What are the Features of Health Insurance Plans?

If you're considering getting a health insurance policy, you might have to deal with a tsunami of information coming at you.  All the policy jargon and comparison between tons of insurers can get overwhelming. However, we're here to simplify it for you. 

In this article, we'll demystify some of the key features of a health insurance policy. We hope that it'll help you cross the edge of indecision and finally pick the policy that's perfect for you and your unique needs:

Pro tip: The health insurance market can be a labyrinth. Instead of spending hours navigating through the hundreds of policies out there, why not book a 30-minute call with our expert IRDAI-certified advisors? We don’t spam or pressure you to buy. Just honest insurance advice.

Why Should You Buy a Health Insurance Policy?

Let's use a hypothetical scenario to understand this. 

Ravi, a 25-year-old graphic designer and heavy smoker, believed he was invincible- until he started coughing up blood and was diagnosed with tuberculosis. Determined to start treatment, he approached insurers, only to face rejections, high premiums, or loan waiting periods. Left with no other options, he drained his savings to cover medical expenses. 

Stories like Ravi’s highlight the importance of getting health insurance early. As age increases, so do premiums, while the chances of securing a good policy decrease if health issues arise prior to getting the policy. Pre-existing diseases (PEDs) like diabetes, hypertension, or tuberculosis can lead to waiting periods of up to 3 years, leaving the insured to handle the financial burden themselves. 

Health insurance isn’t just a backup plan- it can sometimes be the difference between financial security and financial ruin. 

What are the Key Features of Health Insurance Policies?

Now that we’ve established the importance of getting a health insurance policy let’s take a look at its features:

• Adequate coverage: The word coverage is generally used to refer to the sum insured of a health insurance plan. The sum insured is the maximum amount of money an insurance company will offer as a payout in a given policy year if a claim is made. The base cover can range from modest amounts like ₹50,000-1 lakh to numbers like 1 cr and more. It is difficult to ascertain what "adequate coverage" looks like for a person or family as it is highly relative, but 10-15 lakhs is a good number to begin with. Consider your age, health condition, lifestyle, family medical history, and the rising cost of healthcare in your region to calculate the ideal coverage for you.
• Affordable premiums: The premium is the sum the insured person pays to the insurance company periodically to maintain coverage. A health insurance premium is generally paid annually. Some insurers may offer some flexibility, but that comes with a ton of terms and conditions.
   
  A policy is only as good as the policyholder's ability to retain it.  Affordability becomes important when comparing two policies with similar benefits. They may have the same features, but one might be more budget-friendly, prompting you to choose it. 
  
  The premium depends on the sum insured, location, age, pre-existing medical condition, medical inflation, and even the insurance company's profitability. 
  
  However, two people in the same age bracket with the same sum insured may pay different premiums due to the application of 'loading charges'—an additional amount added to the premium to offset the higher risk of claims from individuals with PEDs.
• Co-payment: The co-payment clause involves the policyholder paying a certain percentage of their claim amount while the insurance company pays the rest. The share of the amount that is to be paid by the insured is pre-determined and mentioned in the policy terms.
  
  If your policy has a 10% co-payment clause and the hospital bills turn out to be 10 lakhs, the insured will have to pay 10% of 10 lakhs, i.e., 1 lakh, while the insurer will cover the remaining 9 lakhs. 
  
  It's not really a good feature to have in a policy as the insured has to dole out money from their pocket every time they make a claim, which defeats the purpose of paying hefty premiums to insure oneself. 
• Room Rent Restrictions: Room rent restrictions are another not-so-great feature found in some health insurance policies. Similar to co-payment clauses, these restrictions can result in out-of-pocket expenses for the insured. The insurance company sets a cap—either a fixed amount or a category limit—on the room rent it will cover during hospitalisation.
  
  But here's the catch: this cap doesn't just apply to the room itself. It also affects other hospitalisation costs, as many services (like doctor's fees, nursing charges, etc.) are linked to the type of room you choose.
  
  For example, suppose a person's policy covers a single private AC room capped at ₹5,000 per night. If they opt for a room costing ₹10,000 per night, they'll have to pay the ₹5,000 difference out of pocket. Additionally, since they exceeded the room rent limit by 100%, they'll also bear 50% of the total hospital bill—because the costs of associated medical services are proportionately higher.
  
  This is why it's important to understand room rent restrictions when choosing a health insurance policy, as exceeding the cap can significantly increase your expenses during hospitalisation.
• Disease-wise sub-limits: Some policies may set a limit to the amount of money they'll pay in claims for each specific medical condition. 
  
  For instance, if a policy sets the disease-wise sub-limit for a Bypass surgery at ₹4,00,000, they'd only pay a maximum amount of ₹4,00,000 to the insured in claims, no matter how much the hospital bills total up to. The policyholder will have to fend for himself when it comes to the residual amount.
• Low waiting period: Insurance companies are risk-averse, which is why they impose waiting periods to protect themselves from fraudulent claims and minimise financial risks. Waiting periods also prevent people from buying a policy immediately after a diagnosis, getting expensive treatments covered without contributing substantially towards premiums, and then cancelling the policy right after.
  
  There are three main types of waiting periods: 
  • An initial 30-day waiting period (during which only accidents are covered), 
  • A pre-existing disease waiting period that can last up to a maximum of 3 years according to IRDAI rules and 
  • A specific illness waiting period for slow-growing conditions like cataracts and kidney stones (which is usually 1-3 years). 
    
    While waiting periods are the norm in almost every policy, it's best to go for a plan with a shorter waiting period so you can access timely treatment without unnecessary delays. 
• Restoration Benefit: The restoration benefit is one of the best features to have in a health insurance plan. As the name suggests, this feature replenishes your sum insured and adds your entire cover amount to your base cover when you make a claim. 
  
  However, there is something to be wary of here. Restoration has a lot of conditions. There's restoration upon partial exhaustion of your cover, which kicks in as soon as you make a claim, and then there's restoration upon complete exhaustion, which gets activated only when you use up your entire base cover. One can use the restored cover for any illness or only for different diseases. There's restoration once a year, and there's restoration an unlimited number of times per year. Unlimited restoration upon partial exhaustion for any illness is the most preferable combination for the restoration benefit. 
• No-claim Bonus: The name of this feature is enough to guess what it is about. Insurance companies reward their customers by increasing their total cover year on year. The no-claim bonus feature adds a percentage of your sum insured to your base cover every year you go without making a claim. There are two essential things to remember here. 
  
  First, the bonus you receive has a limit, usually as a certain percentage of your base cover, like 50% every year to 100% maximum. Second, a 'clawback' clause in the no-claim bonus feature takes back your no-claim bonus by the same percentage if you make a claim.Apart from the no-claim bonus, insurers these days also offer loyalty/renewal bonuses, which are added to the sum insured whether the policyholder makes a claim or not.
• Daycare Treatments: Daycare treatments are medical procedures such as angiograms, dialysis, chemotherapy, etc., that take less than 24 hours of hospitalisation. Most health insurance policies have provisions for daycare treatments as they can get very expensive. 
• Domiciliary Coverage: Domiciliary hospitalisation means receiving medical treatment at your own home due to not being able to go to a hospital or because you couldn't find a hospital bed in town. Although the patient needs to meet specific criteria to qualify for domiciliary hospitalisation, like being hospitalised for at least 72 hours and requiring a diagnosis from a certified medical practitioner, it is always wise to have this feature in your policy.
• Crucial Add-Ons: Add-ons are unique features you can opt for in addition to your base policy in return for a slightly higher premium. Add-ons can significantly enhance your health insurance coverage, offering protection beyond just the basics.
  
  For instance, an inflation protection add-on increases your sum insured annually at the same rate as the medical inflation. The reduction in pre-existing disease (PED) waiting period rider is another valuable add-on, helping shorten the typical 3-year waiting period for PEDs—especially useful if you have an existing condition. Lastly, a consumables cover ensures that the insurance pays for often-overlooked hospital expenses like syringes, PPE kits, bandages, catheters, gloves, and surgical tape, which base policies typically exclude. 
  
  Add-ons can be purchased as per your specific needs and provide comprehensive protection when you need it most.

How To Choose the Best Health Insurance Plans?

While choosing your health insurance plan, keep the following things in mind:

1. Important Features: Generally, no co-payment, no room rent restrictions, and no disease-wise sub-limits are the most important features to look out for when it comes to choosing a policy. Next, check if you can avail the restoration benefit and no-claim bonus features. Besides that, check if you have features like daycare treatments, domiciliary hospitalisation, and OPD coverage in your policy. 
2. Data Metrics: Metrics like a company's CSR (Claim Settlement Ratio) and ICR (Incurred Claim Ratio) tell us a lot about a company's financial stability and their probability of settling a claim. Look for a company with CSR => 90% and ICR between 55%-75%. Also take a look at their Complaint Volume, which tells us about the claim settlement experience of policyholders.
   
   Other than that, it’s important to take note of an insurer’s Annual Average Business Income to determine its size and scale. The last metric to be taken into account should be the number of network hospitals the insurer has, which should be more than 10,000 to be in the ideal range.
3. The reputation of Insurer:  An insurer's reputation usually precedes its marketing and speaks volumes about its operational efficiency and claim settlement process. Check reviews, talk to the company's customers, break down policy jargon, assess their behaviour and make a wise decision. 
4. Premium Affordability: While it’s important to pick policy features based on your needs, striking a balance between sufficient coverage and affordable premiums is equally essential. If the premiums are too high, policyholders may not be able to continue it long-term. It’s best to get a policy that you can maintain over long periods of time.

What are the Top Health Insurance Policies in 2025?

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Conclusion

Choosing the right health insurance policy can feel overwhelming, but understanding the key features makes the process much simpler. From evaluating coverage and premiums to considering add-ons and insurer reputation, every detail matters in securing the best protection for you and your family. If you need personalised guidance, you can book a free 30-minute consultation with Ditto advisors. We’ll help you understand policy features in detail and assist you in selecting the plan tailored for you.