Personal Health Insurance Glossary


Group Health Insurance

Insurance involves a lot of technical terms that a layperson may not be aware of. However, it is important to be familiar with these terms as it helps you to understand the terms and conditions of a health insurance policy. Further, it helps to choose the right insurance policy for your needs.

We’ve covered some of the most important terms that you should be familiar with for personal health insurance.

Age Limit 

The age limit is the range between which a person can avail of the health insurance policy for the first time. For example, a maximum age limit of a policy of 65 years after which a person cannot avail of the policy. 


An insurance agent acts as a middleman between the Insurer and the Customer. The Agent helps the Insurer with the identification of the Customer. The Agent also educates the Customer on the products offered by the Insurer. The Agent gets paid a commission in lieu of these services. The Agent also acts as the first point of contact when it comes to the sale of the policy and is also the Customers point of contact for any administrative issue that may arise.


An accident is usually defined as an unpredictable event that causes injury to the policyholder. 

Advanced Cash Benefit

Advance cash benefit means that the insurance company will pay a portion of your estimated treatment costs in advance. This means that you don’t have to pay that portion of the treatment costs from your own pocket before being reimbursed. Further, it means that you can rest assured that at least a portion of your claim has already been paid out.

Overall, an advanced cash benefit is an important feature of health insurance policies because it helps lower the upfront financial burden of a medical emergency or medical treatment.

Annual Renewal Date 

The date on which your policy falls due for renewal is the annual renewal date. IRDAI prohibits insurers from renewing policies on credit i.e. you need to pay the premium upfront to renew your policy.

Ambulance Cover

If a policy has ambulance cover, then it will reimburse the policyholder for the cost of ambulance transportation to the hospital.   


AYUSH refers to treatment via alternative therapy. The AYUSH ministry regulates treatment covered under Ayurveda, Yoga and Naturopathy, Unani, Siddha, and Homeopathy. 

When treatment under AYUSH is covered, most insurers would accept a claim only if the treatment is one at a government facility.  

Add-On Covers

With advancements in the nature of coverage offered, most insurers now provide a basic structure of health policy and allow Customers to choose from a range of add-on covers. Add-on covers the cost of additional premium. Some of the popular add-on covers available are maternity, OPD cover, daily cash cover, and restoration of the sum insured cover.


The benefit is an advantage available to the policyholder under the policy. 


A beneficiary is a person under the policy who receives the benefits of the policy (including any claim amount) in case the policyholder dies. 

Insurance Broker 

The insurance broker is a third-party entity that works on behalf of clients to arrange insurance policies from an insurer. 

Cash Benefit

Under a Cash benefit policy, the Insured is entitled to a fixed cash amount on a daily basis through the period of hospitalization. The amount of cash benefit available and the maximum number of days permissible per hospitalization could vary among Insurers. 

Cashless Facility 

A Cashless facility allows the insured to get treated at a hospital without having to pay money from their pocket. Insurers enter into tie-ups with Hospitals to provide for cashless facilities to their policyholders. The insured should always opt for a cashless facility if one is available. This is because the Insurer has also negotiated special rates for their policyholders which are not available for other patients.


A claim is the term used when you make an application to an insurance company for availing treatment at a hospital. A claim could be preferred via the cashless mode or the reimbursement mode

Claim Settlement Ratio 

Claim settlement ratio is the ratio of the number of claims that have been settled by the insurer to the number of claims received. For example, if the claim settlement ratio is 90%, then that means 10% of claims made by policyholders have been rejected by the insurance company.  

Co-Payment/ Co-Insurance 

Co-payment is the portion of the claim amount that needs to be paid by the policyholder. The rest of the claim amount will be covered by the insurance company. The co-payment is usually a percentage of the claim amount such as 20%. For example, if a policyholder makes an insurance claim of Rs. 1 lakh, then the insurance company will only pay Rs. 80,000 if the co-payment is 20%.


A deductible is the amount of compulsory deduction in a policy year. It is different from a co-pay in the sense that a co-pay entitles the Insurer to deduct a certain percentage of the claim amount against every claim while a deductible is a flat sum that would be deducted through the policy year. 

Not all health insurance policies have a deductible clause, however, you should read the policy document carefully to ascertain if it does. A higher deductible can get you a bigger discount on the premium. 

Daily Hospital Cash 

Daily hospital cash is an add-on cover that entitles you to a fixed per day allowance if one of the insured members gets hospitalized. The add-on benefit can help you cover small payments that you might incur during the hospitalization. 


Eligibility specifies all the terms that a person must satisfy for them to avail cover under the policy. For eg. a policy could have an age related eligibility that restricts the entry age in the policy to below 65 years – this would mean, you cannot buy a fresh policy if you are above 65. 

Effective Date of Coverage

Effective date of coverage is the date from which the insurance cover of the policy starts. In case of a fresh policy, the effective date of coverage normally is the date of remittance of premium.


An exclusion under a policy refers to any treatment or illness that is not covered by the health insurance policy. Exclusion could be temporary or permanent. For example, cataract treatment can be excluded from a policy for a year, while external congenital deformity (like a second thumb on the same hand) could be a permanent exclusion. 

The list of exclusions differs from one insurance company to another, always remember to check this list. 

Grace Period

IRDAI grants for a grace period of 30 days towards renewal of individual health policies. The insurance cover stops to exist during the grace period i.e. no claim is admissible during the grace period. However benefits of continuity can be availed as long as the policy is renewed with the grace period. 


IRDAI, the Insurance Regulatory and Development Authority of India, as the name suggests, is incharge of the regulation of the industry. It also acts as the apex development authority. IRDAI is a statutory body formed under an act of Parliament in 1999.


If the premium towards renewal of a policy is not made before its expiry, the policy is said to lapse. Premiums can normally be made to the insurer from about 30 days prior to expiry. 

Network Hospital 

A network hospital is a hospital that has a cashless arrangement with your insurance company. A policyholder can claim cashless treatment only through a network hospital. This means that the insurance company will directly pay the hospital for the treatment costs.


A nominee is a person registered as a beneficiary under the policy. In case of an unfortunate accident, all the claim settlement monies are paid to the nominee. 

Outpatient Department Treatment (OPD Treatment)  

OPD treatment is a treatment that does not require the insured to get admitted to the hospital. The OPD expenses could be ones incurred on consultations, tests, or medications.  

OPD Cover

OPD stands for Out-Patient Department.

The OPD refers to the department of a hospital which provides consultation services to patients without any hospitalization. A health insurance policy usually provides OPD coverage as well. If you consult a doctor affiliated with a hospital, you can make a claim for the charges involved.

An OPD cover usually includes the consultation charge, any medical tests, and any medical costs.

Primary Insured 

The primary insured is the person who is the first insured under the policy. Relationships of family members under the policy are based on their relationship with the primary insured. For eg. If you are the primary insured under your policy, you can cover your mother under the policy as a dependent; however if your mother is the primary insured under the policy, she would be covering you as a dependent.

Pre- And Post- Hospitalization 

These are charges that the insurer bears if the claim is admitted. The general practice in the industry is to allow for pre-hospitalization expenses of up to 30 days and post-hospitalization expenses of upto 60. Expenses such as consultations, medical tests, and medicine are normally reimbursed under these head

Pre-Natal and Post-Natal Expenses

Pre-natal and post-natal charges are expenses incurred before and after childbirth. These cover expenses incurred towards the mother before childbirth and the mother & child after childbirth. A lot of health insurance policies have a separate cover and sub-limit for pre-natal and post-natal expenses.

Pre-Existing Disease

A pre-existing disease is a medical condition that a policyholder suffers from before having availed of the insurance policy in question. Usually, health insurance companies exclude any claims arising out of a pre-existing disease for a few years (it ranges from one year to four years or a complete exclusion).

It is important to note that the premium of a policy that covers pre-existing diseases from day one may be higher than that of other policies.


Portability allows you to switch insurers at the time of renewal. Currently, the facility is available only in individual mediclaim policies and not group mediclaim policies.


Renewal means the extension of the term of a policy. A renewal is usually for a period of one year.  


Reimbursement means that the insurance company will repay the policyholder for the treatment costs that have been incurred by the policyholder. A reimbursement claim is a type of claim in which reimbursement occurs. 

Reasonable and Customary Charges

Reasonable and customary charges are the general cost of medical treatment in a particular area and community. These are charges that insurers use to arrive at premium figures for particular lines of treatment. It follows that Insurers normally pay only upto reasonable and customary charges on treatments. 

Specific Disease Insurance

A Specific disease insurance policy covers a single disease, for eg. Corona Kavach was a specific disease insurance policy that was introduced in the market during Covid. Since this is a niche cover, the premiums for such policies are normally lower than regular mediclaim policies. One should therefore avail a specific disease policy only as an additional cover to a regular mediclaim policy.

Sum Insured 

The sum insured is the maximum amount that can be claimed from the insurance service provider. If the sum insured is Rs. 5,00,000, then you can only receive a maximum of ₹ 5,00,000 from the insurance service provider, even if your medical treatment costs exceed that amount.

Further, the sum insured remains the same regardless of how many treatments you undergo within the same year. 

The sum insured is calculated on yearly basis. This means that the sum insured will renew itself the next year when the policy is renewed.

The higher the sum insured of an insurance policy, the higher the premium of the policy will be.

Survival Period 

The survival period is the period of time during which the policyholder should survive once they are diagnosed with a critical illness which is covered by a critical illness policy. The period normally varies from 14 to 30 days. 


Underwriting refers to the process of analyzing the risk associated with insuring a person and/ or their family and pricing this risk. The insurer decides on whether to underwrite a health risk by looking at the age composition, previous history of claims among other considerations.

Once the Insurer has decided on taking a risk, they arrive at the premium to charge for this risk. 

If you are considered a high risk person (because you have multiple pre-existing illnesses and you have made insurance claims several times in the past), the underwriting team of the insurance company may refuse to accept your insurance policy application. Alternatively, they might charge an extremely high premium.

Waiting Period 

The waiting period refers to the period during which the insured cannot make a claim relating to a pre-existing illness. A pre-existing illness or illnesses specified under the policy. Pre-existing illnesses are illnesses that the insured already has when buying the policy for the first time.

For example, if a person suffers from diabetes and then avails of a health insurance policy, they cannot make a claim relating to diabetes for a period of two years (depending on the waiting period in the policy) from the date of insurance.

Usually, the waiting period for an insurance policy is 2 to 4 years. However, for group health insurance, the waiting period might be zero.

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Susheel Agarwal

Susheel is the CEO of Ethika Insurance Broking P Ltd. This company, which has a current value of 10 million dollars, was bootstrapped by him and two of his friends. He attributes his success to his ability to inspire others to seek happiness at work.