Health Insurance 101: Things to Keep in Mind Before You Sign Up
When it comes to Personal Finance, one key element often overlooked is health insurance. Think of it as a safety net for life’s unexpected challenges, especially when it comes to your well-being.
Imagine a family has saved up a substantial INR 10 lakhs /- over the years. Sounds great, right? But what if a health issue pops up? Treating just one person could eat up a big chunk, if not all, of those savings. Selling belongings to cover medical bills would be even worse. And the recovery? It might take years to bounce back to where they started. Now, Without a solid health insurance plan, you could find yourself in a tough spot — both health-wise and financially.
Opting for health insurance: a smart way to protect not just your money but your peace of mind. It’s like a safety cushion, ensuring your savings stay put while making sure you get the healthcare you need. So, before you dive into the world of health insurance, think of it not just as a policy but as a proactive move to keep your finances strong, even in the face of unexpected health issues.
Whether to opt for individual plans or a family floater plan 🤔!?
If you’re considering a family floater plan, it’s essential to take note of the age difference between family members. Insurance premiums are often calculated based on the age of the eldest member. Therefore, a significant age gap might result in a higher premium.
In my case, where the age difference was notable, I opted for individual plans for each family member. This decision helped me reduce the overall premium while tailoring coverage to individual needs.
Medical inflation in India reaches an alarming rate of 14%, reveals reports
To ensure adequate coverage, it’s advisable to factor in this inflation rate when deciding on the sum insured. For an individual, a minimum of INR 5 lakhs /- is recommended.
Consider your location as well — coverage needs may differ between city and village dwellers based on the cost of treatments in your area.
Tax Benefits
Should one consider obtaining a separate health insurance policy in addition to the coverage offered by their company?
In the event of a critical illness for the primary breadwinner, many companies might terminate employment, leading to job loss, especially during company switches.
Regardless of corporate policies, it is always recommended to secure an individual policy, ensuring uninterrupted coverage and mitigating the risk of higher premiums associated with delayed applications, given the age-related rate increases every 5 years.
Smart Health Insurance Choices: A Brief Checklist
Coverage Amount
Ensure the policy provides a minimum coverage of INR 5 lakhs/- for each individual. Most policies allow cumulative additions annually for claim-free years, making it a strategic choice for long-term coverage. This approach proves beneficial, especially if you don’t anticipate any immediate health concerns.
Successful Claim Percentage
Prioritize policies with a successful claim percentage greater than 98%. Steer clear of policies with lower success rates to avoid potential issues during claims processing. Instances of rejection may arise from seemingly trivial reasons, such as discrepancies between identification proof and policy details. Selecting policies with high success rates helps sidestep last-minute surprises.
Cashless Claims
Cashless claims simplify the process by enabling policyholders to access medical services without upfront payment, as the insurance provider directly settles bills with the hospital. However, if a non-network hospital is chosen, individuals may need to pay upfront and later seek reimbursement, potentially dissuading many from insurance due to the challenge of covering a substantial upfront cost in a single payment.
Note: Additionally, be mindful of policy limitations, as some may impose a timeframe within which a bill must be submitted for successful reimbursement.
Give preference to policies offering cashless claims and establish a list of network hospitals, including those in your vicinity or preferred locations (a minimum of 3–4). While assessing network hospitals, don’t solely rely on the quantity in your locality; instead, search for specific hospitals that align with your preferences. This prioritization ensures smooth cashless claim processes and minimizes the risk of inconvenient hospital choices during emergencies.
Co-payment Clause
In the event of a claim, the policyholder is required to share a specified percentage of the medical expenses. For example, a co-payment clause of 20% means the insured is responsible for covering 20% of the medical costs, while the insurance provider handles the remaining 80%. It’s important to note that while some corporate policies may come with this clause, it’s advisable to explore options without co-payment for more comprehensive coverage.
Room Rent Limitation
Opting for a policy with no room rent limitation is ideal. This ensures flexibility during hospitalization, preventing unexpected billing surprises. In scenarios where a policy restricts room rent, choosing a higher category room (like a suite) may result in significant out-of-pocket expenses, as the policy might not cover the entire cost, potentially leading to unforeseen financial strain during hospital stays.
Permanent Exclusions
Refers to specific medical conditions, treatments, or activities that are permanently not covered by the insurance provider. Common exclusions include dental procedures, injuries resulting from dangerous activities, self-inflicted injuries, cosmetic surgeries, and certain ophthalmological treatments.
It’s crucial to meticulously read the full policy details, as some insurers might have additional exclusions beyond the standard list. For example, alternative therapies like AYUSH — Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy, maternity coverage, outpatient services, e-consultations, or any other specific conditions that may not be covered under the policy.
Other Benefits
- Pre & Post Hospitalization Coverage: Policies typically include coverage for both pre-hospitalization (around 60 days) and post-hospitalization (approximately 180 days), encompassing various medical expenses.
- Coverage Restoration: Some policies offer the option to restore coverage within the same policy year, even multiple times, ensuring continued financial protection after the initial coverage limit is exhausted.
- Daycare Treatment: Certain policies cover daycare treatments, ensuring financial support for medical procedures completed within a day or less than 24 hours.
- Outpatient Consultation: Policy benefits may extend to outpatient consultation, covering doctor visits and diagnostic tests without requiring hospitalization.
- Free Health Check-up once a year.
- There are many other benefits like ambulance cover, maternity cover, etc. Would suggest going through the entire policy details after arriving at 2–3 options.
Note: Be aware of waiting periods — accident covers start from the day of policy approval, the standard waiting period for any treating any chronic ailments is 30 days, slow-growing diseases like knee joint replacement may have a 2-year waiting period, and treating pre-existing ailments declared during application may also have specific waiting periods based on policies ≥ 3 years.
I’ve compiled all these considerations (for the policies on Policy Bazaar) into a spreadsheet for easy reference. After thorough analysis, I found Niva Bupa and Care Health insurers align well with my requirements. Opting for individual policies due to a slight age gap, I chose Niva Bupa Aspire Diamond+ (Direct) for myself and Care Supreme (Direct) for my parents.
Additionally, consider checking for add-ons; I included yearly health check-up for Care and Future-Ready for Niva Bupawhich cumulatively adds maternity cover of 5k every year. The total yearly premium for these three policies is approximately INR 42k /-.
I hope this information proves helpful in your decision-making process. Happy insuring ✌️!