Understanding the Colour Coding System in Health Insurance Plans

Let’s picture that you’ve just purchased a health insurance policy that is supposed to provide you with a safety net in the event of a medical emergency. You open your policy documents and find yourself faced with a confusing maze of terms and conditions that would confuse even the most savvy readers.

Well, in such times health insurance colour code, similar to the familiar colour of traffic signals, assigns a specific colour to each online health insurance policy, representing its level of complexity. It's a thoughtful attempt to make the fine print less fine

Here’s what more you need to know about medical policy

 What is the Color Code?

Health insurance plans will be colour-coded in the same way that traffic signals are - red, orange, and green. While green means that the policy is simple to understand, orange implies moderate complexity. The colour red, on the other hand, indicates that the policy is complicated. The colours are assigned a score from 0 to 6.

 How Do Insurers Calculate the Score?  

In order to calculate the score, insurers consider seven factors:-

  • A variety of options covered
  • Waiting period
  • Copay percentage
  • The quality of treatment for which sub-limits are relevant
  • The terms and conditions simplicity
  • Deductibles
  • Number of permanent exclusion

The score is calculated using the seven parameters, each with an equal weightage of 14.2

 Understanding the Scores

 What Is The Score For Optional Cover And Copay?

One optional cover would receive a score of 0.6. Thus, a health insurance policy with 6 optional covers would receive a score of 3.6 for this parameter. For each 1% in co-payment over 5%, the policyholder will receive a score of 0.3 for copay, which is the portion of the payment that he/she must pay from their pocket.

 What  is the Score for the Waiting Period? 

Each waiting period of one month would receive 0.15% of the total. accordingly, the parameter would receive a score of 3.6  if the maximum waiting period was set at 24 months. A waiting period is the amount of time during which pre-existing conditions claims are not accepted by the insurer.

 What is the Sublimit Score? 

When it comes to sublimit, a score of 0.6 is assigned to each disease that falls under the category. So if a health insurance policy covers 8 diseases under the sub limit, the score assigned to this parameter is 4.8.

 What are the Scores for Deductibles and Permanent Exclusions? 

The score is 0.3 for each 1% of the policy’s deductible. A 4% deductible health insurance policy will receive a score of 1.2. The amount a policyholder must pay before the insurance company begins to make payments is known as the “deductible”.

Whereas, when it comes to permanent exclusions, one is given a score of 0.6. Therefore, the policy would receive a score of 3.6 for this parameter if it has 6 permanent exclusions. The total of the weighted average scores for each of the seven parameters determines a policy’s final score.

 Benefits of Color Coding System

The colour coding system offers numerous benefits including:

  • Simplified Decision-Making Process- Quickly identify the category that aligns with your needs.
  • Customised Coverage- Find plans that cater to specific requirements which include from basics to premium coverage.
  • Enhanced Transparency- The system fosters transparency, making it easier for policyholders to understand plan features.

 What is the Colour Coding System All About?

 Maternity Coverage

It is essential for expecting families to understand how maternity insurance fits into the various colour-coded categories. Every colour indicates a distinct degree of coverage, guaranteeing that maternity benefits correspond with the individual requirements of policyholders.

 Health And Medical Insurance Policy 

Both medical and general health insurance policies are covered by the colour coding scheme. Every category has special features to meet various medical requirements. For those looking for a particular kind of coverage, it's essential that they understand these differences

 Health Insurance Plans and Online Convenience 

The convenience of obtaining health insurance online is complemented by health insurance websites. The visual representation simplifies the online selection process, allowing individuals to navigate through various plans with ease.


Before purchasing a health insurance policy, it is critical to understand the policy in order to determine whether it will meet your specific needs. So, in order to make purchasing and understanding insurance terms easier, the IRDAI implemented colour coding for individual health insurance plans based on their level of complexity.

The health insurance colour code will assist customers in making the best decision. The colour coding only applies to individual health insurance policies, not group policies.

 Frequently Asked Question (FAQ)

  1. What is the health colour code?

In the health sector, colour coding refers to the organised process of demonstrating information with different colours to aid in categorised and identification.

  1. What is the purpose of the colour coding system?

The goal of the healthcare insurance colour coding system is to make it easier to comprehend the various health insurance plans. Policies are categorised according to colours, which makes it simpler for policyholders to recognise, evaluate, and understand the characteristics of each plan.

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