How Health Insurance Works In India? Renewal & Claim process

By Okbima 12 Jun 2024


Health insurance is necessary to protect individuals from unexpected medical bills. Health insurance works by providing coverage for medical expenses incurred due to illnesses or accidents. When purchasing health insurance, it is important to understand how renewals & claims work in India.


What Is Health Insurance?

Health insurance is a type of insurance coverage that pays for medical expenses incurred by the insured individual or their family. It provides financial protection against the high costs of healthcare, which can include hospitalization, doctor's visits, diagnostic tests, medications, surgeries, and other medical treatments.

Some aspects of health insurance include

  • Premium: The amount paid by the insured person or their employer to the insurance company to maintain coverage.

  • Coverage: The medical expenses and treatments which are covered by the health insurance policy. This can vary widely depending on the type of policy and the insurance provider.

  • Deductible: The amount that the insured person must pay out of pocket before the insurance company starts covering expenses

  • Policy Limits: The maximum amount of coverage provided by the insurance policy, either annually, per illness or injury, or over the lifetime of the policy.

  • Network Providers: Healthcare providers (hospitals, clinics, doctors) that have agreements with the insurance company to provide services at discounted rates to insured individuals.


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How Health Insurance Works In India?

Health insurance in India works by individuals paying a premium to an insurance company in exchange for coverage of medical expenses incurred due to illness or injury.

  • Policy Purchase: Individuals or families purchase health insurance policies from insurance companies. These policies come with various coverage options, premiums, and terms and conditions. Policies can be bought online, through insurance agents, or directly from insurance companies.

  • Policy Activation: Once the policy is purchased and the premium is paid, the policy becomes active. There might be a waiting period in health insurance for specific treatments and pre-existing conditions, depending on the policy terms.

  • Premium Payment: Policyholders need to pay the premium regularly (usually annually) to keep the policy active. Failure to pay the premium on time can cause a lapse in coverage.

  • Coverage Benefits: Health insurance policies provide coverage for medical expenses incurred due to illness, injury, or hospitalization. Coverage includes hospitalization expenses, doctor's fees, diagnostic tests, medicines, and sometimes additional benefits like ambulance charges, daycare procedures, and maternity benefits.

  • Cashless Treatment: Many health insurance policies offer cashless treatment facilities at network hospitals. The insured person can avail of treatment at network hospitals without paying cash upfront. The insurance company directly settles the bills with the hospital, up to the policy's coverage limit.

  • Reimbursement: If treatment is received at a hospital outside the network or if a cashless facility is not available, the insured person can pay for the treatment and then claim reimbursement from the insurance company by submitting the necessary documents.

  • Pre-authorization: For planned hospitalizations or treatments, the insured person needs to get pre-authorization from the insurance company by informing the insurance company about the planned treatment, providing medical records and estimates of expenses, and getting approval for coverage.

  • Claim Settlement: After receiving the claim documents, the insurance company verifies the details and settles the claim by reimbursing the insured person or directly paying the hospital, depending on the type of claim and policy terms.

  • Renewal: Health insurance policies need to be renewed annually to maintain continuous coverage. Policyholders need to pay the renewal premium on time to avoid a lapse in coverage.

  • Portability: The Insurance Regulatory and Development Authority of India (IRDAI) allows policyholders to switch from one insurance company to another without losing the benefits of waiting periods accumulated in the existing policy. This ensures that policyholders can choose the best health insurance companies in India according to their needs.


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How Does Health Insurance Renewal Work?

Health insurance renewal works by allowing policyholders to either renew their existing policy with the same coverage or make changes to their coverage, premium, or deductible for the upcoming policy period.

  • Renewal Reminder: Insurance companies send renewal reminders to policyholders in advance of the policy expiry date. These reminders may be sent via email and SMS

  • Review of Policy Details: Before renewing the policy, the insured person should review the policy details, including coverage limits, exclusions, and any changes in premiums or terms.

  • Premium Payment: To renew the policy, the insured person needs to pay the renewal premium to the insurance company before the policy expiry date. This can be done through online payment portals, mobile apps, bank transfers, or physical payment at the insurance company's office.

  • Policy Continuation: Once the renewal premium is paid, the policy is renewed for another year. The coverage and benefits remain the same unless there have been any changes made by the insurance company or requested by the insured person

  • Renewal Confirmation: After the premium payment is processed, the insurance company sends a confirmation of policy renewal to the insured person. This confirmation may include the renewed policy document and details of the coverage period.

  • Grace Period: In some cases, insurance companies offer a grace period after the policy expiry date during which the policy can still be renewed without losing continuity of coverage. However, coverage during this grace period may not be applicable for any claims made during that time.

  • Continuous Coverage: By renewing the health insurance policy annually, the insured person ensures continuous coverage against medical expenses and emergencies, providing financial security and peace of mind for themselves and their family.


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How Does Health Insurance Claim Work?

Health insurance claims work by the insured person submitting a request for reimbursement of medical expenses to the insurance company, which then processes the claim and pays out the approved amount according to the policy terms.

  • Policy Purchase: Individuals or families purchase health insurance policies from insurance companies. These policies mention the coverage details, premium amount, and terms and conditions.

  • Policy Activation: Once the policy is purchased and the premium is paid, the policy becomes active. It has a waiting period before certain benefits can be availed, such as coverage for pre-existing conditions.

  • Medical Treatment: When the insured person needs medical treatment due to illness or injury, they visit a hospital or healthcare provider that is included in the network of the insurance company. If it's an emergency, they may go to any hospital for immediate treatment.

  • Intimation to Insurance Company: In the case of planned hospitalization, the insured person or their family should inform the insurance company as per the process specified in the policy document. For emergency cases, this process needs to be done as soon as possible after admission.

  • Claim Processing: The hospital submits the claim documents to the insurance company, which includes the medical records, bills, prescriptions, and other relevant documents.

  • Claim Verification: The insurance company verifies the claim documents to ensure they are complete and in compliance with the policy terms. They may also verify the treatment details with the hospital.

  • Claim Settlement: Once the claim is verified and approved, the insurance company settles the claim amount directly with the hospital or reimburses the insured person for the expenses incurred, depending on the type of policy and the agreed-upon terms.

  • Reimbursement: If the insured person pays for the medical expenses out of pocket, they can submit the claim documents to the insurance company for reimbursement. The insurance company will process the claim and reimburse the eligible expenses as per the policy terms.


Read More:

Can I Buy Health Insurance And Use It Immediately?

Why Health Insurance Claim Gets Rejected? Know The Actual Reason

Why Health Insurance Premium Increase? Know The Actual Reason

Does Health Insurance Cover Therapy?

Grace Period In Health Insurance: Meaning, Benefits



In conclusion, health insurance is essential for protecting individuals from unexpected medical expenses. Understanding how renewals and claims work in India is crucial for maintaining continuous coverage and receiving reimbursement for medical treatments. By purchasing the best health insurance policy, individuals can ensure financial security and peace of mind for themselves and their families in times of illness or injury. For any assistance, you can contact “Our Experts”.


In India, individuals have to pay for health insurance for their entire lives.

Yes, it is worth having health insurance in India to protect yourself and your family from unexpected medical expenses and ensure access to quality healthcare.

Coverage for pre-existing medical conditions may vary among health insurance plans in India. Some plans may have waiting periods before covering pre-existing conditions, while others may exclude such conditions from coverage.

Yes, most health insurance policies in India can be renewed annually without any break in coverage, as long as premiums are paid on time and the policy is renewed before the expiry date.

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