Insurance Basics · Updated October 2026 · 7 min read
A single hospital stay can wipe out years of savings. Health insurance pays for hospital treatment so that you do not have to, but only within the terms of your policy. Most claim disputes happen because people did not understand a few key terms. This guide explains them in plain language.
In short: Choose a sum insured that matches hospital costs in your city, check waiting periods and room rent limits, disclose your health history honestly, and do not rely only on your employer’s cover.
Sum insured
The sum insured is the most the insurer will pay in a policy year.
- Individual policy: each person has their own sum insured.
- Family floater: one shared sum insured for the whole family. It is cheaper, but one large claim can use up cover for everyone.
- How much? Many people in metros consider ₹10 lakh or more for a family, and less in smaller cities. Treatment costs keep rising, so review it every few years.
- Top-up and super top-up plans add extra cover cheaply once your bills cross a set amount, called the deductible.
Waiting periods
These are periods when some claims are not paid:
- Initial waiting period: usually 30 days from the start of the policy, for illnesses. Accidents are usually covered from day one.
- Pre-existing diseases: conditions you had before buying, such as diabetes or high blood pressure. Under IRDAI rules, this waiting period can be at most 3 years. Some plans offer shorter periods for a higher premium.
- Specific illnesses and procedures: such as cataract, hernia or joint replacement, often have their own waiting period of 1 to 3 years.
- Maternity: if covered at all, often has a long waiting period.
Continuing your policy without a break is important, because waiting periods already served carry forward when you renew or port to another insurer.
Moratorium period
After you have held a policy continuously for 5 years, the insurer cannot reject a claim on the grounds that you did not disclose something, except in cases of proven fraud. This protects long-standing policyholders.
Common exclusions and limits
- Room rent limits: some plans cap room rent per day. If you choose a costlier room, other costs may be cut proportionately, not just the room difference. Many people prefer plans with no room rent limit.
- Co-payment: you pay a fixed share of every claim, often in senior citizen plans.
- Sub-limits: caps on specific treatments.
- Usually not covered: cosmetic treatments, most outpatient visits, non-medical items like gloves and toiletries, and self-inflicted injuries. Check the policy’s list of exclusions.
Cashless or reimbursement claims
- Cashless: at a network hospital, the insurer pays the hospital directly after approval. Inform the insurer in advance for a planned stay, or within the time limit in an emergency.
- Reimbursement: you pay the hospital and claim the money back with bills, reports and the discharge summary.
Keep all documents and inform the insurer on time. Late intimation is a common reason for delays.
Useful features to look for
- No room rent limit, or a single private room allowed.
- No-claim bonus that increases your cover for each claim-free year.
- Restoration of the sum insured if you use it up in a year.
- Pre- and post-hospitalisation cover, day-care procedures and a good network of hospitals near you.
Tax
Under the old tax regime, health insurance premiums qualify for a deduction, with higher limits for senior citizens. This is not available under the new regime, which is the default.
Common questions
Is my employer’s group health cover enough?
It usually ends when you leave the job and may be small. A personal policy keeps your cover, and your waiting periods, continuous.
Can I switch insurers?
Yes. You can port your policy at renewal and keep credit for waiting periods already served, up to your existing sum insured.
Should I declare a minor condition?
Yes. Declare everything. A higher premium or a waiting period is far better than a rejected claim.
Next steps: Read term insurance basics, and build an emergency fund for costs insurance does not cover.
Disclaimer: This guide is for education and is not financial or insurance advice. Policy features, waiting periods and exclusions differ between insurers and products, so read the policy wording and check with the insurer before you buy.