How to select a Medical Insurance?
With the increasing healthcare costs, getting a health insurance is kind of a necessity now-a-days. Unfortunately, if anyone gets hospitalized for a week, you can easily expect the total treatment cost in lakhs. This cost can be financially devastating for anyone already suffering from the tension of the illness. Wouldn’t it be awesome if you don’t need to worry about medical costs and let someone else pay for your hospitalization costs?
If you have a car or a bike, you get motor insurance, right? If you own a house, you probably have a home insurance. Your health and life are much more important than your car or bike or home. Hence, you should think about getting a health insurance so that your health and life are not compromised because of shortage of funds in case of any emergency.
Benefits of having a health insurance:
It protects you from any unplanned hospitalization costs.
It enables you to get the expensive and advanced treatments done without worrying about the money.
You get tax deductions for buying medical insurance for yourself or your family.
Of course, all these benefits come with a fee known as ‘premium’ which you pay to the insurance provider, who takes the risk by covering you in case of any medical emergency. But, the premium paid is tiny when compared to the expenses that may occur in case you require hospitalization.
The question is how to select a health insurance plan? When I was trying to buy a health insurance for my parents I was overwhelmed and confused with the options available in the market. After a lot of research I finalized a health insurance for them. I am writing this article to explain the nuances and difficulties one can face while trying to choose a health insurance plan. Hope this helps 😀
The following factors need to be kept in mind while selecting a health insurance:
Coverage Amount: Decide an amount which you think will be sufficient to cover any medical emergency. Keeping in mind, location (medical costs in tier-1 cities are more than medical costs in tier-2 cities), age of the individual (more the age, more the changes of medical requirement and hence more the premium), lifetyle(smoker or non-smoker) are some of the factors.
Individual/Family floater: Many insurance companies provide family health cover plans, which covers many people from the same family (parents, spouse, kids and other dependents). In most of the cases, family floater is cheaper and provides more benefits over buying a separate health insurance for each individual in the family.
Pre-existing illness: If the person insured is suffering from some illness at the time of buying the policy and is on regular medication related to that illness, most of the health insurers won’t cover him from the first year. The cover for these pre-existing diseases starts from third or fourth year in most cases.
Claim Settlement Ratio: This number represents the average number of claims paid by the insurer every 100 claims done. The Insurance Regulatory and Development Authority (IRDAI) publishes the claim settlement ratio of all the registered in India every year. You can look into the Annual Report of IRDAI for this ratio. Higher the claim settlement ratio, better it is for the policy buyer. According to the 2018-19 Annual Report, Tata AIA Life Insurance had the best claim settlement ratio of 99.07% for the year. However, please note that numbers do mislead. This ratio is calculated not out of ALL the claims made, but out of all the ELIGIBLE claims made.
Co-payment: Many policies require you to pay some part of the medical expenses from your own pocket. It is better to choose a policy which does not require any co-payment so that apart from premium, the medical costs don’t become an extra burden on your pocket at the time of any emergency.
No claim Bonus: The medical costs are expected to grow year by year. If you don’t make any claim in a particular year, some insurance providers reward you by increasing your cover amount by a fixed percent for the next year. I don’t see this as a primary requirement, but it is definitely a good to have feature while selecting an insurance policy.
Renewal period: With growing age, the risk of medical requirement increases and therefore expenses increases. You don’t want a policy to cover you now and stop covering you when you reach the age of 60. It is better to opt for a policy which allows renewal for lifetime.
Sub limits: This covers for room rent, ambulance etc. Some policies have a sub-limit on some individual expenses. For example, there can be upper cap on the hospital room rent per day, room type (single/shared, ac/non-ac etc), ambulance charges (in case you are using one) etc. You should decide your requirement and buy a policy only if it fits those.
Network hospitals (for cashless claims): Do check the network hospitals before buying the policy of any insurance provider. In network hospitals, you don’t need to pay any money, it will be covered by your policy without any amount paid by you. In case of non-network hospitals, you have to pay the hospital costs and then get it reimbursed by the insurance provider.
Exclusions: These are the diseases or other factors which are not covered by some policies. You should look into the exclusions of any policy and then only decide whether to go for that policy or not. For example, with the rapidly rising cases of COVID-19, it is not a good idea to go for a health insurance policy which ‘excludes’ COVID-19.
Pre and post hospitalization expenses: You can have medical expenses before hospitalization or after discharge from the hospital too like medical tests, small surgery, follow up hospital visit/tests after discharge etc. These expenses can also add up to a significant amount. So always choose an insurer which covers such expenses under the policy.
Day Care treatments: Most of the health insurances require you to be hospitalized for a minimum of 24 hours to claim the expenses. However, with the advancement of medical science, some medical procedures like Cataract operation, Skin transplantation and restoration take just a few hours to complete. So, always prefer a health insurance which cover day care treatments.
Restoration benefit: Most of the health insurance policies now-a-days come up with restoration benefits. It means once you exhaust your cover, your total sum assured is reinstated back (once a year). However, there is a catch with this benefit. The reinstated amount cannot be used for the same person for the same illness for which he/she was hospitalized the first time. For example, if the policy cover is 5L and the insured person has already utilized the full cover (5L) for say illness X. After this, his cover amount is reinstated back and he can utilize the reinstated amount (5L) again in the same year if he is hospitalized again for any illness OTHER THAN X.
Top-up plans: There are some insurance plans which are not standalone plans. They are combined with a top-up policy. For example, 5L base cover + 15L Top-up. These plans are generally much cheaper than normal plan of the same value (a 5L+15L plan will be cheaper than a 20L plan). But with top-up plans, there is a catch. They come with a 'deductible' which is the minimum amount which is to paid using a base plan or by self (own money). If the expenses are lower than this deductible amount (individual expenses, not combined), the top-up can't be used. This can be better understood by the following example: Let us suppose the plan is 5L+15L (base + top-up with a deductible of 5L). If the hospitalization cost is Rs 8L, then 5L can be paid using the base cover and 3L can be paid using the top-up cover. But, if the person insured gets admitted twice a year with hospitalization costs 4L and 3L respectively, he won't be able to use the top-up cover amount even with 95L top-up cover remaining. Does this mean you should not buy such covers? Not necessarily!!! There are special type of top-up plans (super top-ups) which need aggregate hospitalization expenses over the year before kicking in. In the previous example, even the second type of expenses will be covered in the top-up plan.
These are the basic criteria which will help you select a health insurance. You might not get a health insurance which covers everything and has less premium. For some of the features, you might need to shell out more money. But never ever make premium your sole criteria for selecting a health insurance. The safety of us and our loved ones is the top priority.
Tip: Prefer buying health insurance using aggregator websites such as Policybazaar etc. You will be able to compare policies in a better way and might also get deals like No cost EMI or extra discounts on the premium.
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