Health Insurance Buying Guide For 2021

Health Insurance Buying Guide For 2021

Choosing the right kind of health insurance policy, whether for your own self as an individual or for the entire family, can be a tricky affair. Worst of all, it should never be looked at as yet another investment option. The article highlights the salient aspects of covering your health with the best financial deal

One of the scariest things that we do these days is to rely heavily on our financial advisors or planners for our finances. This could be about investment or insurance and it becomes more frightening when we don’t bother about things other than returns. Whether it is investment or insurance, it is your ultimate responsibility to carefully analyse and take appropriate actions. In the current situation when the world is facing one of the worst health crises in a century, the first thing that comes to our mind is health insurance. If you zero down on a plan with what the agent says or are happy that you have just got the cheapest one, then there is a bit of a gap between your understanding about the health plan and the need to fill the same with proper knowledge.

Hospitalisation expenses are sky-rocketing and its inflation is somewhere around 10 per cent. Therefore, it is quite important to have health insurance to cover you and your family in the likelihood of any hospitalisation expenses. That said, among the plethora of options available in health insurance it becomes difficult for people to choose the right one. In this article, we would try to find out the best health insurance policies. However, before that we need to understand what different kinds of health insurance covers are available.

There are majorly two kinds of health plans: one is individual health insurance policy and the other is family floater.

✓Individual Health Insurance: As the name suggests, individual health insurance covers only a single person. This means that an individual cannot share his sum assured with his or her family or dependents. Such policies are more suitable to people who do not have financial dependents.

✓Family Floater: Unlike an individual health insurance policy, a family floater covers your family and with this you can share the sum assured with financial dependents. In fact, such policies also cover your extended families such as in-laws. However, the thing to remember here is that while calculating the premium, the age of the eldest family member is considered. Therefore, choose the family members quite diligently. Such policies are more suitable for those having financial dependents or those having family as in spouse and children.

Choosing the Policy
In order to arrive at the right health insurance plan, we need to first screen health insurance companies, whether private, public or standalone, based on their incurred claim ratio, percentage of claims resolved by them during the year and age analysis of number of claims paid. This will help us to look at the plans of selected companies. Further, we would be analysing individual as well as family floater health polices of the screened insurers. Moreover, we would boil down to the top three health insurance policies each for individual and family floater. For this we would be focusing on its premium, pre-existing disease exclusion, room rent limit or co-pay, no claim bonus and restore benefit.

Incurred Claim Ratio (ICR)
Before analysing the incurred claim ratio, let us first understand what it actually means. ICR is the total amount of claims paid by insurance companies to the total amount of premium collected during the same year. This ratio shows how generous is the company in settling the claim or whether the company is in profit or loss. Say for instance, an insurance company settled a total claim amount of Rs85 crore in a given year and during that period collected Rs100 crore as premium. Then its ICR stands to be 85 per cent.

As can be seen from the above graph, public sector health insurers are quite generous to give out more claims than making profits as all of them have ICR of over 100 per cent. So, does this mean these insurers are not profitable? Yes, but only in the health insurance segment. They cover the losses made here from other segments like marine insurance, fire insurance, motor insurance, etc. Mostly, we prefer a company having an ICR from 75-90 per cent. This is because ICR above 90 per cent shows that the insurer is either settling high risk claims such as claims of senior citizens or is not diligent enough to reject inappropriate claims. On the flip side, if it is below 75 per cent, it means the company is very stringent while settling the claim or is more profit-oriented. Therefore, ICR of 75-90 per cent is ideal .

In the above graph you might have noticed that among private insurers you find health insurance companies with ICR as low as 21 per cent to as high as 113 per cent. Having said that, most of the popular health insurers like HDFC Ergo, ICICI Lombard, Tata AIG, etc. have ICR below 75 per cent. This suggests that either they are quite stringent in settling claims or they are more profit hungry. On the other hand, we have companies like Edelweiss General that seems to be well-positioned in terms of ICR.

The above graph shows the ICR of standalone health insurers. Standalone health insurers are those who only have health insurance product in their bucket unlike private and public sector insurers that offer other general insurance covers as well. So, looking at the ICR of standalone health insurers we can say that only HDFC Ergo Health (erstwhile Apollo Munich Heath Insurance) is still well-positioned among other standalone health insurers.

Percentage of Claims Resolved
Understanding the percentage of claims resolved during the year will help you gain insights into the claim settlement ratio of these general insurers. Although the Insurance Regulatory and Development Authority of India (IRDAI) does not provide separate data for health insurance, it does gives you an overall approach of non-life insurers in resolving claims.

The above graph shows how private insurers have resolved claims during the year. As can be seen, only a few have fared to resolve claims over 95 per cent. The highest claims settled during the year are from SBI General followed by Bajaj Allianz, Tata AIG, Go Digit and HDFC Ergo. Those marked red have the least resolved claims.

The above graph clearly shows that it is only New India that was able to resolve the maximum claims. Even it had the lowest ICR in health insurance when compared with other public sector insurers.

The above chart shows how the standalone health insurers have resolved claims and the data looks quite impressive as apart from Reliance Health and Religare all other insurers resolved claims above 95 per cent. In fact, Max Bupa resolved the highest claims of 99 per cent among other standalone insurers.

Age Analysis


Analysing this part would help us understand how quick the insurers are in disbursing claims. Here we would analyse the percentage of claims that got resolved within one year and the percentage of claims that took more than a year to resolve.As we can see from the above graph, it is only Raheja QBE that performed really bad, failing to resolve maximum claims in one year. Whereas, all others have successfully resolved maximum claims within one year.

In case of public sector insurers, it is only National that failed to resolve maximum number of claims within one year. The public sector insurers are well-positioned in this aspect. However, the thing to remember is that this data is not for just health insurance. It is collectively for all general insurances sold by these companies.

In case of standalone health insurers, all of them scored well by resolving all the claims within one year. This can be well-attributed to the efficient cashless facility and settling claims in-house without relying much on a third party. However, this data cannot be compared with the private and public sector insurers as for them the data is for all the general insurances. Hence, this won’t be an apple-to-apple comparison. However, it can indeed give you insights about how quick the insurers are when it comes to resolving claims.

From the above analysis of ICR, the percentage of claims resolved and age analysis of number of claims paid, we have screened top five insurers (not in any order) which would lead to our next step of analysis.

HDFC ERGO Health
Bajaj Allianz
Max Bupa
Manipal Cigna
Aditya Birla Health.

For the above five health insurers, we would be further analysing their individual as well as family floater policies to find out the top three health insurance policies among these five insurers. To analyse these policies, we have assumed a few things. Note: Numbers in brackets are their respective ages.

1) Individual :
Sum assured: Rs10 lakhs
Age: 30 years

2) Family Floater :
Sum assured: Rs 20 lakhs
Age of eldest member: 30 years and youngest member 3 years
Family members: Self (30), Spouse (28), Son (5) and Daughter (3)

Best Individual and Family Floater Policies
Based on appropriate parameters such as premium, pre-existing disease exclusion, room rent limit or co-pay, no claim bonus and restore benefit, we have further analysed and cherry-picked the best three health insurance plans. Remember, these are not in any ranking order. Further, the plans that are available for individuals are also available as family floaters.

 

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