Have you ever held a legal document in your hand and had the urge to pull out your hair? The complicated terms may make you feel like you are reading something right out of the Shashi Tharoor universe. Such is the nature of legalese language that it can confuse anyone. But when it comes to health insurance terminology, we want to relieve you of this annoying sensation of having to decode long, complex jargon on your own. So we’ve prepared this quick guide to understanding health insurance terminology. We promise, it is really easy!
The health insurance glossary you didn’t know you needed
Let’s go in alphabetical order to simplify the most common medical insurance terminology you will encounter in your health insurance policy document.
Ambulance cover
When you need hospitalization in an emergency, you typically need to call for an ambulance. Hospitals levy charges for offering ambulance facilities, but most policies cover this cost up to a certain limit by offering an ambulance cover.
Additional rider
An additional rider, also referred to as an add-on rider/add-on cover, is a facility that allows you to enhance your insurance coverage by paying a separate premium. Common add-on riders include critical illness cover, maternity rider cover, personal accident cover, etc.
AYUSH treatments
Under the IRDAI’s guidelines, you can file insurance claims for non-allopathic or alternative treatments like Ayurveda, yoga, Unani, Siddha, and homoeopathy (AYUSH). These are known as AYUSH treatments.
Beneficiary
A beneficiary is any individual, group of individuals (as in family floater plans) or entity, such as a trust or corporation, entitled to receive health insurance coverage benefits. Such persons/entities may also be referred to as policyholders.
Cashless hospitalization
Cashless hospitalization is a facility that allows you to seek hospitalization at a hospital in your insurer’s network without paying anything upfront. You need to inform the insurer about your chosen medical facility. The insurer’s representative directly pays the hospital bills up to the sum insured amount.
Co-payment
Co-payment is a health insurance term used to refer to the specific portion, typically a fixed percentage of a claim amount, that you, as the policyholder, need to pay out of your pocket.
Claim
A claim is the formal request a policyholder must make to receive compensation or reimbursement for the medical costs incurred by them. To raise a claim, you must submit the duly filled claim form, diagnostic reports, medical bills, etc., within the stipulated timelines.
Critical illness
Diseases that are classified as severe or life-threatening are referred to as critical illnesses under health insurance terminology. Such treatments typically involve higher costs and longer treatment tenures.
Critical illness insurance
Health insurance policies are designed to cover the costs of specific critical illnesses, wherein the insurer pays the sum insured amount as a lump sum and not as per actuals, is known as critical illness policies.
Daycare treatments
Any medical treatment covered under your policy that entails less than 24 hours of hospitalization, wherein the patient is discharged on the same day, is regarded as day care treatment. Examples of such treatments include dialysis, chemotherapy, cataract surgery, etc.
Deductible
A deductible is the fixed amount that policyholders need to pay from their pockets before their insurance coverage kicks in. If the costs of a medical procedure are less than the applicable deductible, your insurer is not liable to cover those costs.
Daily hospitalization cash
A benefit under which the insurer provides a fixed cash amount for every day that an insured member is hospitalized is called daily hospitalization cash. This benefit helps you bear the additional costs not covered under your health plan, such as compensation for loss of income due to hospitalization.
Exclusion
Exclusion is a health insurance term used to refer to the general illnesses, treatments, and procedures not covered under a health insurance plan. Examples include cosmetic surgeries, HIV/AIDs treatment, medical conditions arising due to self-harm, substance abuse, etc.
Family floater policy
A family floater policy is one that covers the medical expenses of various members of a family unit, such as the policyholder, their spouse, and children, under a single plan. The sum insured in such policies is shared by all the insured members.
Did You Know? The free look period is the time insurers give potential customers to review their newly purchased health insurance policy and cancel it if needed. You can typically cancel the new policy within 10 to 15 days from the date of issue.
Grace period
The health plan terminology 'grace period' refers to the extension the insurer gives you if you do not renew your policy by the applicable renewal date. This period usually lasts for 15 to 30 days after the policy expiration date.
Group health insurance
Health insurance plans that cover several members of an organization are called group health insurance plans. Companies typically pay the premiums of these policies and provide them as a perk to their employees.
Hospitalization
The act of being admitted to a hospital is called hospitalization. This health insurance terminology is used in the context of both a hospital stay exceeding 24 hours or a treatment completed in less than 24 hours.
In-patient treatment
Any treatment for which you need to stay in the hospital for a period of 24 or more consecutive hours to be eligible to file a claim is known as inpatient treatment.
IRDAI
The abbreviation IRDAI stands for the Insurance Regulatory and Development Authority of India. IRDAI is the governing body responsible for formulating the rules and regulations in India’s insurance sector.
Insurer and insured
In the context of health insurance, the insurer represents the insurance company providing the insurance coverage benefits, whereas 'insured' is another word used to represent a policyholder.
Maternity cover
The health insurance plan that covers pregnancy and childbirth-related costs is known as maternity cover. You can buy this plan as a standalone policy or as an additional rider.
No-claims bonus
A no-claims bonus, also called a cumulative bonus, is a benefit under which your insurer enhances your sum insured at no extra cost. You become eligible for this benefit if you do not file any claims during a policy year and can get up to 50% of the sum insured as a bonus for five consecutive claim-free years.
Network hospital
A hospital or healthcare facility registered under the insurer’s network, where policyholders can seek cashless hospitalization benefits, is known as a network hospital.
Out-patient department
Outpatient Department, or OPD, refers to hospitals and individual healthcare facilities that offer medical treatments and consultations to policyholders, wherein hospitalization is not required.
Portability
If you are not happy with your current insurer’s services or if you find a policy that offers the coverage you need at a lower cost, you can change your insurer without losing your benefits. This is known as portability.
Premium
Your insurance charges you an annual fee to provide you with coverage. This fee is known as a premium, which you must pay every year to enjoy uninterrupted insurance coverage.
Pre-existing illnesses
Any medical condition you are diagnosed with before you buy a health insurance plan is known as a pre-existing illness. If you suffer from any such illness, you must inform the insurer before buying a policy.
Pre and post-hospitalization costs
Before and after you are hospitalized, you may need to undergo medical screening tests and doctor consultations. In medical insurance terminology, these are known as pre- and post hospitalization costs.
Room rent
The charge associated with being hospitalized, wherein you need to rent a hospital room, is referred to as 'room rent'. Insurers usually impose a cap or sub-limit on the maximum room charges they will cover.
Did You Know? In the event that you choose to be hospitalized at your preferred medical facility instead of a network hospital, you need to bear the charges upfront and file a claim. Such a claim is known as a reimbursement claim.
Sum insured
Sum insured A is the maximum coverage amount borne by your insurer. Every health insurance policy comes with a fixed sum insured amount beyond which the insurer is not liable to cover the costs.
Waiting period
The period during which you cannot file an insurance claim despite having an active health insurance policy is referred to as the waiting period. This period can last from 30 days to 4 years, depending on the policy type and coverage terms.
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With this glossary of health insurance terms, we hope we have helped relieve the anxiety that comes with reading a legal document so you can confidently decode your health insurance policy. We also have a more detailed glossary that you can refer to on the Manipal Cigna Health Insurance website. If you are looking for the ideal health insurance plan for yourself and your loved ones, you can find an array of options on our website with sums insured ranging from ₹5 lakhs to ₹1 crore. You can buy the policy and even file claims online.
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Conclusion
Health insurance documents don’t have to feel like a puzzle you need a law degree to solve. Once you understand a few key terms, like sum insured, deductible, waiting period, and cashless hospitalisation - you’ll find it much easier to compare plans and avoid surprises during a claim.
And if you want a plan that’s easy to understand and easy to manage, Manipal Cigna Health Insurance offers a wide range of options with flexible sums insured and the convenience of online purchase and claim support.
FAQs
What is the difference between sum insured and sum assured?
They sound similar, but in health insurance, 'sum insured' is the more commonly used term. It’s the maximum amount your insurer will pay for covered medical expenses during the policy period. “Sum assured” is used more often in life insurance, though people use both terms interchangeably in everyday conversation.
What does cashless hospitalization mean?
Cashless hospitalization means you can get treated at a network hospital without paying the entire bill upfront. Once approved, the insurer settles eligible expenses directly with the hospital (up to your sum insured). You may still pay out of pocket for non-covered items, co-payments, or expenses beyond policy limits.
What are AYUSH treatments in health insurance?
AYUSH treatments refer to alternative or non-allopathic systems like Ayurveda, Yoga, Unani, Siddha, and Homeopathy. Many health insurance policies cover AYUSH treatment, but usually with conditions like:
- treatment taken at recognized AYUSH hospitals/centers
- bills and medical records submitted properly
- coverage subject to policy limits and terms.
What is the waiting period in a health insurance policy?
A waiting period is the time after buying a policy when certain claims aren’t covered, even though your policy is active. It can vary depending on what you’re claiming for, such as the initial waiting period (commonly 30 days for illnesses), the pre-existing disease waiting period (often 2–4 years), and the specific illness/procedure waiting period (plan-dependent).
How does a no-claims bonus work?
A no-claims bonus (also called a cumulative bonus) rewards you for not filing claims in a policy year. Instead of “cash back,” insurers usually increase your sum insured at no extra premium, up to a defined cap. Over time, this can meaningfully boost your coverage. Just remember: the exact bonus percentage and maximum limit depend on the plan, and some policies reduce the bonus if a claim is made later.
