If you’re a regular reader of our blog, you must already know the importance of a good health insurance. Usually most people stop with employer provided health insurance but that should not be the case.
The cost of treatment has risen at a double-digit pace of growth, outpacing average inflation in both rural and urban India between 2003 to 2013, according to the results of a cross-national survey on health conducted by the National Sample Survey Office in the first half of 2014.
Taking care of your health is probably the best health insurance that you have. But the question is why do you need a health insurance policy if you eat right, exercise, don’t smoke and are fit and healthy?
Let’s face it, life is unpredictable! Getting yourself health insured will protect you from financial shocks in the event of a grave medical emergency.
Buying Best Health Insurance Plan
Health insurance policies are complex products that have evolved over time to cater to the specific needs of consumers. The IRDA issued a list of rules in 2013 for the standardization of various policies available in the market.
The new Policies issued after the standardization of rules have a higher age entry of 65 years. Also, according to the new rules, the insurer is bound to offer settlement within 30 days of the claim request.
There are as many as 25 General Insurance Companies marketing more than 40 health insurance Products. Here is a quick guide to help you choose the most suitable or one of best health insurance policy.
1 ) Don’t Wait to Get Sick To Buy a Policy – Have you been waiting for the perfect health insurance product to get yourself health insured? Know that there are no perfect products.
There are basically two types of policies: indemnity plan which cover hospitalization costs and the other is benefit policy which offers a lump-sum amount to the insured upon diagnosis of a disease.
Every policy might differ in some way or the other, but these are two broad frameworks within which they operate.
[Source: The Economic Times]
Know your needs and decide upon the policy accordingly. Most mediclaim or health insurance policies in India primarily cover hospitalization costs. Other features that may or may not be included are out-patient costs which include medicine costs, doctor visits and more.
These are expenditures that you will able to incur yourself, if you plan your finances accordingly. What might pose a serious threat to your finances is huge hospitalization bills and treatment cost of critical illness such as a stroke or diseases like cancer.
Don’t let go of a good health insurance policy just because it does not meet 2 of the 10 criteria that you have set. Decide on a policy and get it as soon as possible. Delaying to get yourself health insured is like waiting to buy a policy till you get sick!
2) Individual Policy or Family Cover – If you are the bread winner of the family then you must think of getting your entire family’s health insured.
Getting your parents insured when they are relatively young is essential as risk of diseases shoot up with age and health insurance policies for senior citizens offer limited benefits.
After you have decided upon getting your family insured, what you decide next is whether you want to take individual policies or a family floater.
A family floater is a policy where all the members of the family are covered under the same policy. It is considered to be the preferred option because they offer a higher cover at a lower cost.
Considering that not all family members would need hospitalization around the same time, it is a great deal. Family floaters would generally come off cheaper than all the individual policies combined.
[Source: Article, The Economic Times, June 2012]
If there is a member in your family who has a pre-existing illness then it is wise to take an individual policy for them as they would require claims more often than others.
This might therefore exhaust floater cover not leaving much for others when they need it.
3) Decide the Cover Amount – While buying a policy, the most crucial thing is deciding the cover. One of the biggest mistake that you might make is to take a policy on the basis of current healthcare costs.
Remember a health insurance policy covers you for lifetime, therefore you must take an amount that sufficiently covers you for a minimum of 25 years .
You must also take into account your lifestyle and choose the best health insurance policy that suits it. If you are leading a healthy lifestyle, you might be at a lesser risk to fall prey to diseases but if not then you must prepare for the unexpected.
With increasing prevalence of lifestyle diseases in India, one out of four Indians is at risk of dying from non-communicable diseases like diabetes, cardio-vascular ailments or cancer before the age of 70, according to estimates of various global and domestic organizations, says an article published in The Times of India in August 2015.
[Source: Livemint, Article. Sep 16, 2015]
You must also take into account the inflation rate while deciding your cover. Estimates for the increase in healthcare costs in India range from 15% to over 20% per annum;
According to an article published in Livemint in September 2015. A hospital room that costs you Rs. 5000 today might double up in just 5 years.
If you take a policy taking into account the healthcare services cost of toady you might end up paying out of your own pocket despite paying being insured; which will only leave you frustrated.
4) Hospital Room Eligibility/ Room Rent Capping– Room rent capping refers to the provision which makes you eligible to claim expenses of a room rent only if it falls under this capping. The room rent capping may be defined as 1% of the sum insured or Rs. 5000 (whichever is lower).
The fine print that is tucked away in the room rent capping clause is that you are eligible for all other reimbursement only if you take the room that falls under the cap.
The following table explains what happens when you exceed the room rent cap of Rs. 5000/- for a policy of Rs. 5,00000/-
|Under Room Rent Cap||Exceeding The Room rent Cap|
|Policy||Rs. 5,00,000/-||Rs. 5,00,000/-|
|Room Rent Cap||Rs 5000/- (per day)||Rs. 5000/- (per day)|
|Room Rent||Rs 5000/- (per days) X 2 days = 10,000||Rs. 7500/- (per day) X 2 days = Rs. 15,000
|Room Rent Paid By Insurer||Rs. 10,000/- (100% of the room rent)||Rs. 10,000/- (66.66% of the room rent)|
|Surgery Costs||Rs. 3,75,000/-||Rs. 3,75,000/-|
|Total Cost||Rs. 3,85,000/-||Rs.3,90,000/-|
|Amount Paid by the Insurer||Rs. 3,85,000/-||Rs. 33,0000/- (66.66% of Rs. 500000/-, the same percentage that the room rent cap is of the total room rent)|
|Amount Paid by You/Loss||0||Rs. 60,000/-|
Always compare the room rent capping and opt for a high room rent cap as the prices would increase due to inflation and also because you might not be left with any option but to avail a high-priced room.
Look for private room eligibility policies rather than policies with room rent capping.
5) Be Aware of the Sub-limit/Co-pay – Co-pay refers to a scheme where you have to pay a certain percentage of the treatment costs while sub-limit refers to the maximum cap that the insurance company reimburses such as the case in room rent cap. A policy may have a sub-limit for certain surgery like 50 % or Rs. 1.5 lakhs for cardiac surgery.
[Source: The Economic Times]
Make yourself aware of all such costs and only buy a policy if you are assured that it is worthwhile. Also lookout for words such as “sub-limit”, “deductible” and “co-pay” and be aware about their implications on the sum assured.
6) Know the Hospital “network” – Hospital network refers to the list of health care providers that have an agreement with the insurance company to provide “cashless treatments” to policy holders.
The insurance company in such a case will pay the hospital directly. Look for policies that have hospitals from your area or any other credible hospital on the network list, whose services you may avail in future.
7) Treatments Abroad – Check if the policy offers cover for treatments abroad. Cover for worldwide treatment is generally offered for larger covers.
Some Policies cover treatment costs at facilities abroad, only for selective diseases. For instance, Religare Health’s Care Policy covers five illnesses for which you can seek treatment in a foreign land.
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8) Know the Policy Wordings – In 2012-13, delay in settlement, claim rejection and partial claim settlement made up nearly 38 per cent of complaints received by the insurance regulator.
The reasons could vary from non-disclosure of pre-existing illnesses by the policyholder and different interpretation of policy wordings, to willful rejection by the insurer or the third party administrator, says an article published by The Economic Times in January, 2014.
Being unaware of the policy wordings might land you in trouble during claims settlement. Go through the entire policy document yourself. Also ensure that you go through the Customer Information Sheet which contains all the key conditions that you must be aware of.
The Policy wordings that not only states the terms and conditions but also includes what is covered and what is not covered in the policy.
A policy may have a list of permanent exclusions (list of diseases not covered under the policy for whole life), a waiting period (it is time when the policy does not pay for any treatment other than injury), 2-4 years waiting period (It includes a list of illness that are not covered in the first 2-4 years) and pre-existing illnesses (pre-existing illnesses are not covered for the first few years).
The span of years when a no. of illnesses are not covered under a policy varies from company to company. You can view the list of exclusions of the policy by looking up the policy terms online on the insurance company’s website.
Below is the snapshot of inclusions and exclusion of health insurance policy from Bharti Axa found on their website.
9) Super Top-up or Top-up Policy – A super top-up plan is basically where you have larger cover that helps to combat the effect of inflation. Suppose you have a base policy of Rs. 5 lakhs and you buy the super top up policy of Rs. 15 lakhs.
Your super top-up policy will pay your bills when you have exhausted the threshold limits of your base plan. Also, consider taking a super top-up policy rather than a top-up policy.
The difference lies in case of two claims, wherein only one claim is settled by a base+top-up policy but a super top-up policy pays in case of more than one claims in a year.
A super top-up policy+base policy also accounts for lesser premium than a large base policy of the same amount. Ascertain while buying a super top-up policy that it has no room rent limits and also that your base policy and super top-up policy have similarly timed renewal dates.
10) Check For No-Claims Discount/Bonus – Getting yourself health insured does not mean that you are going to fall ill the next minute or the next month.
Look for a policy that offers a no claims discount/bonus and enjoy incentives for being healthy. It refers to a feature where you can get a discount on the premium if you haven’t made any claims till the renewal of the policy is due.
The bonus may also be added to the sum assured of an indemnity plan. It is calculated at a certain percentage of the sum assured in such a case.
11) Check for Restore Feature – The restore feature enables you to make a second claim in the same year even when you have exhausted your entire sum assured. However, this feature works on only one condition, that the second claim should be made for a different illness than the first one.
12) Compare Policies – It is very essential to compare different policies while buying health insurance. Although premium is an important criteria in relation to your income and financial condition, that should be last thing you should compare policies on.
Compare policies on the overall insurance contract which may include features, benefits, terms and conditions and other factors such as network, post hospitalization expenses, loading, no claims discount, no sub-limit, no room rent limit and more.
Also you can look if a policy offers cover for alternative treatment like Homeopathy, Ayurveda and more. You can do the comparison on various websites like Coverfox.com, QuickBima.com that have such a provision.
13) Read customer reviews – Once you have decided upon buying a health insurance policy, make sure to look into the claims settlement history and credibility of the company. You might even Google customer reviews for a certain policy. This is a very valid step in deciding about your health insurance provider and their customer service.
Also, take help from an experienced and unbiased policy advisor who can understand your needs and your financial condition, and advise you appropriately.
Lastly, if you are not happy with benefits offered by your existing health insurance policy then you can also port your policy. You can switch your policy only a minimum of 45 days before the next pending renewal.
However, this might not be possible if you have already made claims. Try and upgrade your policy to enhance your cover, if that is the case.
Was this guide on buying the best health insurance plan in India useful ? What points should one consider when buying health insurance based on your experience. Share them for the benefit of other readers.