Insurance Glossary

Key decisions

1. Q1

   Sum Insured vs Cover Amount vs Policy Value — different?

   SUM INSURED = max amount insurer pays in a policy year (annual cap). COVER AMOUNT = same thing, casual term. POLICY VALUE / FACE VALUE = lump sum payable to nominees in TERM/LIFE insurance on death. Critical distinction: Sum Insured is per-year (renews each year). Policy Value is lifetime in life insurance. So '₹10L health insurance' = ₹10L per year refresh. '₹1Cr term insurance' = ₹1Cr lump sum to family on death. In a FAMILY FLOATER plan, sum insured is SHARED across family — ₹10L floater for 4 people = total ₹10L per year for everyone combined (not ₹10L each).

2. Q2

   Premium vs Premium Loading vs Premium Increment — what is the difference?

   PREMIUM = annual cost of insurance (₹15K-₹50K typical health, ₹15K-₹25K term). PREMIUM LOADING = surcharge added for pre-existing diseases / risky occupations / smoker status (typically +20-50% over base). PREMIUM INCREMENT = year-over-year increase (insurer-decided, ~10-15%/year for health insurance due to medical inflation). 'Locked premium' / 'guaranteed premium' = no increment for a specified period (rare, 3-5 years max in India). Watch out for 'No premium loading for first year' marketing — loading kicks in Year 2 onwards.

3. Q3

   Deductible vs Co-Payment vs Sub-Limit — all reduce payouts?

   DEDUCTIBLE = fixed amount YOU pay before insurer starts paying. ₹10K deductible on ₹50K bill = you pay ₹10K, insurer pays ₹40K. Reduces premium 20-30%. CO-PAYMENT = percentage of EVERY claim YOU pay (e.g., 20% co-pay). ₹50K bill, 20% co-pay = you pay ₹10K, insurer pays ₹40K. Same math at low value, very different at high (₹5L bill: 20% co-pay = ₹1L out of pocket). SUB-LIMIT = cap on specific expense within total cover. ₹10L health insurance with ₹5K/day room rent sub-limit = you stay in ₹15K room, claim 1/3 (proportionate deduction on EVERYTHING including doctor / drugs / OT). Sub-limits are the #1 hidden trap.

4. Q4

   Waiting Period vs Cooling-Off Period vs Free-Look Period?

   WAITING PERIOD = time from purchase to when coverage starts. Initial 30 days standard (illness only, accidents covered Day 1). Pre-existing diseases (PED) 2-4 years. Maternity 2-4 years. Specific illnesses (cataract, hernia, knee replacement) 2 years. COOLING-OFF / FREE-LOOK = 15-day window AFTER buying to cancel and get full refund minus admin charges. Mandated by IRDAI for all life and health insurance. Read your policy in this 15-day window — most rejections later trace back to not reading sub-limits / exclusions during free-look.

5. Q5

   Rider vs Add-on vs Floater vs Top-up — same thing?

   RIDER = additional coverage attached to base policy (critical illness rider on term plan, accidental death rider). Lower premium than standalone. ADD-ON = same concept, different insurer terminology. FLOATER = single sum insured shared across family members (vs INDIVIDUAL = each person has own cover). TOP-UP / SUPER TOP-UP = additional cover that kicks in AFTER base sum insured exhausted. ₹5L base + ₹15L super top-up = total ₹20L cover but premium is 60-70% cheaper than ₹20L individual plan because top-up only pays after deductible (₹5L base exhaustion).

6. Q6

   Pre-existing Disease (PED) vs Lifestyle Disease vs Chronic Condition?

   PRE-EXISTING DISEASE (PED) = any illness diagnosed BEFORE policy start date (regardless of treatment). Waiting period 2-4 years. Must be DECLARED at proposal — non-disclosure = full claim rejection (#1 rejection reason). LIFESTYLE DISEASE = diabetes, hypertension, obesity-related — most insurers cover after PED waiting period. CHRONIC CONDITION = long-term illness needing ongoing treatment (kidney disease, COPD). Some insurers exclude chronic conditions entirely or charge premium loading. CONGENITAL DISEASE = present at birth. External (cleft palate, deformities) usually excluded; internal (heart defects) often covered.

7. Q7

   Cashless vs Reimbursement — coverage difference?

   CASHLESS = insurer pays hospital directly. Available at NETWORK HOSPITALS only (each insurer empanels 5,000-15,000). Process: pre-authorisation in 30-60 mins, treatment, you pay only non-covered items. REIMBURSEMENT = you pay upfront, claim back in 30-45 days. Works at ANY hospital but you front the cash. NETWORK is the keyword — your insurer's network may not include your nearest top hospital. Verify via insurer's app BEFORE you need treatment. Some plans offer 'Cashless Everywhere' (pay 5-10% higher premium) — kicks reimbursement automatically at non-network.

8. Q8

   Sum Insured Restoration vs Refill vs Recharge — bonus cover?

   SUM INSURED RESTORATION (also REFILL / RECHARGE) = automatic top-up if base sum insured exhausted during policy year. Triggered by separate hospitalisation (not same illness's continuation). ₹10L base + 100% restoration = if you exhaust ₹10L in Apr (kidney stone surgery), then need ₹8L in Oct (different illness), insurer pays from restored ₹10L. Some plans 'unlimited restoration', some 'once per year', some 'only for unrelated illnesses'. Read fine print. Premium for restoration: +15-25% above base — usually worth it for families with multiple high-risk members.

9. Q9

   Standard vs Critical Illness vs Disability Insurance — different?

   STANDARD HEALTH INSURANCE = covers hospitalisation expenses. Pay-as-you-go, reimbursement model. CRITICAL ILLNESS = LUMP SUM payout on diagnosis of specified illness (cancer, heart attack, stroke, kidney failure, paralysis). Use the money however you want — treatment, income replacement, debt clearance. DISABILITY INSURANCE / PERSONAL ACCIDENT = lump sum + monthly income on disability (permanent or temporary). All three are SEPARATE products — having one does not cover the other. Comprehensive coverage = stack ₹15-25L health + ₹15-25L CI + ₹25L PA.

10. Q10

    Exclusion vs Limitation vs Conditional Coverage?

    EXCLUSION = never covered (always rejected). Cosmetic surgery, fertility treatment, suicide (first 12 months), substance abuse, war/civil unrest. Listed in policy 'Exclusions' section. LIMITATION = covered but with cap. Maternity ₹50K cap, AYUSH treatment ₹50K cap. CONDITIONAL COVERAGE = covered IF specific condition met. Critical Illness covered IF diagnosed BY specified ICD-10 code AND survives 30 days post-diagnosis (survival period — common in CI plans). Read all three sections (Exclusions / Limitations / Definitions) before buying. Most claim rejections trace back to one of these — often unread.

Top insurers ranked by claim settlement

• HDFC Ergo:Best plain-English policy documents in India; terminology consistent across plans.
• Niva Bupa:Visual policy summaries; sub-limit explanations clearer than most.
• Care Health:Mobile-app glossary; in-app term explanations during claim process.
• Star Health:Comprehensive sub-limit transparency; senior-focused plans well-documented.
• ICICI Lombard:iL TakeCare app includes glossary lookup; strong claim documentation.