Health Insurance Guide
Understanding insurance can be challenging, especially for those unfamiliar with its details. Some terms in insurance may seem confusing or unheard of, leading people to avoid buying policies even after reading them carefully.
Let's simplify things for you. We will explain complicated terms and concepts in a straightforward way to help you understand the basics of insurance better and its impact on your life.
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Let's start by discussing common features of health insurance.
Individual or Family-Floater – Make a decision
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Simi, who works in a private company, has been searching for a health policy. She got quotes from different insurers but is unsure about selecting between an individual plan or a family-floater plan.
Initially, she planned to get an individual health plan for herself, which would cover her health expenses. However, she realized she also needs coverage for her aging parents. This led to further confusion on whether to opt for separate plans for herself and her parents or a family health insurance policy.
To simplify her decision, Simi compared individual and family health insurance plans.
Consideration Points |
Individual Health Insurance Plans |
Family-Floater Health Insurance |
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Description |
These plans protect an individual against numerous expenses incurred towards his/her overall health and wellbeing. Here, the coverage is offered as per the sum insured and the premium paid by the policyholder.
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Family-floater health plans allow coverage to all members of a family under one policy. They are available on a family floater or individual sum insured basis.
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Who all are covered? |
Only the individual who is insured under the plan.
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All family members who are insured under the plan.
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Expenses |
The costs may be higher as every person has his/her own sum insured.
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It may be more cost-effective as all members of the family get protection under one plan and one premium.
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Concern |
Premium increases with age.
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The sum insured may not be enough for all family members.
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Preference |
Suits bigger families with senior citizens.
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Suits well for nuclear families.
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Recommendations |
Buy relevant add-ons to have exclusive coverage.
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Opt for an increased sum insured to have sufficient coverage for all family members.
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Coverage amount (sum insured)
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Once you pick the health insurance plan that you seek to buy, the next important feature to choose is the Sum Insured (SI) or the coverage amount of your policy. Here, again the great confusion resumes. How to choose the right coverage amount? How much health insurance do you need? All these and more questions will crop up once you initiate to buy a health insurance plan.
In the above case, the comparison of plans helped Simi to make the right decision on buying the right policy. However, now she is perplexed as to how much sum insured or coverage amount does she require to protect her health as well as the health of her parents. Simi knows that the sum insured depends on various things including the type of policy.
Like Simi, if you too are planning to buy a health policy and are uncertain about the sum insured, you must note that in individual plans sum insured simply cater to the needs of the policyholder. Whereas, if it is for a family-floater policy which also includes senior citizens/parents, spouse, kids etc., the SI is shared among all the family members. Thus, you would require an enhanced coverage amount if you are availing a family-floater policy so that all the members of the family are well protected.
So, it is important to include realistic coverage amounts for health insurance. As such, the medical or healthcare costs are soaring high with every passing day. Thus, an amount that might appear adequate now may not be so a few years down the line. So, there is no ideal coverage amount for a health plan and it depends on varied factors. But the market rule states that health insurance coverage should be 2 times your annual income.
Remember, your health coverage amount depends on factors that affect you and your family members, like the type of plan, age of the insured individuals, health condition of the insured people etc. So, consider every aspect before choosing the amount.
Waiting period for pre-existing conditions
The waiting period in health insurance can be daunting. After choosing a policy, you face a series of questions about your medical history and may need to undergo medical tests. Based on these, the insurer determines coverage for new conditions, while pre-existing conditions often come with a waiting period of 2 to 4 years before you can claim benefits. This waiting period can cause problems, as seen in Mr. Surinder Sharma's case, who had disclosed his high blood pressure condition to the insurer, resulting in a 2-year waiting period on his policy. Unfortunately, he underwent heart surgery the following year but couldn't use his insurance due to the waiting period. To minimize this, look for policies with shorter waiting periods.
Room rent restrictions
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Understanding "Room Rent Restriction" may not be obvious at first. Jaspal, a designer at a private university, recently got health insurance with a 1% room rent limit on his INR 5 lakh plan, which translates to INR 5000 per day. He didn't realize this limit's impact until he needed hospitalization and found that he couldn't stay in his preferred room due to the cap. This meant he had to pay extra for the room as well as cover other expenses like surgeon fees separately. It's crucial to know about room rent limits in health insurance and avoid policies with such restrictions or stay within the limit to avoid additional costs.
Deductables/Co-Pay
Sunil, a cosmetics trader, is choosing a health plan. He found one offering INR 5 lakhs coverage for INR 6700, with an additional INR 1700 discount if he agrees to a 20% co-pay. Since Sunil is well aware of what co-pay means, he realized that he might have to pay more from his pocket during hospitalization in future. After calculating potential costs, he decided against the co-pay discount since it wasn’t mandatory to avoid unexpected expenses if he falls ill.
Pre & Post-Hospitalization
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Simi was confused between choosing individual or family health insurance, and finally opted for a plan that suited her needs. However, she overlooked discussing pre and post-hospitalization charges. Later, she needed to undergo some complex tests for a long-standing medical issue. Thankfully, her policy covered these charges, which she discovered after checking with the insurer. This coverage saved her from paying thousands of rupees out of her pocket. It's wise to consider pre and post-hospitalization coverage when buying a policy to avoid unexpected expenses.
Restoration
When Mr. Jaspret Singh purchased his health insurance, he included his spouse in a combined plan. Last year, he underwent a major surgery costing over INR 4.5 lakhs, covered by his insurance. However, he was worried about future medical emergencies for his spouse as their INR 5 lakh policy was nearly used up. His friend suggested adding a restoration benefit to the policy, which restores the sum insured after a claim is made. It's important to check policy details for how to include this benefit.
Day care treatments
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Kishore, a newcomer to health insurance, didn't pay much attention to the term "Exclusion of Day Care Treatment" in his policy. However, when he had a sudden appendicitis surgery costing over INR 60,000, he realized the importance of having day care coverage. Since his policy didn't cover day care, his claim for the short hospital stay was denied. It's wise to choose health plans that include day care treatment coverage and check the list of covered treatments with your insurer before buying the policy.
Domiciliary Expenses
The COVID-19 pandemic highlighted the value of domiciliary treatment. With the unavailability of beds in both public and private hospitals, several patients turned to home care. Even outside of emergencies, domiciliary care is beneficial. To avoid unexpected costs, ensure your health plan includes domiciliary treatment coverage.
No claim bonus
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Insurance companies offer no-claim bonuses to encourage policyholders to stay healthy and avoid making claims during their policy period. This can lead to a 50% reduction in premiums or a 50% increase in the sum insured, effectively doubling your coverage. For example, if you have INR 5 lakh sum insured, it could become over INR 10 lakhs by not claiming for 2-3 years. However, making a claim will reset the sum insured back to its original value. No Claim Bonus is a beneficial feature if your insurer offers a significant discount.
Free health checkups
Free health check-ups under health insurance plans are valuable incentives that encourage people to prioritize their health. Sunaina, a health-conscious woman in her 30s, regularly underwent health check-ups. During one check-up, her doctor detected a potential issue and recommended tests, leading to early treatment and prevention of a serious illness. This experience highlighted the importance of regular check-ups and the benefits of insurance-covered health screenings in maintaining good health.
Alternative treatments
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Many people overlook the inclusion of alternative treatment in their health insurance because they think they won't need it. Mr. Hara Nath initially felt the same but added the clause on a friend's advice. When he faced health issues last year, traditional treatments didn't help much. He then opted for rejuvenation therapy at a certified Ayush clinic, which improved his condition but costed INR 30,000. Luckily, his insurance covered the cost, highlighting the value of including Ayush treatments in insurance plans, provided they are from government certified facilities.
Maternity
Planning for a family includes considering maternity benefits in your health insurance. However, it's important to plan ahead to ensure the waiting period and other policy features align with your family planning timeline.
Some insurers don't offer maternity cover due to high costs, while others may charge a high premium or only cover part of the expenses. Manu, an IT professional planning to start a family, faced challenges finding affordable maternity coverage. It's crucial to explore multiple quotes and policy options to find a plan with maternity benefits at a reasonable premium. Avoid paying excessively high premiums by choosing a plan that fits your budget while still offering maternity benefits.
Doctor Consultations
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Paying consultation fees each time you see your doctor is common, which ranges from INR 1000 to INR 15000. To save money, you might want OPD benefits in your health insurance, but not all insurers offer this coverage. Look for a plan with this option, but ensure the premium isn't too high compared to what you would otherwise spend on consultations.
Shalini considered adding OPD benefits to her insurance plan; however, she found it more expensive than paying directly for consultations, so she skipped it. If you want OPD benefits, find a budget-friendly plan that won't impact your finances.
Conclusion
Buying health insurance means paying attention to small details. If you are getting a plan soon, think about the following aspects:
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