Is Your Insurance Policy Healthy Too?

Health insurance is a big ball of unknowns – so big, in fact, that many of us put it on the back- burner rather than deal with it. Nevertheless, it’s one of the most important decisions you will ever make. Think about it: your entire family’s well-being depends on it. To stay motivated, it helps to remember that insurance protects not only your health but your entire financial plan. Nothing is more devastating to your bank account than a stack of uncovered hospital and doctor bills. And even if you have insurance, healthcare bills can pop up everywhere – from services that aren’t covered to unforeseen emergencies. Given the multitude of options in the health insurance space, making a decision is difficult.

Moreover, life insurance companies have entered the health insurance space and hence customers have a greater choice than before. Here’s a look at the various aspects that need to be considered while signing up for a mediclaim policy. Policy Tenure: In case of health insurance offered by general insurers, the mediclaim has to be renewed annually whereas in the case of health covers offered by life insurers the policies are renewable after three years or more, depending upon the insurance company. The premiums are likely to remain unchanged in the three-year period. After three years, it works like a regular mediclaim policy which revises premiums on an annual basis.

Health Insurance Cover: Experts advise going for a cover of around Rs 5 lakh if you stay in a metro and around Rs 2.5 lakh if you stay in a smaller city.

Policyholder's Contribution: This clause is seen mostly in health covers designed for senior citizens. It is also common in group mediclaim covers offered by employers that cover the employee and his/her family members. The co-payment clause is applicable mostly to the family members. At the other end of the spectrum are defined benefit plans wherein you will know how much you will earn from your cover in advance. These are a drawback for individuals who have signed up for a less sum assured. However, it could be a plus for an individual who has signed up for an adequate sum assured.

Sub-Limits: Sub-limits (room rent, doctors’ fees, diagnostics, etc.) have been introduced in mediclaim policies to tackle the rising healthcare costs. Say, if you have a sum insured of Rs 2 lakh and the insurer has capped your room rent at 1 per cent of the sum insured, then your room rent cannot exceed Rs 2,000. If it exceeds that amount, then one has to pay the balance independently. Similarly, insurers also impose a sub- limit on doctors’ fee at 25-30 per cent of the bill amount.

Type Of Policy: The first kind of health insurance is the traditional mediclaim policy that general insurers offer. These are reimbursement plans that cover hospitalisation expenses. The claims are settled by the insurer either on a cashless basis through a tie-up with hospitals or by reimbursing bills. The second type are defined benefit plans, offered by life insurers, which include critical illness policies and payment of a lump sum on the diagnosis of any of the named critical illnesses in the policy. If the insurance company is stipulated to pay Rs 1 lakh for a certain critical illness, the company will pay Rs 1 lakh irrespective of the size of the claim. Insurers generally do not cover any of these illnesses if they get diagnosed within 90 days from the effective date of the policy.

Premium Comparison: While the premiums of health covers from life insurance companies and general insurance companies are comparable, the claim settlement procedures of both are different. In the case of life insurers, the service of claim settlement to TPAs is outsourced. Among the general insurers, most private sector companies have changed this practice and carry out the claim servicing business within the company itself.In a way, the company becomes directly responsible for claim settlement.

The Pre-existing Diseases Clause: All policies have a waiting period before the cover begins. There are mediclaim covers which do not cover pre-existing diseases for four years while there are others which don’t cover pre-existing disease for three years. Note: Reimbursement cover should be the ideal base cover for any policyholder as that would cover the hospital bill. However, not all costs are covered as there are various expenses which fall outside the purview of a traditional reimbursement plan such as buying medicines post-hospitalisation, etc. In such cases, you could top up a traditional reimbursement plan with a defined benefit plan to be able to tackle all the medical-related expenses. Last but not the least, it always makes sense to have an additional mediclaim even if you are covered under your employer’s mediclaim scheme.