Different Types Of Health Insurance Plans In India
Mini Balakrishnan
A sudden illness in the family can turn into more than just a health crisis—it can quickly become a financial one. Between hospitalisation, tests, doctor visits, and medication, the bills add up fast. And for many, this means dipping into savings or even taking on debt just to cover basic treatment.
That’s why having a health insurance plan isn’t just smart—it’s essential. It gives you the financial backing to access quality healthcare without hesitation. With medical expenses steadily rising across India, the right insurance policy can be the difference between delay and timely care, between stress and peace of mind.
Types Of Health Insurance Plans
The tremendous increase in better healthcare needs of people being met by them, it has become almost unavoidable to get a health insurance plan for oneself. Health insurance plans ensure to provide help to the person insured by covering the financial burden that might arise out of any accidental hospitalisation or illness.
There are several types of health insurance plans in India. Buying a particular type of health insurance plan for yourself and your family will be very easy if you look at it in the right direction and understand the offers provided by it. Let’s look at the different types of health insurance plans available in India.
The two major types of health insurance policies are:
- Indemnity Health Insurance Plans
2. Fixed-Benefit Health Insurance Plans
Indemnity Health Insurance Plans
Indemnity plans are the most common type of health insurance. These policies are designed to reimburse the actual medical expenses incurred during hospitalisation or treatment up to the sum insured. You can choose your hospital, your doctor, and your treatment—giving you maximum flexibility.
These plans act as a safety net by covering costs like hospital room rent, ICU charges, surgery, medications, and more. Here are the main types of indemnity plans available in India:
- Individual Health Insurance: Ideal for a single person who wants to be covered for personal medical expenses.
- Family Floater Plan: Covers an entire family under a single sum insured, usually including spouse, children, and sometimes parents.
- Group Health Insurance: Typically offered by employers to employees as a work benefit.
- Senior Citizen Health Insurance: Specially tailored for people aged 60 and above, often with coverage for age-related illnesses.
- Critical Illness Insurance: Offers cover for life-threatening conditions like heart attack or stroke, but in indemnity format, it reimburses actual costs.
- Mediclaim Insurance: Focused on inpatient hospitalisation; reimburses expenses incurred during the hospital stay.
- Maternity Insurance: Covers childbirth, pre- and post-natal care, and sometimes newborn expenses.
- Top-Up Health Insurance: Provides additional coverage once a certain threshold (the deductible) is crossed.
Fixed-Benefit Health Insurance Plans
Unlike indemnity plans, fixed-benefit plans do not reimburse bills. Instead, they pay a predefined lump sum amount once a covered medical condition or event occurs—regardless of the actual expense. These are great for situations where you need funds quickly or want help managing non-medical expenses like travel, home care, or even income loss.
These plans work well alongside indemnity policies, offering extra financial cushioning. Here are the key types under this category:
- Critical Illness Insurance: On diagnosis of a covered illness, a lump sum is paid, which can be used for treatment or lifestyle adjustments.
- Personal Accident Insurance: Provides a fixed payout in case of accidental death, disability, or dismemberment.
Individual Health Insurance
An individual health insurance plan covers medical expenses for a single person. The entire sum insured is dedicated solely to that individual, meaning you get full access to the coverage amount when needed.
How it works:
You pay an annual premium in exchange for coverage that includes hospitalisation, pre- and post-hospitalisation care, ambulance charges, and more. You can also opt for add-ons like critical illness or room rent waivers.
Benefits:
- Complete coverage for one person
- Customisable add-ons
- Tax benefits under Section 80D
Who should buy it:
Ideal for young professionals, freelancers, or anyone without employer-provided health coverage. It’s best to buy early when premiums are lower and health risks are minimal.
Family Floater Health Insurance
A family floater plan covers the entire family under a single sum insured. Instead of buying separate policies for each member, one premium covers all.
How it works:
The sum insured is shared among insured members—typically the policyholder, spouse, children, and sometimes parents. If any one member needs treatment, the claim is made from the overall coverage pool.
Benefits:
- Cost-effective for families
- Easy to manage one policy
- Covers multiple dependents
Who should buy it:
Best for young families, couples planning children, or anyone with dependent parents or kids.
Group Health Insurance
Group health insurance is offered by employers to their employees, covering them under a single umbrella policy.
How it works:
Companies tie up with insurers to offer a group plan as a workplace benefit. Some policies may also extend to employee dependents.
Benefits:
- Lower premiums
- No pre-policy medical check-up
- Immediate coverage, often from day one
Who should consider it:
Employees of medium or large organisations and business owners looking to provide benefits to their workforce.
Senior Citizen Health Insurance
This type of insurance is specially designed for individuals aged 60 and above. It focuses on age-related illnesses and long-term care.
Why it matters:
Older adults are more prone to health issues and hospitalisations. Regular plans may have age caps or high premiums, but senior citizen plans cater specifically to their needs.
Benefits:
- Covers pre-existing conditions (after waiting period)
- Higher sum insured for chronic diseases
- Annual health check-ups
Who should buy it:
Perfect for retired individuals or elderly parents who aren’t covered under a family floater.
Critical Illness Insurance
Critical illness insurance provides a lump sum payout on diagnosis of a serious illness like heart attack, cancer, or stroke.
How it’s different:
Unlike regular health insurance that reimburses bills, this plan pays you a fixed amount regardless of actual treatment cost.
Benefits:
- Financial cushion during tough times
- Helps manage income loss
- It can be used for non-medical expenses, too
Who should buy it:
Recommended for those with a family history of critical illnesses or people who want extra financial security beyond hospital expenses.
Mediclaim Insurance
Mediclaim is a basic form of health insurance that reimburses hospitalisation expenses.
How it works:
Only in-patient care is covered—meaning you have to be admitted for at least 24 hours. It’s simple, affordable, and focuses solely on hospital bills.
Benefits:
- Affordable premiums
- Covers sudden or emergency hospital visits
Who should buy it:
Good for individuals on a tight budget or those looking for basic hospitalisation cover.
Top-Up Health Insurance
Top-up and super top-up plans act as backup policies, offering additional coverage once your base policy limit is crossed.
How it works:
If your existing health policy only covers ₹3 lakhs and your bill is ₹5 lakhs, a top-up policy can cover the extra ₹2 lakhs—after a deductible.
Benefits:
- High coverage at a low cost
- Useful for medical inflation
- No need to buy a whole new plan
Who should buy it:
Those who already have basic health insurance but want extra protection without high premiums.
Unit Linked Health Insurance
Unit Linked Health Insurance combines insurance with investment.
How it works:
Part of your premium goes towards health cover, while the rest is invested in market-linked funds—similar to ULIPs in life insurance.
Benefits:
- Dual benefit: protection + investment
- Potential wealth creation over time
Who should buy it:
People with long-term financial goals who want both health security and investment returns.
Maternity Insurance
Maternity insurance is designed to cover expenses related to childbirth, including pre- and post-natal care.
What it covers:
Hospitalisation during delivery (normal or C-section), pregnancy-related complications, newborn care, and sometimes vaccinations.
Why it matters:
Childbirth costs can be significant, especially in private hospitals. Maternity cover ensures you’re financially prepared.
Who should buy it:
Couples planning a baby should opt for this early, as it usually comes with a waiting period of 9 months to 2 years.
Personal Accident Insurance
This plan offers financial support in case of accidental death or permanent disability.
What it covers:
Lump sum payout in case of death, partial or total disability due to an accident. Some plans may also cover temporary income loss.
Benefits:
- Ensures family is financially supported
- Can complement other health plans
Who should buy it:
Ideal for frequent travellers, field workers, or those in physically demanding or risky jobs.
Top Reasons to Buy Health Insurance At a Young Age?
There are quite a few reasons that are important to note and that will make you want to buy a health insurance plan for you or your family as it is an unavoidable process with the high risk of health issues we all face. The major reasons are [H3] Lower Premiums & Cost-Effectiveness
Health insurance premiums are directly linked to age—the younger you are, the lower your premium. This is because younger individuals are generally considered low-risk by insurers.
For example, a 25-year-old might pay around ₹5,000–₹6,000 annually for a plan that could cost ₹10,000 or more at age 40. Over time, this adds up to major savings while still offering the same level of coverage.
Comprehensive Coverage with Fewer Restrictions
When you’re young and healthy, insurers are more likely to offer broader coverage options with fewer exclusions. Waiting periods for pre-existing conditions are shorter, and chances of claim rejection are lower.
Plus, younger policyholders often get access to extra features like OPD cover, critical illness add-ons, and maternity benefits, which may not be available or affordable later.
Coverage for Lifestyle-Related Diseases
Diseases like diabetes, hypertension, and heart conditions are now affecting people in their 20s and 30s due to stressful jobs, irregular diets, and lack of physical activity.
Buying health insurance early means these conditions can be covered later without exclusions as long as they weren’t pre-existing at the time of purchase. If you delay, insurers may treat them as pre-existing illnesses, which could limit your benefits or raise your premiums.
Financial Security & Peace of Mind
A sudden illness or accident doesn’t wait for a “convenient” age. Medical emergencies can strike anytime, and they often come with huge costs—hospital bills, medicines, tests, and follow-up visits.
Health insurance taken early acts as a financial buffer, saving you from dipping into your savings. For example, something as simple as a two-day hospitalisation for a viral infection can cost ₹25,000–₹50,000 in a private hospital. Insurance ensures you’re covered.
No Claim Bonus (NCB) Benefits
No Claim Bonus rewards policyholders with either an increased sum insured or discounted premiums for every claim-free year. Starting young allows you to build a higher NCB over time.
Let’s say you buy a policy at 25 and don’t make a claim for 5 years—you could end up with up to 50% more coverage at no extra cost by the time you’re 30. This makes your policy stronger as you grow older when medical needs are likely to increase.
Tax Benefits on Health Insurance Premiums
Under Section 80D of the Income Tax Act, health insurance premiums qualify for tax deductions. Starting early means you can begin saving on taxes from the moment you start earning.
For example, you can claim:
- Up to ₹25,000 for self and family
- An additional ₹25,000 (or ₹50,000 if parents are senior citizens) for insuring your parents
These deductions not only reduce your taxable income but also promote smart financial planning from a young age.
Factors to consider while choosing the Right type of Health Insurance Plan
Having said all that, you must always consider certain factors before buying a health insurance policy from a particular insurance company. Some important points are listed below.
1. Age
Your age plays a major role in determining your premium. The younger you are, the lower the premium since you’re considered low-risk by insurers. As you grow older, premiums increase, and certain coverage options may become limited.
- Example: A 25-year-old can get a ₹5 lakh health insurance policy at a significantly lower premium than a 50-year-old for the same plan.
2. Network Hospitals Coverage
Cashless treatment is one of the most convenient features of modern health insurance. For this to work, your insurer must have tie-ups with hospitals in your area.
Always check the insurer’s list of network hospitals, especially in your city or hometown. A wider network ensures hassle-free treatment and avoids last-minute payment issues.
- Example: A plan that includes major hospitals in your city allows you to get treated without worrying about upfront payments.
3. Inclusions & Exclusions
It’s important to read the fine print. While most plans cover basic hospitalisation, they may exclude certain treatments or services.
Common exclusions include cosmetic procedures, dental work, infertility treatments, and pre-existing illnesses during the waiting period.
- Example: If you’re planning a family, a plan that excludes maternity benefits might not suit your needs.
4. Premium vs. Benefits
A low premium may look attractive, but it doesn’t always mean you’re getting the best deal. Some low-cost plans come with higher deductibles, sub-limits, or limited coverage.
Aim for a plan that balances affordability with comprehensive protection.
- Example: A cheaper plan might save money upfront but could lead to higher out-of-pocket expenses during hospitalisation due to co-payments or room rent limits.
5. Co-Payment & Deductibles
These are cost-sharing clauses where you pay a part of the bill before the insurer pays the rest.
- Co-payment: A fixed percentage of the claim amount you must bear.
- Deductible: A fixed amount you must pay before the insurer starts covering expenses.
- Example: If your policy has a 20% co-payment and the hospital bill is ₹1 lakh, you’ll pay ₹20,000 while the insurer pays ₹80,000.
Choosing a plan with lower co-payments and deductibles ensures higher financial protection.
6. No-Claim Bonus (NCB) & Renewal Benefits
No-Claim Bonus rewards you for staying healthy. For every year you don’t make a claim, your insurer may increase your sum insured or offer a discount on the premium.
- Example: A ₹5 lakh policy could grow to ₹7 lakh after 2 claim-free years. Look for insurers with generous NCB terms and benefits.
7. Lifetime Renewability Option
Health issues tend to rise with age, so you need a plan that stays with you for life. IRDAI mandates lifetime renewability, but it’s still important to check if your policy clearly offers it.
- Example: A plan with lifetime renewability ensures you won’t be left uninsured after retirement or once you cross 60.
8. Claim Settlement Ratio & Process
Claim Settlement Ratio (CSR) refers to the percentage of claims an insurer settles out of the total received. A higher CSR means more reliability and fewer hassles during emergencies.
Also, look into the claim process—Is it online? Is it quick and smooth?
- Example: An insurer with a 95% CSR is more dependable than one with a 75% CSR, especially when you need quick approvals.
9. Additional Benefits & Riders
Most health plans can be customised with add-ons or riders to suit your needs. These could include:
- Critical illness cover
- Maternity and newborn cover
- OPD and dental benefits
- Global coverage for international treatment
Example: A frequent traveller might opt for global health insurance, while a young couple may look for maternity coverage.
Common FAQs
- Am I allowed to buy more than one health insurance plan at the same time?
Of Course, you may buy as many health insurance plans as you like to meet your individual needs.
- Will I be able to increase my sum insured on my already existing health insurance policy?
Yes, you will definitely be able to increase the sum insured in your existing health insurance policy and that can be done during the renewal of the same.
- I was diagnosed with a medical condition after I bought my health insurance policy. Would that be covered by the existing policy?
As the medical condition is diagnosed after getting the insurance plan you may have to submit the reports to your insurance company and may have to wait till a certain waiting period as mentioned in their policy terms. Once the waiting period is over, you can get the condition covered as well if it is one among the listed medical conditions under the policy wordings of that particular insurance company.
