Category: Blog

05 Nov 2018

Important Health Insurance Terms & What They Mean: Part I

Before you sign the papers on a health insurance policy document, it is extremely important to read through all of the terms and conditions to understand the scope of services that you you will be covered under, in case of a medical need. While doing so, you are likely to find a number of terminologies related to health insurance that you may be unfamiliar with.

Here is a handy list of 15 such important terms and their meaning to help you in the process:

  1. Premium: This is the sum of money the insured/policyholder has to pay on a monthly (sometimes quarterly) basis to an insurance company. Once you sign the policy documents and provide your bank information, this sum may be arranged to be auto-deducted from your account.
  2. Allowed Amount: The allowed amount is the maximum sum of money that an insurance company offers to cover a specific healthcare service or procedure. If the treatment cost exceeds this amount, the policyholder will have to pay the balance amount on their own. This is different from the total sum insured, which is the overall amount an insurance company will spend for a single policy.
  3. Term Date: The insurance policy you are signing up for is a contract for a limited period – typically a year. The term date refers to the last date of this contract. Beyond the term date, you will no longer be eligible for the insurance cover.
  4. Healthcare Provider: These are the entities that offer healthcare services to patients, including hospitals, physicians, and private clinics, hospices, nursing homes, and other healthcare facilities.
  5. Network Providers: Healthcare providerS that have entered into a contract of partnership with the insurance company to provide cashless benefits to insured/policyholders. IThe list of network providers/hospitals is usually provided along with your policy document.
  6. Out-of-Network: Out-of-network refers to healthcare providers that are not part of an insurance company’s list of network. Cashless claims cannot be made by policyholders if they visit an out-of-network hospital. Instead, they will have to pay from their pockets and later submit a claim for reimbursement.
  7. Indemnity: An indemnity is a type of health insurance plan where a person is eligible to receive care with any healthcare provider in exchange for higher deductibles and co-pays. It is also referred to as a fee-for-service insurance.
  8. Managed Care Plan: A managed care plan is a type of health insurance that will only cover treatments made through network providers and will not offer any cover (including reimbursement) for treatment through out-of-network providers.
  9. Deductible: A deductible is the amount a policyholder must pay towards his/her healthcare treatment before an insurance company begins to cover the costs as part of the policy. Deductibles range in price according to terms set in a person’s health plan.
  10. Co-Insurance: In certain policies, the policyholder is expected to pay a certain percentage of the treatment cost while the insurance company pays the remaining. This is known as co-insurance.
  11. Co-Pay: A co-pay is the amount that must be paid to a healthcare provider by the policyholder before they receive any treatment or services. Co-pays are applicable only in certain insurance policies.
  12. Maximum Out of Pocket: The amount amount a patient is required to pay whether in terms of deductibles, co-pays or co-insurance.
  13. Guarantor: The party paying for an insurance plan who is not the patient. Parents, for example, would be the guarantors for their children’s health insurance.
  14. Third Party Administrator (TPA): A TPA is a third-party organisation, hired by the insurance company to act as the intermediary between the policyholder, the healthcare provider and the insurance company.
  15. Subscriber: If your insurance is part of a group policy (such as one that an employer takes on behalf of employees), then each individual who is covered under the policy is a subscriber.
30 Oct 2018

All You Need to Know About Deductibles in Health Insurance

You have opted for a health insurance policy, you are paying your monthly premiums, but when you have a need for treatment, your health insurance expects you to pay a part of the total cost. Don’t be caught unawares, there is something you need to know about deductibles in health insurance.

A deductible is the amount up to which the policyholder is expected to pay for availing healthcare services before the insurance company steps in and begins to pay/cover. Only once the deductible is met does the insurance company pay for the policyholder’s treatment or care. In other words, this is similar to self-insuring yourself before you start to claim from your insurance company. Usually, policies with lower premiums will have higher deductibles and vice versa.

The following are the different types of deductibles:

Comprehensive Deductible

The comprehensive deductible is the deductible that is applied across all types of treatment costs and other healthcare-related expenses that will be covered under the policy. It adds up until you have met the maximum deductible for the given period.

Non-Comprehensive Deductible

The non-comprehensive deductible is a deductible that only applies to specific costs towards certain medical treatments in a health insurance policy. This means that, for some treatments, there will be no deductible and for some others, the deductible will apply.

Cumulative Deductible

If members of a family are covered under a single family health insurance policy, then a cumulative deductible or a family deductible may apply. This means that a single deductible applies for all members of the family cumulatively. However, it is important to note that some family insurances may have individual deductibles as well.

Once you have met your deductibles, you think you need to make no more additional payments to the health insurance company? Well, that is where you would be wrong.

Typically, there are three types of “out-of-pocket expenses” a policyholder will incur in addition to the monthly premiums paid towards a health insurance. These are what limit the liability of the insurance company to a certain extent. The maximum amount paid cumulatively through all the three make up the “out-of-pocket maximum”. Different health insurance policies have different amounts predefined as the “out-of-pocket maximum”.

23 Oct 2018

5 Factors to Consider When Choosing a Health Insurance Company

Choosing a health insurance policy suited to your specific needs, with a premium affordable by you is important. Equally important, however, is opting for the right health insurance company from which to invest in a health insurance policy.

Here are some of the most important factors to keep in mind when choosing your health insurance company.

1 Claim Settlement Ratio

Claim Settlement Ratio (CSR) is a percentage that reflects the total number of claims settled with respect to the total number of claims received by the insurance company. In other words, the CSR gives you an idea of the possibility for the insurance company to settle a claim that you are likely to make. While it is justified for insurance companies to reject duplicate or fake insurance claims, it is peculiar if an insurance company rejects most of the claims it receives. Therefore, insurance companies that have a low claim settlement ratio are likely to reject most claim requests received by them – which puts you in a vulnerable position at the time of an emergency need.

CSR = Number of claims settled / total number of claims received

2 Incurred Claim Ratio

Incurred Claim Ratio (ICR) refers to the total amount paid by the insurance company to settle insurance claims in a year with respect to the total amount collected by the company as premiums from all its insured. If the amount paid by the company is more than the premium it receives, this means that the company is running on a loss and may not be able to pay for claim requests in the future. However, if the ICR is too low (less than 50%), then it means that the company is not paying enough in terms of settlements. Therefore, a balanced ICR (between 75% – 90%) is what establishes an insurance company’s ability to pay and its reliability.

ICR = Net Claims Incurred / Net Earned Premium

3 Solvency Ratio

Solvency Ratio (SR) is used to measure a company’s ability to meet its debt and other obligations by determining if its incoming cash flow is sufficient to meet liabilities. It is preferred to opt for an insurance company with a higher solvency ratio as this means that it has a higher proportion of asset holdings. is preferred while a low solvency ratio indicates that the company may not be able to pay for claims.

SR = Net Income / Total Liabilities

4 Network Hospitals

Most insurance companies today come with a list of network hospitals they are affiliated with. At these hospitals, the insured are allowed to opt for cashless treatment. Cashless treatment means that the insured patient need not pay for the treatment they are availing (other than co-pay/co-insurance amounts). The hospital will directly deal with the insurance company or its TPAs and arrange to get paid for the services it has offered free of cost to the insured patient.

On the other hand, if the insured patient avails treatment in a non-network hospital, he/she will first have to pay for the treatment and then apply for a reimbursement from the insurance company. A good health insurance company will have a long list of network hospitals – with plenty of options for the insured to choose from, preferably within their own locality.

5 Business Volume

Business volume refers to the total number of active customers, who are paying monthly or quarterly premiums to the insurance company. This can also be determined by the number of policies sold by the insurance company in any given year.

Naturally, the company with with a large business volume is considered to be more trustworthy, simply because it is likely to have the resources required to pay for claims.

The importance of making an informed choice when investing your money cannot be emphasised enough. We hope that this list will enable you to choose wisely.

You may also refer our blog on Top 10 Insurance Companies in India to guide you in the quest for the right insurance company.


16 Oct 2018

What is Claims Processing? Definition & How it Works defines claims processing as “the fulfillment by an insurer of its obligation to receive, investigate and act on a claim filed by an insured. It involves multiple administrative and customer service layers that includes review, investigation, adjustment (if necessary), remittance or denial of the claim.”

Claims processing begins when a healthcare provider has submitted a claim request to the insurance company. Sometimes, claim requests are directly submitted by medical billers in the healthcare facility and sometimes, it is done through a clearing house.

In essence, claims processing refers to the insurance company’s procedure to check the claim requests for adequate information, validation, justification and authenticity. At the end of this process, the insurance company may reimburse the money to the healthcare provider in whole or in part. The company may also reject the claim request, if found invalid, forged, duplicated or outside of the policy terms.

Steps Involved in Claims Processing:

Primarily, claims processing involves three important steps:

  1. Claims Adjudication
  2. Explanation of Benefits (EOBs)
  3. Claims Settlement

Claims Adjudication

In this step, the insurance companies checks the following:

  • Has pre-authorisation been approved?
  • Does the claim match the details given in the pre-authorisation request?
  • Is the patient eligible for a claim?
  • Has there been any duplication in the claim?
  • Is the hospital in the approved network list?
  • Is the diagnosis valid?
  • Was the treatment medically necessary?
  • Has the treatment been coded correctly?
  • Is the claim request amount validated?


Insurance companies use a combination of automated and manual verification for the adjudication of claims. When this is done, payment determination is done, wherein the insurance company decides how much it is willing to pay for the claim.

Explanation of Benefits

When the adjudication process is complete, the insurance company sends a notification to the hospital, along with details of their findings and justification for settling (fully or partially) or rejecting the claim. This is known as an explanation of benefits or remittance advice. Based on the EOB, the healthcare provider may provide more information or request to represent the claim.

Usually, the explanation of benefits includes details such as: Amount paid, amount approved, allowed amount, patient responsibility amount (in cases of copay or coinsurance), covered amount, discount amount and so on.

Claims Settlement

This is the final step, where the insurance company settles the amount that it is due to pay the healthcare provider for the treatment rendered to the insured patient. This may be done, either individually for each claim made, or in bulk for all claims received from the same healthcare provider over a period of time.

09 Oct 2018

Most Common Types of Insurance Claims

Insurance is a broad field with a variety of options. You can insure almost all areas of your life, be it your health, your house, your vehicle, or your business. You can even insure your life itself!

With more and more awareness on the usefulness of a good insurance as being a backup plan in case of unwarranted emergencies and as an ideal investment to go tax-free, insurance companies are also coming up with several policy types within each insurance category to help customers invest for more specific needs.

When it comes to most insurance policies, you are investing in something that you wish you would not have to claim. You wish you wouldn’t fall sick, but if you do, you are backed up by your health insurance. You wish your vehicle wouldn’t be in an accident, but if it is, you are backed up by your vehicle insurance. In the same way, the insurance company is dealing with you in the hope that you wouldn’t make a claim and that they wouldn’t have to pay you. However, in the real world, unexpected occurrences are inevitable, and so are insurance claims.

The most common types of insurance claims fall under the following categories:

Vehicle Insurance Claims

Accidents – major and minor keep happening on a daily basis. Moreover, with the law making it mandatory for every vehicle owner to possess a valid vehicle insurance, the number of claims are also more commonly made for two-wheeler and four-wheeler insurances.

Home Insurance Claims

In case there has been a mishap such as fire in the house, or if damage has been caused by a natural disaster such as a flood/storm/earthquake, a home insurance claim is made. Moreover, a home insurance claim can also be made if there has been a theft; where the claim can be extended to cover silver articles, jewellery and other valued items under the condition that these were kept within a locked safe in the house.

Health Insurance Claims

The rising cost of quality healthcare, the inevitability of unhealthy lifestyles and the frequent emergence of new and unheard-of diseases and illnesses – all of these factors, combined, are causing more and more people to rely on health insurance as a way to deal with their ever-rising health concerns.In the recent years, many employers have also taken up the responsibility of investing in the health of their employees and their dependent family members. This, too, has been a cause for the rise in the number of health insurance claims.

Maternity Insurance

Sold separately or as a subset of health insurance, maternity insurance has slowly but surely become a necessary element of the family planning process in most families. This has become especially useful to cover pre and post-hospitalisation expenses, in addition to the delivery charges, and any health complications identified with the infant at birth.

Life Insurance Claims

Life insurance claims are made either when the insured individual dies or when the insurance period ends (and the insured person becomes eligible for an endowment pay). As life insurance offers tax savings, it is often used as a way to make savings for the future. In case of a death, the insurance claim is made by the beneficiary assigned to receive the sum as designated by the insured person.

Flood Insurance

Although still an emerging trend in India, there are flood insurance policies that are provided and covered by the National Flood Insurance Program in the USA. This is a fifty-year old policy which has been providing affordable insurance to property owners and also to renters and businesses. In disaster-prone regions of the world, people also rely heavily on natural disaster insurance policies such as these to cover damages caused to property due to hurricanes, earthquakes and so on.

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