the cost of an insured’s medical expenses. Depending on the type of health insurance policy, the insurer makes direct payment to the service provider or the insured pays the expenses out of their pockets to claim a reimbursement on a later instance.

Advantages of Health Insurance

Nobody ever plans to get sick or hurt. However, when illness strikes, you will need to be financially ready in order to handle the situation. Here are a few advantages of having a health insurance policy.

1. You Get a Daily Hospital Allowance

To begin with, when you are in a hospital, a vast sum of money is spent on food and your family’s commute to the hospital. To take care of this, most health insurance policies offer a daily hospital allowance. You will need to check if it is a per-day cash handout or pre-fixed. Also, you don’t need to hand over any bills to claim these expenses.

2. Recovery Benefit

While some insurers provide only hospitalisation expenses, there are others that offer recovery expenses as well. Known as a recuperating benefit, this particular feature offers you a lump sum amount if you stay at the hospital for a prolonged period of time.

3. Alternative Treatment Benefits

The IRDAI has recently added a guideline wherein insurance providers need to provide insurance for clients who opt for alternative treatments like Ayurveda, Unani, and homeopathy.

4. Tax Benefits

The premium paid for health insurance policies are eligible to get tax benefits under Section 80D of the Income Tax Act.

Disadvantage of Health Insurance

Apart from the fact that you will need to set aside a certain amount for premiums each month, there are no specific disadvantages that come with buying a health insurance policy. There is the case of waiting period, though, which can be avoided if you buy a disease-specific policy.