Health and Accident Insurance
Domain 5 tests health and personal accident cover: indemnity, waiting periods, exclusions, cashless settlement and the benefit structure of accident policies.
Health insurance
It is a contract of indemnity: the insurer reimburses actual hospital expenses, subject to sum insured, sub-limits and co-payment. Contribution applies if more than one policy covers the same expenses, so you cannot profit. Subrogation lets the insurer recover from a negligent third party. Typical conditions include an initial waiting period, a pre-existing disease waiting period (often two to four years), disease-specific waiting periods and exclusions such as cosmetic treatment.
Personal accident
This is a benefit policy, not indemnity. It pays a fixed percentage of the sum insured for death, permanent total disablement, permanent partial disablement and temporary total disablement, as defined in the policy. It usually covers accidents only, not illness.
Worked example
A policy starts on 1 January. The insured is hospitalised in March for diabetes, a pre-existing condition. The claim is not payable because the pre-existing disease waiting period has not ended. If the same person fractures a leg in a road accident, the accident claim is assessed from day one, subject to the policy terms.
Traps
Assuming day-one cover for all illness; claiming profit from multiple policies; confusing accident benefit with health indemnity; ignoring sub-limits.