# What Is Health Insurance? A Plain-English Guide > What health insurance pays for in India, how a claim works, and the five terms in every policy wording that decide how much you get back. - **Published**: 2026-10-18 - **Modified**: 2026-10-18 - **Category**: health-insurance - **URL**: https://www.tldr.money/articles/health-insurance/what-is-health-insurance --- New to health insurance? This page covers the basics in plain English. When you are ready to shortlist, the [health insurance in India](/health-insurance) guide and the [buying checklist](/articles/health-insurance/health-insurance-checklist) take it from there. ## What it is A health insurance policy is a one-year (or multi-year) contract. You pay a premium, and the insurer pays for covered medical treatment up to a yearly limit called the **sum insured**. If you have a family floater, the limit is shared by everyone on the policy. See [family floater vs individual policy](/articles/health-insurance/family-floater-vs-individual-policy-india). ## What it usually pays for Policy wordings follow IRDAI's standard definitions, so the core cover looks similar across plans: - **In-patient hospitalisation.** The standard definition is admission for at least 24 consecutive in-patient care hours (the ICICI Lombard Elevate wording, for example, uses exactly this). - **Day care treatment.** Procedures that once needed a 24-hour stay but now take less, such as many eye and cancer treatments. - **Pre- and post-hospitalisation.** Tests, medicines and consultations before admission and after discharge. The windows vary: 60 days before and 180 days after in HDFC ERGO Optima Secure, Care Supreme and Niva Bupa ReAssure 3.0, and 60 and 90 days in Star Comprehensive. - **AYUSH in-patient treatment.** Ayurveda, Unani, Siddha and Homeopathy at a qualifying hospital. See our [AYUSH cover guide](/articles/health-insurance/ayush-cover-health-insurance). Out-patient visits and pharmacy bills are usually **not** covered unless the plan includes OPD cover. Our [OPD cover guide](/articles/health-insurance/opd-cover-health-insurance) explains the add-ons. ## The five terms that decide your payout 1. **Room rent.** Some plans pay any room or "at actuals", others cap it. HDFC ERGO Optima Secure pays room and ICU at actuals. Star Senior Citizens Red Carpet caps room rent at 1% of sum insured a day for covers up to Rs 5 lakh. A cap also shrinks related bills through [proportionate deduction](/articles/health-insurance/room-rent-capping-proportionate-deduction). 2. **Co-payment.** A share of every claim you pay yourself: 30% on all claims in Red Carpet, and a 50% default in Niva Bupa Senior First. See [co-pay vs deductible](/articles/health-insurance/co-pay-vs-deductible). 3. **Waiting periods.** Usually 30 days at the start for illness, 24 months for listed illnesses, and up to 36 months for pre-existing diseases. Read the [waiting periods guide](/articles/health-insurance/health-insurance-waiting-periods). 4. **Restoration.** Refills your cover after a big claim. See the restoration benefit guide. 5. **Bonus.** Cover that grows each year. See NCB vs cumulative bonus. ## How a claim works You can go **cashless** at a network hospital, where the insurer pays the hospital directly, or pay first and get **reimbursed**. Under IRDAI's May 2024 Master Circular, insurers must decide a cashless request within one hour and approve final discharge within three hours of the hospital's request. Our cashless vs reimbursement guide has the details. ## How to read a plan Start with the policy wording, not the brochure, and note its UIN. Every plan page on tldr.money lists the UIN and links the document we read. To see how insurers compare on paying claims, use our claim settlement ratio table. ## Sources - IRDAI, Master Circular on Health Insurance Business (IRDAI/HLT/CIR/PRO/84/5/2024), 29 May 2024: https://irdai.gov.in/en/document-detail?documentId=4942918 - [HDFC ERGO my: Optima Secure policy wording, UIN HDFHLIP25041V062425](https://www.hdfcergo.com/docs/default-source/downloads/policy-wordings/health/optima-secure-revision-pw.pdf) - [ICICI Lombard Elevate policy wordings, UIN ICIHLIP27057V062627](https://www.icicilombard.com/docs/default-source/default-document-library/elevate.pdf) - [Star Senior Citizens Red Carpet brochure, UIN SHAHLIP26041V082526](https://d28c6jni2fmamz.cloudfront.net/Brochure_Senior_Citizens_Red_Carpet_Health_Insurance_Policy_V_16_Web_f0f416af49.pdf) - [Niva Bupa Senior First policy wording, UIN NBHHLIP27053V022627](https://transactions.nivabupa.com/pages/doc/policy_wording/Senior-First-Policy-Wording.pdf) - [CBIC Notification No. 16/2025-Central Tax (Rate), 17 September 2025](https://www.caalley.com/gst25/16-2025-CTR-eng.pdf) --- - [More health-insurance articles](https://www.tldr.money/articles/category/health-insurance) - [All articles](https://www.tldr.money/articles)