Health Insurance in India — How to Buy, Claim Process, Cashless vs Reimbursement

Medical emergencies don't come with warnings. A single hospitalisation in India can cost ₹2–10 lakh, wiping out years of savings overnight. Health insurance acts as a financial safety net — covering hospital bills, surgeries, diagnostics, and more. Yet, over 60% of Indians still lack adequate health cover.

This guide walks you through everything: types of plans, how to buy online, the claim process, cashless vs reimbursement, tax benefits, and how to compare policies smartly.

Why Health Insurance Matters

• Rising medical costs: Healthcare inflation in India runs at 10–14% annually — far above general inflation.
• Protects savings: A ₹5 lakh surgery won't drain your emergency fund or force you into debt.
• Tax savings: Premiums qualify for deduction under Section 80D of the Income Tax Act.
• Access to better care: Cashless facility at network hospitals means you get treated first, paperwork later.
• Government push: Schemes like Ayushman Bharat cover economically weaker sections, but middle-class families need private cover.

Types of Health Insurance Plans

Individual Health Insurance

Covers a single person. You choose the sum insured (₹3 lakh to ₹1 crore+). Ideal for young professionals and single earners.

Family Floater Plan

One policy covers the entire family — spouse, children, and sometimes parents. The sum insured is shared among all members. Cost-effective for families with young, healthy members.

Senior Citizen Health Insurance

Designed for people aged 60+. Higher premiums but covers age-related ailments. Some insurers offer entry up to age 80.

Critical Illness Plan

Pays a lump sum on diagnosis of specified diseases — cancer, heart attack, kidney failure, stroke, etc. This is a benefit-based plan (not indemnity), so you receive the full sum insured regardless of actual hospital bills.

Top-Up and Super Top-Up Plans

Affordable way to increase your cover. A top-up activates once a single claim crosses a threshold (deductible). A super top-up activates when cumulative claims in a year cross the deductible — making it more useful. If your employer gives ₹5 lakh base cover, a ₹10 lakh super top-up with ₹5 lakh deductible costs very little.

Key Terms You Must Know

How to Buy Health Insurance Online

Buying health insurance online is straightforward and often cheaper than offline (no agent commission loaded into premium).

Step 1: Assess Your Needs

• Family size: Individual or family floater?
• City tier: Metro cities need higher sum insured (₹10 lakh minimum recommended).
• Age of members: Older members increase premiums significantly.
• Existing cover: Does your employer provide group insurance? Consider a top-up.

Step 2: Compare Plans

Use aggregator platforms or visit insurer websites directly. Compare on:

• Sum insured and premium
• Room rent sub-limits (prefer plans with no sub-limits)
• Co-pay clauses
• Waiting period for PED
• Network hospital list in your city
• Claim settlement ratio (aim for 90%+)
• Restoration benefit (sum insured resets after exhaustion)

Step 3: Fill the Application

Provide personal details, medical history, and nominee information. Disclose all pre-existing conditions honestly — non-disclosure is the #1 reason claims get rejected.

Step 4: Medical Check-Up (If Required)

Insurers may require a medical test for applicants above 45–50 years. Some plans offer test-free entry for younger applicants.

Step 5: Pay Premium and Get Policy

Pay online via UPI, net banking, or card. You'll receive the policy document on email within minutes. Verify all details — especially member names, sum insured, and PED declarations.

Cashless vs Reimbursement: What's the Difference?

This is one of the most important distinctions in health insurance.

Cashless Claims

You get treated at a network hospital and the insurer settles the bill directly with the hospital. You pay nothing (or only the co-pay/non-covered items).

How it works:

1. Get admitted to a network hospital.
2. Show your health card or policy number at the insurance desk.
3. Hospital sends a pre-authorisation request to the insurer/TPA.
4. Insurer approves (usually within 2–4 hours for planned admissions, faster for emergencies).
5. At discharge, the insurer pays the hospital directly. You sign the claim form.

Pros: No out-of-pocket expense, hassle-free. Cons: Limited to network hospitals; insurer may not approve all charges.

Reimbursement Claims

You pay the hospital bill yourself, then submit documents to the insurer and get reimbursed.

How it works:

1. Get treated at any hospital (network or non-network).
2. Pay all bills upfront.
3. Submit claim form, bills, discharge summary, and reports to the insurer within 15–30 days.
4. Insurer reviews and reimburses the eligible amount (within 30 days as per IRDAI norms).

Pros: Freedom to choose any hospital. Cons: You need funds upfront; reimbursement takes time; some deductions may apply.

Which Is Better?

Cashless is almost always preferable for planned procedures. Use reimbursement only when you must visit a non-network hospital (emergencies in remote areas, specialist available only at a specific hospital, etc.).

Health Insurance Claim Process — Step by Step

For Planned (Non-Emergency) Hospitalisation

1. Inform the insurer 48–72 hours before admission.
2. Visit a network hospital and submit your health card at the TPA desk.
3. Pre-authorisation is sent to the insurer by the hospital.
4. Insurer approves the treatment and estimated cost.
5. Get treated. The hospital coordinates with the insurer during your stay.
6. At discharge, sign the claim form. Pay only non-covered items (if any).

For Emergency Hospitalisation

1. Get treated immediately — don't worry about paperwork first.
2. Inform the insurer within 24 hours of admission (most insurers allow up to 48 hours).
3. If at a network hospital, the TPA desk initiates cashless authorisation.
4. If at a non-network hospital, collect all original bills and reports for reimbursement.
5. Submit claim documents within the specified window (usually 15–30 days post-discharge).

Documents Required for a Health Insurance Claim

Keep these ready to avoid delays:

• Duly filled claim form (provided by insurer/TPA)
• Policy copy or health card
• Hospital discharge summary
• All original hospital bills and receipts
• Investigation/diagnostic reports (blood tests, scans, X-rays)
• Doctor's prescription and treatment notes
• Pre-authorisation letter (for cashless claims)
• FIR copy (for accident-related claims)
• KYC documents — Aadhaar, PAN (for reimbursement payment)
• Bank details — cancelled cheque or passbook copy (for reimbursement)

Pro tip: Always take photos/scans of all documents before submitting originals.

Health Insurance Portability — IRDAI Rules

Don't like your current insurer? You can port your policy to another insurer without losing continuity benefits like waiting period credits.

Key Portability Rules

• Apply to the new insurer at least 45 days before your renewal date.
• The new insurer must respond within 15 days.
• Waiting period credit is carried forward — if you've completed 2 years of a 4-year PED waiting period, the new insurer counts it.
• You can port to a different plan type (e.g., individual to family floater).
• No claim bonus may or may not transfer — check with the new insurer.
• Portability applies to indemnity plans regulated by IRDAI.

Portability ensures you're never stuck with a bad insurer. Compare and switch if you find better terms.

Tax Benefits Under Section 80D

Health insurance premiums qualify for tax deductions under Section 80D of the Income Tax Act:

• Preventive health check-up of up to ₹5,000 is included within these limits.
• Payment must be made via non-cash modes (UPI, card, net banking) to claim deduction.
• File your claim when you file your ITR.

How to Compare Health Insurance Plans

Don't just look at the premium. Here's a checklist:

1. Claim settlement ratio — Higher is better (check IRDAI annual reports).
2. Network hospitals — Ensure good hospitals in your city are covered.
3. Room rent limits — Plans with no sub-limits save you from unexpected out-of-pocket costs.
4. Restoration benefit — Does the sum insured reset if exhausted? Useful for family floaters.
5. Day-care procedures — Are cataract surgery, chemotherapy, dialysis covered without 24-hour hospitalisation?
6. AYUSH coverage — Ayurveda, Yoga, Unani, Siddha, Homeopathy treatments covered?
7. Maternity and newborn cover — If planning a family, check waiting periods (usually 2–4 years).
8. Ambulance charges — Most plans cover ₹2,000–₹5,000 per hospitalisation.
9. Free health check-ups — Many plans offer annual check-ups after claim-free years.
10. Premium increase history — Some insurers hike premiums aggressively at renewal. Check reviews.

Related Guides

• Ayushman Bharat Health Card — Eligibility and Application
• Life Insurance Types and How to Buy Online
• How to File Income Tax Return Online
• Vehicle Insurance Online — How to Buy and Renew

Frequently Asked Questions

What is the best sum insured for health insurance?

For individuals in metro cities, a minimum of ₹10 lakh is recommended. For tier-2/3 cities, ₹5 lakh may suffice. Consider a base plan + super top-up for cost-effective high coverage.

Can I buy health insurance for my parents?

Yes. Many insurers offer senior citizen plans for parents aged 60–80. Premiums are higher, and there may be co-pay clauses (10–20%). Compare plans specifically designed for senior citizens.

What happens if I hide a pre-existing disease?

The insurer can reject your claim and even cancel the policy permanently. IRDAI mandates full disclosure. Always declare all known conditions — they'll be covered after the waiting period anyway.

How long does a cashless claim approval take?

For planned hospitalisations, pre-authorisation typically takes 2–6 hours. For emergencies, insurers usually respond within 1–2 hours. Some insurers offer instant cashless approvals at select hospitals.

Can I have two health insurance policies?

Yes. You can claim from both policies, but the total reimbursement cannot exceed the actual hospital bill. The primary insurer pays first, and you can claim the balance from the second insurer. This is called the contribution clause.

Is health insurance mandatory in India?

Health insurance is not legally mandatory for individuals. However, employers with 10+ employees must provide ESI or group health cover. Having personal health insurance is strongly recommended regardless of employer cover.

What is the difference between a top-up and a super top-up?

A top-up covers only when a single claim exceeds the deductible. A super top-up covers when cumulative claims in a year exceed the deductible — making it far more practical and useful.