The high prospects of being impacted by lifestyle diseases such as diabetes and hypertension and the constant rise in the medical inflation rate has led to increased adoption of health insurance. Additionally, over the last one and a half years, driven by Covid-19 and its implications, people have become far more cautious and aware about planning and securing their lives. Additionally, the ongoing Covid-19 pandemic has also made people more cautious about their financial wellbeing and this is an important reason why maximum people are covering themselves and their loved ones under a health insurance plan.
While people have started to invest in health insurance policies in higher numbers, it has become even more important to buy the “right” health insurance plan to ensure one has the right coverage.
Fear and anxiety must not be the reasons that push you to buy a health insurance plan as it only leads to panic buying and you may not end up buying the right product. Insurance is a long-term purchase and it must be bought with utmost caution so that the real benefits can be availed at the time of hospitalization or claims if any. The primary purpose of your health insurance plan—to cover you against medical expenses—stands defeated if you do not invest in the right plan as per your needs. It is best advised to know well in advance the basic contours of a health cover.
To help you, below are some important aspects that must be given due consideration when planning to buy a health insurance policy to cover yourself and your loved ones.
Factors To Evaluate Before Buying Your Health Insurance Policy
Individual Policy vs Family Floater Plan
The first and foremost thing to decide on when planning to buy a health insurance plan is whether to enrol in a family floater plan or an individual policy.
People with family must make sure whether they want to cover all the members under individual health plans or under a family floater plan where all members share the same policy. Ideally, individuals with spouses and dependent kids should have health insurance coverage under a family floater plan, as it is much more economical. However, if the kids are above the age of 25 years, they must be covered under individual health plans.
An important thing to remember is that if you have dependent parents and they are not covered under any health insurance scheme, it is suggested to buy a separate plan for them and not cover them under your family floater plan. And this is because, first, under a family floater health plan, the premium of the policy is always calculated considering the age of the eldest member. Thus, covering your parents within your family floater plan may cost you more.
Once you have decided on which type of health insurance policy to buy: individual or family floater, the next important thing to consider is the sum insured or the coverage amount of your health insurance plan. For those unaware of the term sum insured, it is the maximum amount that the insurer pays to the policyholder in case of hospitalization.
Considering the pace at which healthcare expenses are rising each year in India, it is best to have a maximum sum insured that you can afford for comprehensive coverage. Even after having health insurance, you would never want your sum insured to fall short during hospitalization and you have to pay for expenses from your own pocket. In fact, with utter advancements in medical treatment and the inclusion of robotic and bariatric surgeries in health insurance plans, you would definitely want to avail the best possible treatment for any ailment.
For that, you need to make sure you have a comprehensive health plan with maximum coverage. To decide on the sum insured of your health insurance plan, do always consider your family size, age of the members to be insured, family medical history, and the city of residence. While higher the sum insured, the better it is; it is recommended to have at least 10 lakh per person sum insured in Tier-I cities, and at least five lakh per person in Tier-II cities.
To help customers buy health insurance with a maximum sum insured, insurers have also started the option of paying health insurance premiums in easy monthly instalments. This means, instead of paying the premium amount as a lump sum, customers now have the option of paying premiums in the form of monthly instalments (EMI). This initiative has increased the affordability by multiple folds especially in Tier-II and Tier-III cities where people usually used to buy health plans with the limited sum insured following affordability issues.
Over the last two years, insurers have also come up with special health plans that are a combination of base plan and super top-up plans. These plans are significantly cheaper yet provide the highest coverage possible. Most of these plans are available under INR 1 crore sum insured variant wherein INR five lakh coverage is offered through the base plan while the remaining INR 95 lakh coverage is provided through super top-up. For a family of four: two adults aged 35 and 33 years and two kids aged 4 and 7 years, a INR 1 crore sum insured plan comes at a monthly premium as low as INR 1,700.
Apart from buying higher sum insured health insurance plans, customers also have the option of enhancing their sum insured by investing in super top-up plans – a convenient and economical way of enhancing your health cover. A super top-up is an added sum insured over and above your base plan and usually becomes active once the base cover is exhausted. While several insurers offer super top-up plans, it is mostly advised to buy a super top-up plan from the same insurer as your base plan as it helps in a smooth claim process.
When you buy a new health insurance policy, it is important to know that not all ailments are covered from Day 1 and you need to serve a specified waiting period to get certain coverages.
Initial wait period of 30 days during which accidental hospitalization is covered.
Secondly, there is a specific disease waiting period of two years for slow growing diseases like hernia, piles, cataract, knee replacement etc.
Apart from this, there is also a waiting period levied on pre-existing diseases. Pre-existing conditions are illnesses that a customer is suffering prior to buying health insurance cover and these must be disclosed to the insurer while buying health insurance. Some of the most common pre-existing conditions that people suffer from include hypertension, diabetes, asthma, and cardiovascular diseases (CVD). On all such pre-existing conditions, insurers apply a waiting period of two to four years.
However, over the last few years, with changes in underwriting rules and constant innovations in health insurance products, insurers have now started to come up with products with a zero-day waiting period for pre-existing conditions. While the option of lowering the waiting period existed earlier as well, the customers had to pay hefty premiums for the health insurance plan.
However, now by paying almost the same amount as regular health insurance plans, customers can avail benefits of zero-day waiting period plans. This is a much-needed innovation for people with pre-existing conditions, as the number of people suffering from PED in India is much higher than in other nations across the globe.
Often, family floater plans come with a waiting period of two to four years for several ailments like Diabetes, Hypertension, and Asthma that are common during old age. The whole purpose of having health insurance becomes pointless when you have to wait to avail yourself coverage for pre-existing ailments. For your parents, you must buy a plan that provides coverage for pre-existing illnesses from Day 1.
In addition, kids aged above 25 years must be covered under individual health insurance plans and not a family floater plan.
Yet another important thing to keep in mind while buying a health insurance policy is sub-limits. Often in order to buy health insurance plans with lower premiums, customers buy plans that have co-payment and sub-limit clauses attached to them. Such plans are cheaper than regular plans that do not have any co-payment or sub-limits. While this may reduce your premium up to a certain extent, it will cost you dearly while making a claim. Let us understand how this works.
As per the co-payment clause, the policyholder needs to pay some portion/percent i.e. mostly 10% to 20% of the hospital bill from his or her own pocket. This means, say if someone with health insurance is hospitalized and the treatment cost comes around INR 5 lakh. Now, with a 10% mandatory co-pay in the health insurance policy, the policyholder will need to pay INR 50,000 from his own pocket to settle the hospital bill. When buying a health insurance plan, always make sure to buy one without any co-pay charges wherein the insurer pays the entire hospitalization expenses.
Also, when buying a health insurance cover, do make sure the plan does not have any sub-limits attached to room rent or specific procedures. You must have the choice of selecting the room category of your own preference and not limit your decision as per the insurer’s conditions. Most insurers now usually allow a single private room. A health insurance plan with sub-limits on specific procedures should also be avoided.
With the world swiftly shifting towards smart products, it is time to be enrolled under smart health insurance plans. Recently, the Insurance Regulatory and Development Authority of India (IRDAI) directed all general and specialized health insurers to start offering incentives to policyholders under the wellness and preventive initiative of health insurance plans.
Under this feature of insurance plans, the policyholders are rewarded with wellness points for maintaining a fit and healthy lifestyle. These rewards can be accumulated over the months and can be later redeemed against a pool of benefits like a discount on renewal premium, memberships for gym, spa and yoga centres, annual health check-ups, and many more. Some plans even offer discounts up to 100% on staying fit and healthy.
These plans are very much in demand these days as these are an excellent way to promote fitness and wellness amongst the masses. When planning to buy a health insurance plan, do make sure the plan comes well equipped with wellness features that reward you for keeping fit.
Network of Hospitals
The network of hospitals allows you to avail cashless treatment. Under the cashless feature, you can take treatment during hospitalisation at any of the network hospitals without having to pay anything from your own pocket.
However, if you do not take treatment at a network hospital, you will have to first pay for the hospitalisation expenses from your own pocket and later the bills have to be submitted with the insurer to get reimbursement which then becomes a lengthy process. In addition, arranging for a hefty amount while suffering from the hospitalisation crises can prove to be a major challenge for most families. To avoid such a situation, always make sure to buy a health insurance plan with the maximum network of hospitals within your city of its proximity.
Claim Settlement Ratio
In the insurance industry, claim settlement ratio means the number of claims settled by the insurer against the total number of claims filed with the insurer within a financial year. Claim settlement ratio is an exceptional way for customers to identify the ability of the insurer to settle claims.
An important feature that you must look for is adequate coverage for out-patient department (OPD) expenses and consumable Items. For those unfamiliar with the terms OPD expenses and consumable items, OPD expenses are those that incur without being hospitalized and generally include charges like doctor’s consultation, medical check-ups, cost of medicines and ambulance charges.
On the other hand, consumable items are medical aid or equipment like PPE kits, syringes, gloves, sutures, tourniquet, among others, that are usually discarded after one time use. Both these expenses are usually billed to the patient and are mostly not covered under regular health insurance plans.
In order to avail adequate coverage against these expenses, it is wise to buy only those plans that cover such expenses or invest in add-ons that provide comprehensive coverage for such expenses. These add-ons can be bought at a cost as low as 5% of the base plan premium. Coverage for OPD expenses and consumables has become significantly important as these are counted under out-of-the-pocket expenses, and they make for almost 20% to 30% of the hospitalization cost.