Choosing the right health insurance plan can be a tough task as we have to make sure that all the ends are covered. If the need arises, the insurance provider should be able to help in our time of need.
Many people in India buy health policy just for the sake of buying it or for the tax purposes. But the implications of buying an under-insured policy or with miss-understood terms and conditions can really impact the financial situation of your present life.
A lot of private service providers have now entered the Health Insurance industry. Due to this, the situation has improved a lot over the last decade regarding the disclosures. Also with the increased usage on the internet, it has become easier to decide what policy suits to your requirements.
A really good regulation that has come up in recent times is that all the Health Insurance policies are now mandatorily issued for the life-time.
I have compiled the list of 10 most important points which need to be mandatorily considered for buying the Mediclaim policy. Before reading further, please read part 1 of the importance of having a health insurance policy.
1. Family floater or Individual Healthcare Plan
A nuclear family in their late 20s or early 30s comprising of husband, wife and a child can opt for a family floater. A floater policy is one where all the members of the family are covered under a single policy. The sum insured covers all the members of the family included in the floater. For example, If a family of 3 takes health policy where sum insured is Rs 5 lakhs, then the maximum amount the 3 people can claim is Rs 5 lakhs.
Regarding the health insurance of the parents, it is not advisable to go for floater policy. With an increasing age, there may happen a scenario where multiple claims may be required in a year. So, such a scenario poses a risk where you are not able to cover the costs required to provide the best healthcare.
A floater or an individual plan should cover for pre and post hospitalization charges. In most of the policies, 30 days and 60 days are considered as a standard coverage for pre and post hospitalization charges respectively.
2. Appropriate age for buying health insurance
In our professional lives, most of us are insured by our employers and we take our health insurance as granted. But, there may happen a scenario in our life where you are between the jobs and about to join a new job or have taken a small break in the professional life. The health policy by our employers ceases to exist when we leave our jobs. If in such a scenario, some incident occurs then you would not be covered under employer’s health coverage.
Moreover, the right age to buy the health cover is when you are young, free of any pre-existing diseases and the premiums are also low.
If there are any pre-existing diseases, there would be a waiting period varying from 2 to 4 years. If a claim related to the pre-existing disease is made, then it would not be honoured by the health insurance provider. Also, the health insurance provider would levy a loading factor based on the age and pre-existing disease which would be permanently added to the premium amount.
3. Choosing a No Claim Bonus V/S Increase in Sum Assured
Everyone wants a discount on their health insurance premium if they have not taken a claim in the previous year. But, this is a very wrong outlook from the perspective of health insurance.
The inflation in the healthcare industry is increasing at an astounding rate of 15 %. The sum assured of Rs 5 lakhs which you think is sufficient as per the current scenario may not prove to be enough in the future. The other option is to take the policy where the sum insured would increase by a certain percentage in case of no claim up to a limit of 100-200% of the sum insured.
For e.g.: Your sum insured is Rs 5 lakhs and it would increase by 20% in the case of no claim up to a limit of Rs 5 lakhs. So, in this scenario, the sum insured would be Rs 10 lakhs in 4 years in case of no claims.
4. Check for Sublimit OR Co-Payment
Co-payment is a feature where the health insurance provider will agree to pay only a certain percentage of the expenses occurred.
For e.g. many healthcare policies in the market have the feature where they agree to pay only 80% of the total expenses incurred. In the case of senior citizens, 80% of the policies in the market have this clause.
It is of utmost importance that you choose a policy wherein the insurance provider agrees to provide 100% of the claim.
A co-payment of Rs 1.2 lakhs is still a huge amount to pay when the total expenses are 6 lakhs. So, make sure that there is no clause of co-payment in your health policy.
There are some health insurance providers wherein the co-payment is not present but they have put a sublimit for some specific kind of surgeries. This can be a scenario wherein the insurance provider says that 60% is the maximum capping for a particular surgery. The remaining amount needs to be borne by the patient. Make sure that there are no sub-limits in your policy.
5. Room Rent Capping
This is definitely the most critical point and the less known point which brokers rarely tell to their customers. I’ll explain this with a help of an example:
For example, Your policy states that the maximum amount the insurance provider would pay for the room rent is Rs 5,000 per day. Assume that a person stays in a room of Rs 8000 per day for 5 days. A normal person would assume that he has to pay an extra amount of Rs 3000*5 i.e. Rs 15000 as the extra room rent.
But, this is not at all the case. In case the hospital bill comes at Rs 4 lakhs, then the amount that would be approved is in proportion to the approved room rent. In our scenario, it is (5000/8000= 62.5 %), so an amount of Rs 4 lakh * 0.625 which equals Rs 2.5 lakhs would get approved. The patient would have to shell Rs 1.5 lakhs from their own pocket.
So, it is of utmost importance to check this particular clause so that all the ends are covered. It should be ensured that you are never at risk where you have to shell lakhs of rupees because of this miss-understood clause.
6. Restoration Benefits
This is also a good to have benefit in your healthcare plan. Restoration benefits give us an option to restore the exhausted amount in case a second claim needs to be made within a year.
Restoration makes it possible where the base sum insured would be again available for the subsequent claim in the same year. Please note that the disease should be an unrelated illness from your previous claim.
7. Hospital Network and Cashless Claims
Each health insurance provider has a chain of empanelled hospitals where the cashless claim facility is available. In such a case, you don’t have to pay any money upfront. All the charges would be borne by the service provider. There can be a scenario wherein the hospital is not covered under the cashless facility. You should confirm that there is no clause in the policy stating that “A certain percentage of the amount would be reimbursed in case of not availing the cashless facility.”
Also, every insurance provider would have a list of hospitals for which they don’t provide any cover. Please make sure that there are no good hospitals from your city which are included in that particular list.
8. Daily hospital cash allowance
The first priority is to oversee that all the patient charges are taken care of by the insurance provider. But, what about the other charges that take place like refreshments, money spent on commuting etc. These may be small expenses but can add up to a decent amount in case of extended stay.
But don’t worry, as there are many service providers who offer the option of Daily hospital cash allowance. Some providers provide this facility as a part of the policy. Some ask for a small premium which needs to be added to your existing premium. The daily hospital allowance normally varies between Rs 1000 to Rs 5000.
9. Claim Settlement Ratio
IRDAI has mandated that each service provider needs to release the claim settlement percentage for each year. Claim settlement percentage gives an idea as to whether the insurance provider keeps his side of the bargain. It gives us an idea if the money is released in the time of need.
Health insurance industry is quite regulated and IRDAI has made the policies easier to understand. Policy rejections occur wherein a person had lied earlier by not mentioning the pre-existing diseases. We should make complete disclosures so that we don’t have to face these problems.
10. Does broker matter?
From my personal experience, I recommend you to purchase the health policy through the broker. A broker can help you in understanding the minute nitty-gritty’s of the policy. They will also help if there is an issue with the claim process. They also call and help you each year for the renewal purposes. A Mediclaim policy is a lifelong relationship with the insurance provider. A guiding hand would play a benefiting role in the long term.
I would recommend you to start looking for the Mediclaim policies. The health coverage of each and every member of your family is very important. Please reach out to us if you have any more queries in deciding your insurance provider.