Tips to Buy Health Insurance in India (Apr 2020)
Why buy Health
Insurance?
·
Financial security against large unforeseen
medical expenses
·
Medical costs rising at ~17% per annum, way
higher than salary growth & economy
Types of Health
Insurance:
·
Classification
1:
o
Indemnity Plans –
Reimburse the hospital expenses. Eg – Mediclaim, family floater plans
o
Defined benefit Plans – Pay a
lump sum irrespective of the actual hospital expense. Generally pre-defined.
Eg- Critical illness Plan
·
Classification
2:
o
Individual – Best for extensive coverage for an
individual, Protects other members,
o
Family Floater – One sum
distributed amongst all insurers, One premium, One policy for all, More
affordable than sum of individual premiums, Preimum dependent on age of eldest
member, Tax benefits under 80D
o Critical Illness Plan - Covers life-threatening diseases such as cancer of
specified severity, kidney failure, etc. The cost of treatment for such
conditions is quite high, and it may require multiple hospital visits over a
long period. The sum insured amount is paid in a lump sum that can be used to
cover all the medical costs. The total number of illnesses that are
covered are specified at the time of policy purchase.
o
Hospital daily cash benefit plan - It
offers a lump sum amount for each day of your hospitalization. The sum assured
is fixed at the outset and would remain fixed irrespective of the expenses
incurred. So, if your plan offers Rs. 5000 per day of hospitalization,
you will get the amount for each day of your hospitalization even if your daily
hospital expense comes out to be Rs.1000 or Rs.1500.
o
Senior Citizens Health Insurance Plans - Designed
for 60+ years. Elderly people are more vulnerable to serious illnesses, and the
cost of treatment for such diseases is also expensive.
Key things to be
considered
·
Sum Insured: Enough coverage to ensure sum left
for the rest of the year & other policyholders (for family floater plan).
10lacs (for Metros & Tier 1) & 5lacs for (Rest) is a good sum. As a
rule of thumb, the sum assured under a Family Floater plan should not be less
than 9 months of family income.
·
Risk Factor: Higher risky customer would have
higher premium and could require larger sum insured; May use up the sum insured
for the entire family in family floater plan and hence should have an
additional individual policy
·
Sub-limits: It refers to capping the
re-imbursement limit under some cost heads. Eg : total room rent being capped
at 1% of the total sum insured.
·
Pre-existing ailments coverage: Time
frame post which pre-existing ailment would be covered in the policy. Most companies have 36-48 months post which
it will be covered. These should be declared during buying the policy. For a
specific set of ailments the waiting period is 12-24 months.
·
Check for Co-payment:
Co-payment is whether policyholders needs to pay a certain part of the claim. If
you are buying from an agent, please take it in writing – via repeated emails
asking him to reconfirm with a copy to the insurance helpdesk and an
acknowledgment of the same from the insurance helpdesk – that your policy does
not have a co-pay clause.
·
Check Room limit: Amount
the insurer will pay for hospital room in case of hospitalization. A policy with
no room rent capping should be preferred over ones with a room rent cap.
This is because a lower cap on room rent will depreciate the value of your
health insurance policy. That is not all - the other facilities like
Surgery Cost, Doctor Visit, Medical Test expenses are based on the Room Rent
and paid proportionately. Hospitals charges are different (for the same
services) depending on the room type (General, Shared, Private, Deluxe, Super
Deluxe etc.) you have chosen. Insurance companies therefore not only deduct the
additional room charges over and above your eligibility, but also
proportionately deduct all other hospital charges that are linked to the room
you have chosen. Room Rent limit can therefore significantly impair your
perceived health insurance coverage. You cannot depend on a Top-up for all that your Base Health
Insurance policy does not pay for. If you have Room rent capped base policy,
and your claim is lower than your deductible/threshold in the Top-up policy,
your Top up/Super Top up policy will not kick-in and you could be hit by a
large deduction in your claim.
·
Check No Claim Bonus: Benefits
received if no claims were made
·
Check Portability:
Portability means the right accorded to an individual health insurance policy
holder (including family cover) to transfer the credit gained by the insured
for pre-existing conditions and time bound exclusions if the policyholder
chooses to switch from one insurer to another insurer or from one plan to
another plan of the same insurer, provided the previous policy has been
maintained without any break.
·
Renewability Clause:
While purchasing your
health insurance look for lifelong renewability.
·
Survival Period: This term
is majorly used in critical insurance plans. Most of the times the policyholder
have to survive for at least 30 days after the diagnosis of the medical
condition in order to avail the claim benefits.
·
Pre-Existing Illnesses:
Pre-existing illnesses or diseases is the illness that you have before you have
purchased the insurance plan. Most of the insurance providers do not offer
coverage for pre-existing diseases before the completion of four years of the
policy. If you have continued your health insurance policy with the same
insurance provider for four contentious years, then the insurer may consider covering
your pre-existing illnesses.
·
Network Hospitals: All the
health insurance providers have tie-up with some hospitals; these hospitals are
termed as network hospitals of the insurer. Ensure that a sufficient number of
hospitals around your location are on your insurer’s network, before you invest
in their plan. This is important as you do not want to be rushed across the
city at time of an emergency.
·
Waiting Period: Every
health insurance policy has a waiting period. It is a time after which you can
avail the benefits of your health insurance plan. However, exceptions such as
emergency hospitalization due to an accident are covered even before the
waiting period is over. The tenure of waiting period may vary with the insurance
provider and the plan you take, but for general health insurance policies, it
is mostly 30 days.
·
Inclusions: All that is covered in your health
insurance policy is considered as the inclusion of your plan. The inclusions
are mentioned in the policy documents. At the very minimum base cover should
include: pre and post hospitalization expenses, day care treatments and
ambulance charges.
·
Exclusion: All that is not covered in your
health insurance plan is known as its exclusion. The exclusions are mentioned
in the policy documents. There are some exclusions that are common in most of
the health insurance plans, such as treatment of AIDS, dental treatment,
self-injury, etc. are a few standard exclusions.
·
Super Top Plan: Comes into
action when the basic plan is exhausted. On hospitalization, expenses up to
deductible amount should be either paid by you or by your basic insurance
company. Anything above this deductible amount is paid by super top plan.
·
Deductible amount: The
amount your basic plan is covering or amount you can afford to pay.
·
Expense caps: Ensure that
any expense caps in your insurance plan are sufficiently large. It is always
preferable to have a plan with no expense caps, as these may result in out of
pocket expenses. For example, if your policy caps ambulance charges at Rs. 750
and the cost of getting to the hospital from your residence turns out to be Rs.
2,000 then you will have to pay up the addition amount from your own pocket.
·
Cashless or Reimbursement: Health
insurances provide two modes for claim settlement: reimbursements of actuals
and cashless settlement. Cashless settlement is the better option as it avoids
any additional financial burden in the hour of need.
·
Claims Settlement ratio: The
trustworthiness of an insurer is measured by the number of claims that are
settled among the claims made. Obviously, you should choose an insurer with the
higher claims settlement ratio.
o
The agent or the helpdesk will tell you data
of unsettled claims per 100 policies (sold). Please don’t look at this data.
You want to know what percent of claims are settled/unsettled after the claims
are made, not on the total policies sold.
o
The agent will mix the data of group insurance
with individual insurance. Ask for individual insurance data. Group insurance
is normally paid off easily. But as a retail customer, the insurer will have a
different attitude while paying you back.
- Are day-care treatments covered: Due to medical advancements,
many illnesses are now treated without hospitalisation beyond 24 hrs.
Thus, it is important to know whether your policy covers these treatments
and also how many such treatments are covered.
Factors
influencing Premium
o
Age
o
Gender
o
Medical history
o
Sum Insured
Disclaimer: This
is for my personal research. Reader discretion is advised. (Updated 14/4/2020)
References:
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