Health insurance penetration in India is miniscule. Apart from the health cover provided by the employer, individuals are not inclined to buy own health insurance policy due to lack of awareness, affordability, and complexity of the process & trust issues. Most of the individuals who are covered by employer don't even feel the need of buying own health insurance policy. However, the truth is that healthcare inflation in India is 14% per annum. A single hospital bill can create a huge dent on the family finances & in some cases lead into a debt trap. Trust issues is one major factor that keeps people away from these policies.
It is important for us to understand that health insurance companies are strictly regulated by the Insurance Regulatory and Development Authority of India (IRDAI) & there are rules regarding the coverage of diseases. No insurance company can deny a genuine claim & it has to be settled within due course. There are various types of health insurance policies available in India with many variations within them.
The most important category of health insurance is comprehensive health insurance policy.
In some cases, however, it is not affordable to take a comprehensive policy due to age factor or health conditions of life assured. There are alternative products available with health insurance companies that offer benefits with some conditions at a reasonable cost. In this article, we are going to discuss about 11 most important things to look for before buying a health insurance policy:
1) Type of coverage: Cost of hospitalization is covered under the policy, however, one needs to check if the policy also covers pre- and post-hospitalization expenses, critical illness, and other medical expenses like consumables. Usually policies cover 30 - 90 days pre-hospitalization & 90 - 180 days post-hospitalization expenses.
2) Type of policy: There are broadly two types of policies:
- Individual policy: This covers a single person.
- Family floater policy: This covers a family (eg: Husband, Wife, Kids) in single policy.
3) The sum assured: The sum insured is the maximum amount that the insurance company will pay in case of a claim. Make sure that the sum insured is enough to cover your medical expenses. Please note that the cost of hospitalization varies from city to city. A family floater policy for a family of 2 adults & 2 children with sum assured of Rs. 10 lakhs may not be sufficient in metro cities, however, it may be sufficient in Tier 3 or Tier 4 cities.
4) Hospital network: Hospitals in the network of the health insurance company provide cashless claim settlement facility. Before buying a health insurance policy, check whether the hospitals in your nearby area are available on the list of network or not. The claim settlement process is convenient in case of network hospital. In case of non-network hospital, the bill is to be paid by the individual & is then reimbursed by the insurance company on submission of documents.
5) The waiting period: Many policies have a waiting period for certain illnesses or treatments. Make sure you are aware of the waiting period for your policy.
6) Pre-existing illnesses: Pre-existing illnesses are usually covered under health insurance policies after a specific waiting period. Check if your pre-existing illnesses are covered under the policy, and if there is a waiting period for such coverage.
7) Room rent limits: This is a very important factor that could affect the entire claim amount. This is a pre-defined limit set by the insurance company on certain policies where per day room rent is capped at a certain percentage of the sum assured. Eg: 1% of sum assured means that a policy having a sum assured of Rs. 5,00,000 will have a capping of room rent per day of Rs. 5,000. Suppose a policy has a room rent capping of Rs. 5,000 per day but the patient gets admitted to a room with rent of Rs. 10,000 per day. In this case, the entire hospital bill will be slashed by 50% & only 50% claim will be settled. In most of the comprehensive policies, there is no limit on room rent.
Make sure that the limit is sufficient for the type of room you want to be hospitalized in.
8) Co-payments: Some policies require policyholders to pay a certain percentage of the medical expenses themselves. Make sure you are aware of any co-payment requirements & conditions. This is usually applicable on policies issued to senior citizens.
9) Sub-limits: Some policies have sub-limits for certain treatments or procedures. Make sure you are aware of any sub-limits that may apply to your policy.
10) Renewability: Check if the policy is renewable and if there are any age limits for renewability. Usually the policies are renewable for lifetime if they are continuously in force.
11) No-claim bonus: Some policies offer a no-claim bonus which increases the sum insured in case you have not made any claim during the policy year. This could range from 10-50% of the base sum assured for each no-claim year.
In conclusion, health insurance is an important part of financial planning & one should opt for it immediately to ensure it continues for lifetime. Do not hesitate to take help of an advisor to help you with the best suited plan.
Rohit Gyanchandani is Managing Director at Nandi Nivesh Private Limited