12 Points to Remember Before Buying Health Insurance
Choosing the correct health insurance plan is an important decision for all of us. Not only is health a true wealth, it gives a sense of security and peace of mind for both you and your family. It always assures us of the best chance to get well, just in case something goes wrong. Here are 12 points to consider before buying health insurance.
Most people buy health insurance with the only objective to save tax. They, sadly, fail to understand the importance behind buying a comprehensive health insurance plan. In India, over 80% of all financial crises emerge from medical emergencies that can severely dent a person’s monetary health. A medical emergency not only requires huge funds for treatment, but it may also affect a person’s ability to earn his/her livelihood. So it’s often double damaging. Imagine losing a close family member because you couldn’t afford the best treatment. Health insurance, thus, has become a necessity today.
With healthcare costs increasing every day, getting health insurance early in life has become important. As you age, you may get issues like high blood pressure, or diabetes that will reduce your chances of getting an insurance cover. The cost would also go up. It’s better to pay a small price each year and get peace of mind.
But selecting a health insurance policy is never easy. Things have somewhat improved after the Insurance Regulatory and Development Authority (IRDA) issued guidelines to bring uniformity in the basic healthcare policies. Several companies, as a result, have reintroduced their basic schemes. The new products have a higher age of entry of up to 65 years, a bigger list of exclusions, and lifelong renewability. It’s now easy to select a simple healthcare policy. But at the same time, insurers have come up with more complex products.
So how do you know which healthcare policy will serve you best? Consider the following points while buying one:
Buy health insurance early
As already said, the first thing on your list of tasks after landing a job would be to buy a health insurance, not a car. The earlier you start, the better for you because as you grow older you are likely to become less insurable. Some of the benefits that I see while buying a health insurance at an early age are as follows:
• No medical checkups.
• Lower chances of rejection for buying a health insurance plan.
• Coverage for all diseases.
• Hassle-free policy renewal.
In simple terms, sum assured is the maximum amount you get as coverage in a policy year. It’s the basis of all your claims. Before you select your sum assured, consider the rising costs of hospitalisation and treatment. It’s better to go for a higher cover, but at the same time it shouldn’t be so high that you have to go out of your way to pay the premium. For instance, an insurer assumes that hospital bed cost for a day would be 1% of the sum assured. So if the sum assured is Rs. 1 lakh, hospitalisation cost would be Rs. 1,000 per day. Now if you are hospitalised for five days and the hospital charges more than Rs. 1,000 per day, you have to pay the difference amount.
Co-pay and sub-limits
Insurance companies have introduced co-pay and sub-limits to prevent hospitals billing them unreasonable room rents. In co-pay policies, you have to pay part of the expenses, regardless of the sum insured. For instance, if there’s 10% co-pay in a policy, the insurer will pay 90% of the expenses while you have to bear the balance. Besides, many treatments are capped by insurers to reduce hospital claims. The system is called sub-limits. Choose a policy with fewer sub-limits. Many general insurance companies have no capping on the room rent. Ideally, select a plan which has no co-payment or sub-limits.
Even if your employer provides health insurance under a group insurance plan, you should still have your own plan that covers the full family. If your employee gives the option to transfer the policy when you leave your job, you shouldn’t ideally consider having a separate policy. Comparing the various policies across companies is also important.
Most comprehensive healthcare policies cover critical illness. It’s not required to go for another policy. It’s better to opt for a comprehensive plan and then top up with accidental insurance which doesn’t cost much. These two would be enough for most of the issues. If your family has a history of a certain disease, like blood sugar or thyroid, you should ideally go for a separate critical illness cover. But there’s no need for families that have not suffered from a genetically passed disease, to buy a critical illness healthcare plan.
It’s always better to invest in a single plan which takes care of your family members including you, such as the Family Floater instead of taking the separate plans for each of the family member as the premium for multiple policies will be higher than the premium for a single policy. Also, In Family Floater the full coverage, if required, can be utilised by a single member of the family.
For instance: There are four members in your family and you buy a non-floater policy of Rs.1 lakh each, you have to pay four different premiums for all the four policies and the sum of these premiums will be higher than the premium of a single Family Floater plan. Also, the claim amount available will be Rs. 1 lakh only for each of those 4 individual policies. On the other hand, if you buy a single Family Floater plan of Rs. 4 lakh, any member can claim whatever amount that went for hospitalisation, within the Rs. 4 lakh limit.
This feature will allow you to reinstate the basic sum assured, in case you have already exhausted the sum assured and the multiplier benefit within the policy year. But market experts say that the benefit is unavailable on the same illness where the limit has been already exhausted.
However, restoration is beneficial in case of Family Floater plan where the entire sum assured gets exhausted in the ailment of one of the family member and the rest of the family members remain uncovered for the remaining part of the year. In such cases, rest of the family members may get covered for some other ailments than the one for which the treatment has already been done.
No claims bonus
Insurance companies generally provide a no claims bonus to a customer if there are no claims against the policy in the preceding year. Before buying a plan, check out the quantum of no claims bonus, which often ranges from 5% to as high as 100% of the basic Sum Insured. A high no claims bonus can cover you against medical inflation and you won’t have to increase your coverage every year.
Pre-existing, waiting period and exclusions
Pre-existing diseases are the one you have at the time of buying the policy and most insurers have a waiting period for such ailments. If you have one, your insurance company may not give you a cover against it while subscribing to the healthcare policy. The pre-existing disease, depending upon the insurer, usually gets covered after at least a couple of years. Many insurers take four years in this regard. It’s also important to check the list of exclusions. For instance, if you have diabetes at the time of taking the policy, kidney ailments may be excluded from the list if it’s caused due to diabetes. Don’t hide any pre-existing health issue when you buy a policy. It may greatly reduce your claims in case of hospitalisation.
Pre- Existing Diseases
Many insurance companies provide a free health check-up to the subscriber. But it always comes at a price which is embedded in the premium. You may go for it only if you are keen to avail the facility every year. It’s also important to check whether a healthcare policy, which is renewed every year, covers you for the entire life because life expectancy is increasing, courtesy; improvement in medical technology. While the majority of the popular policies give whole life coverage, there are a few that covers only till 75-80 years.
Maternity and day care
Many recent policies now extend cover against day-care procedures in hospitals that don’t require an overnight stay. Before buying such a policy, check out the number of procedures covered in the plan that doesn’t require overnight hospitalisation. Besides, if you are planning a baby, ensure that the policy covers maternity expenses. Most insurance companies don’t consider maternity as a medical emergency and if you have no plans for a baby, you shouldn’t look for it because the price is embedded in the premium.
Top up plans
Rising medical costs call for large covers. However, not all can afford high premiums. This is where a top up plan comes useful. They reduce the cost of deductibles i.e. the amount you have to pay for treatment before your insurer pays. In a standard plan, your insurer pays up to the sum assured. But top up plans don’t pay until your bill breaches a particular limit.
For instance, if your hospital bill is Rs. 7 lakh with a Rs. 3 lakh deductible, you need to pay the latter, while the insurance company would pay the balance. But you can use your group/individual policy for paying the deductible amount. This could be helpful because the combination of a basic and a top-up plan is far cheaper compared to a single indemnity cover. For a 25-year old male, a regular policy with Rs. 5 lakh cover, would cost around Rs. 6,500. If he wants to top up the policy with extra Rs. 15 lakh coverage, the additional premium may be just Rs. 5,000, much cheaper than a separate policy of a similar amount.