When you purchase a health insurance policy, you have to pay the premiums every year to keep the policy active. But most people don’t do a thorough review of their health coverage requirements periodically. They just blindly renew their health plans.
That is not correct.
Renewal is your chance to review your health coverage and whether it’s still sufficient for your requirements. Ideally, this review should be done yearly. If not, then make sure to do so every 2-3 years or when some important life event occurs.
Here are 4 heads under which you should carry out such a review:
Addition of New Members
If you got married or became a parent, then you have a new family member to take care of. So make sure to get the new member added to your existing health insurance as soon as it is allowed by the insurer.
You don’t want to end up in a situation where you have a health claim to make for the new member but realize it late that the member is not added to your health insurance. Also, new member addition will increase your premiums but that is normal.
Coverage Still Enough?
Let’s say 5 years back you took a health insurance coverage of ₹2 lakh. Now since then, you got married and had a child. Do you think today ₹2 lakh coverage will be enough? I am sure you know the answer. In view of the rising medical costs, this is not enough at all and needs immediate attention.
How big should be your health insurance coverage now? I think, you should target having a minimum of ₹10-15 lakh coverage. There are 2 ways to increase your coverage. The first is to ask your insurer to increase the coverage amount. Remember that you can only increase the sum assured of existing cover at the time of renewal. The other option is to keep the base cover as it is and purchase super top-up insurance to enhance the overall coverage.
Just having a medical insurance is not enough. If you have a small coverage and a big hospital bill, then you will be forced to dip into your savings to cover the bill beyond the sum assured.
Insurer Changing Policy Terms
The insurance sector is a dynamic one and every few years, there are mergers or acquisitions of insurance companies. When this happens, your existing insurer may decide to change a few terms and conditions of the existing policies in the name of upgrade. This might lead to an increase in coverage and/or increase in premiums.
This might also result in changes to the list of network hospitals and claim procedures.
These changes will be announced to policyholders closer to the renewal time. So make sure you do check and review these if any at the time of your policy renewal.
Availability of Better Alternatives?
Health insurers regularly upgrade existing policies and announce new ones. Many new plans will offer benefits which may be useful for you but may not be available in your existing health cover. So it makes sense to review your current policy versus what other options are available.
Let’s say you have health insurance which offers you benefits A, B and C. You pay an annual premium of ₹20,000 for it. Now a new health insurance plan is launched which offers enhanced versions of existing benefits A+, B+, C+ and also offers two new benefits D and E, which are quite applicable to you. This new plan offers all this at a new premium of ₹15,000 only. You check with your existing insurer but they are unable to either increase your benefits (from A to A+, B to B+, etc.) or provide new benefits D and E.
In this case, you can then consider porting your policy. Porting is suggested if you find a new plan that offers benefits/features that better fit into your current requirements but are unavailable in your current insurance policy. But be careful while porting. You should ensure that you don’t lose the added benefits that come from continuing with the existing health policy like no-claim bonuses, waiting periods for pre-existing diseases, etc.
But remember that if you want to port, then it can be done only at the time of renewal and you have to inform your insurance company at least 45 days before your policy renewal date.
That’s about it.
Many people rely solely on their employer-provided health insurance. This is not the right approach. But if you have your own health cover, even then don’t make the mistake of blindly renewing it every year. Review your health plan on factors like coverage amount, features, etc. before the policy renewal date. And if you are unsure about this, then ask your investment advisor to help you with it.
Dev Ashish is a SEBI-Registered Investment Advisor and Founder (Stable Investor). He provides fee-only financial planning and investment advisory services to small and HNI clients across India.