Health insurance is something most people undermine until and unless stricken with an exigency situation.
The importance of health insurance is driven by the fact that there is a rising number of diseases in India and at the same time the costs of treatment in hospitals is higher.
Also, the rising co-payment, yearly deductibles and lower amount of coverage available, render health insurance even more expensive.
It is in this context that though people take up these policies, they are not aware of the pros and cons. Many health insurance policies comes with strings attached, meaning there are number of clauses that we need to pay attention to.
But most people lose out on the important parts.
Therefore, in this article, we will discuss the important elements to be kept in mind before finalizing a health insurance plan.
In this article
8 Things to Keep in Mind Before Finalizing a Health Insurance Plan
Here are the 8 most important things to look at before finalizing a health insurance plan:
1.Scope of Coverage
The first question that needs to be answered while buying a health insurance is the amount of coverage that the policy will entail.
It is always advisable to have a long-term view in mind before finalizing the amount of coverage. We might be fit today but need to think of our future needs as well.
Putting late hours at work and eating large amount of junk food might come to haunt us few years down the line.
Let us take a specific case to get further clarity. If we are opting for a family floater plan, it is important to look at the sum insured restoration.
(Sum Insured Restoration is the amount of benefit that allows an insured person to reinstate the entire sum insured in the policy year, when it gets exhausted due to incurred claims)
At the same time, we should not forget to top up our initial coverage in subsequent years. It is easier to opt for a higher amount of health insurance policy while we are young, as the amount of premium at this point in time is less.
2. Room Rent Capping
While we decide on the health insurance policy, there may be hundreds of policies with low premium, but certain conditions attached such as the per day cap on hospitalization will be provided.
This makes a lot of difference and is therefore an important factor to consider.
As a traditional practice, health insurance companies offer room rent cap at 1 or 2 percent of the entire sum insured. Lately there are plans which offer “single private rooms”, “upgrade your room” or “no capping” limit on the plans. But these come with a higher insurance premium
With private hospitals charging exorbitant rates, the cash limit coverage per day on hospitalization becomes a critical factor.
So, it is advisable to check the hospital room rent for preferred hospitals and match it with the policy being offered to eventually find the policy that suits our need the most.
3.Treatment in Cashless Hospitals
Cashless hospitalization includes treatment of the insured by just showing them the health card.
Though it seems fancy, only a few insurance companies offer policies that have tie-ups with your choice of hospitals.
Even though some insurance companies might have a tie-up with several hospitals, the policy will be useful if the hospital is in our vicinity or they are good for treatment.
Hospitalization in non-network hospitals will attract payment, which needs to be claimed within due date.
4.Maximum Entry Age of the Policy
We all agree that health insurance becomes critical once your age increases, because this is when you are more prone to diseases.
Though advancement in medical science has rendered the average life expectancy to rise, most policies in the market today come with an age limit.
Therefore, we must hunt for policies which come with a maximum age limit. It is instrumental not to delay taking up a health insurance plan as there are severe chances of us being rejected in case of any change in our medical history.
But no insurance company can reject renewal of an existing policy.
5.Claim Settlement Ratio
Claim settlement ratio means the number of claims that have been successfully paid out as compared to the total number of policies that were due for payment. As a simple rule, the higher this ratio, the better it is.
There are several insurance companies that try to reject the claim based on false accusations. Therefore, we should only opt for those insurance companies which have a steady or consistent track record of payment of claims.
We need to read between the lines to know what the policy states about specific illnesses. These can be minor or major diseases, such as arthritis, cardiac problems, cancer etc. We must be thorough with these limits.
In case of genetic diseases, there are higher chances of it getting passed on to the next generation. The plan terms and conditions may be different then.
7.Clause of Co-Payment
Co-payment simply means a fixed out of pocket expense that is paid by an insured for covered services under a health insurance policy.
This is mainly added to the policy so that people don’t make unnecessary claims and do not go to very expensive hospitals for treatment.
Co-payments can be of two types:
In this case, the premium will be reduced by the insurance company as you are sharing the claim proceeds at a predetermined percentage.
This type of co-payment is generally preferred when you are young and healthy, because you are less likely to be prone to various diseases.
This entails mandatory sharing of the claim with the insurance company.
The important point to note here is we get extremely surprised when we find that co-pay clause is present in our health plan. So, it becomes imperative to go through to know whether this clause is present in our policy document or not.
8. Let’s Not Overshoot the Sum Insured
Lastly, let us be reasonable and rational while choosing the insured amount. This means that we ideally should not cover ourselves for minor illnesses or illnesses that seldom occur.
Having a health insurance plan becomes critical in the current period where medical cost is exorbitant.
At the same time, these costs are growing at a high inflation rate as well.
This will further burn your pocket in the coming years. Therefore, don’t think twice before comparing health insurance policies and remember to check the above seven points before zeroing in on one.
Disclaimer: The views expressed in this post are that of the author and not those of Groww