Checklist for Buying a Health Insurance policy
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Checklist
for Buying a Health Insurance Policy
The rising medical costs in our
country have made buying health insurance all the more important. Covid has
made people more aware of the importance of having a health insurance
policy. However, in order for the policy, you buy to live up to your
expectations, it must be the result of thorough thought and research.
In this blog, we come up with a
10 point checklist to consider before you buy your health insurance policy.
Let’s get started.
1. Firstly, identify the
need for having a health insurance policy:
The first thing that you need
to analyze is your biggest need for getting a policy. There are a lot of health
insurance policies available with different features and specifications. Some
policies for children, young families, senior citizens, etc
Some individuals also buy health insurance to cover themselves for a serious pre-existing illness like
cancer.
The need for having health insurance may differ from person to person. Understand your personal requirement and once you are clear about this you can decide about the coverage that you need.
2. How much coverage?
A good practice is to have a
health insurance cover of at least six times your monthly salary. So, if your
salary is Rs 50,000, then your health cover should be of a minimum Rs 3 lakh.
Also, remember that a Rs 1 lakh
hospital bill won’t amount to the same after 10 years. So don’t make the
mistake of not accounting for inflation on the policy amount
3. Individual plan or family floater?
People often get confused if
they should opt for an individual plan or a family floater.
If you are single then you may
consider buying an individual health insurance plan. On the other hand, if you
have a family (spouse and children) you may opt for a Family floater plan. In a
family floater policy, one sum assured can protect each and every member of the
family. For example, if you have a family floater policy of 7 lakh sum assured
then any of your family members can get hospitalization and treatment benefit
up to an amount of 7 lakh.
If you have dependent parents,
opt for a separate senior citizen policy. Do not include them in your family
floater policy as it would increase your premium. A separate plan would also
give you additional tax benefits.
4. Check for the Cashless Hospitalization network
Avoid health insurance plans
that do not offer a cashless service.
Cashless service is one
wherein the amount of your medical treatment is directly settled by the
insurance company with the hospital. So, there is no money going out of your
pocket.
Check the policy document for
all hospitals which are part of the insurer's cashless network. Make sure that
hospitals in your vicinity are listed.
5. Be aware of room rent capping
Some insurance policies come
with a room rent limit. So, let’s say you buy a policy with a sum assured of Rs
5 Lakh, and room rent of 1%. This ideally means your room rent is locked in at
Rs 5000 and any amount above it will go out from your pocket.
The catch here is that all
other expenses such as the surgeon’s fee, medical tests, etc are linked to the
room rent cap. You will be compensated for these expenses only if the room rent
is below Rs 5,000. If it goes above Rs 5,000, your total claim would get
reduced in the same proportion at which you exceeded the room rent limit
So, opt for a policy that
doesn’t have restrictions on room rent capping.
6. Avoid policies with a Co-payment clause
When a policy comes with a
co-payment clause it essentially means the insurance company won’t pay up for
all your expenses. A 10-20% of it needs to come out from your pocket. Hence it
is called Co-payment. Insurance companies sell you this policy by offering a
discount on premiums. Getting a discount on the premium may sound attractive but it
doesn’t make sense to save a few thousand rupees if you land up paying lakhs in
hospitalization expenses.
Co-payment clause makes sense
only for senior citizens wherein you can actually save a lot of money.
7. Opt for policies with low waiting periods.
The waiting period is basically a
period that occurs during the initial years of the policy where the insurance
company makes no payment to you on certain pre-existing or critical illnesses.
Waiting periods can be as high as 4 years to 2 years as well.
Now, this is a very common
clause and the only thing you could possibly do is to choose a policy with the
lowest waiting period.
Some of the illnesses that have
a waiting period are Diabetes, Hypertension, Thyroid, Cataract, Osteoporosis,
Psychiatric illness, etc
8. Check for disease wise sub-limit
Disease-wise sub-limit is one of
the worst clauses to have in any health insurance policy. It basically means
that the maximum amount you can reclaim is limited by the type of diseases or
treatment you undergo and not the overall cover that the patient is led to
believe. For example, cheaper insurance may have a limit of Rs 2 lakhs on a
heart disease even though the total insurance is Rs 10 lakhs
Don’t fall prey to these practices. Make sure you always know there are no disease-wise sub-limits because you don’t know what happens when and it’s always good to be on the safer side.
9. Restoration benefit
Restoration benefits restore
your original medical cover if it gets fully exhausted. While some policies
offer unlimited restoration for any illness, others have some restrictions.
Let’s say If you have a health
plan of Rs 5 lakhs and you spend the entire 5 lakhs in hospitalization. Now you
suddenly got admitted after 3 months and the bill comes up to 3 lakhs. Your health plan will not pay for this.
However, if you have Restoration
Benefit the insurance company will automatically refill the coverage of Rs 5
Lakh for you to claim again in the same policy year.
Some policies will tell you that you can’t claim the restoration benefit if you have the same illness once again. Hence you need to read the fine print carefully.
10. No Claim Bonus
How happy would you be if the
insurance company told you that they will increase your cover if you don’t make
any claims?
No claim bonus is an insurer’s
way of rewarding you for not making any claim. Policies with No claim bonus
provide an additional cover of 5% of the sum assured in case there is no claim in
the current year. This increase in sum assured of 5% every year is restricted
to a maximum of 50% of the initial sum assured. If there is a claim in the
policy then this additional cover is decreased by 10% on the next renewal.
11. Check the coverage benefits
Other benefits apart from
hospitalization should also be covered. For example Pre and post-hospitalization, maternity coverage, daycare treatments, etc.
Some Additional points to check
• Check the claim settlement ratio and claim incurred claim
ratio of the company
• Don’t just simply buy a policy that provides your insurance
cover at a low premium. Understand what is covered and what is not covered.
Always read the fine print carefully.
• Finally, never depend on just the health insurance provided
by your company
Need help in selecting the
right Health Insurance for yourself and your family? Feel free to get in touch
with us.
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