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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