Health Insurance Policy: Dos And Donts
In this article we have listed some of the important things that you should remember before renewing your health plan each year
One of the most crucial parts of your financial planning is to protect your life and health. This can be done by buying an appropriate life and health insurance plan.While the importance of life insurance is pretty much straightforward – protecting your dependents financially in your absence – when it comes to health insurance, it offers coverage for medical expenses incurred by the policyholder during the policy period. There are various kinds of health plans and so depending upon the type of health cover you opt for, the features and policy wordings change. Typically, medical expenses include hospitalisation expenses, day-care procedures, domiciliary hospitalisation, pre and posthospitalisation expenses, etc.
Having said that, a policyholder can opt for various riders as well, which can get attached to the standard health insurance policy to cover additional expenses such as donor expenses, critical illness cover, personal accident cover, etc. Although health insurance plans are typically a one-year contract and require to be renewed every year, these days insurers do offer two-year and three-year plans. Some insurance companies may inform you regarding renewal of policy by sending a renewal notice but it is the responsibility of the policyholder to renew the policy and enjoy the benefits of the policy.
Therefore, it is quite important to renew your health insurance policy. It is prudent to renew your policy at least 30 days before the expiry of the policy. Renewing your health insurance policy on time prevents loss of any benefits offered by the policy. However, ignoring to renew it on time may pose significant problems for the insured. If your health insurance policy lapses, you have to buy the health insurance plan as if you are purchasing a new one. This might lead to losing all your accumulated ‘no claim’ bonus and might also lead to a crucial waiting period. Therefore, do not ignore your health policy renewal. It is equally important to understand certain things before renewing your health insurance plan.
Renewing Policy Before Due Date
In order to avoid the policy from getting lapsed, it is crucial on your part to renew your policy before the due date. But if for any reason you have not renewed the policy by paying the requisite premium by the deadline, the insurer does provide you with a 30-day grace period before making the policy null and void. And during this grace period, there would be no health insurance coverage offered to the policyholder. Moreover, if not renewed, you would also lose the benefit of lifelong renewability provision as mandated by the Insurance Regulatory and Development Authority of India’s (IRDAI) health regulations.
Further, you would also lose out on the credit of waiting periods for pre-existing diseases along with any accumulated ‘no claim’ bonuses. Also, you would be no more eligible for availing tax deduction under Section 80 D of the Income Tax Act, assuming that you do not pay any premium towards health insurance in the whole financial year. We would urge you to use a personal finance app wherein you can enter all your financial details right from your income and expenses along with details of your investments and insurance. Further, such apps do have a ‘reminder’ feature. This way you won’t miss renewing your policies.
Review Health Insurance Requirement
May it be life insurance or health insurance, it is very crucial to calculate the cover required as per needs. In life insurance there are various methods that can be adopted to understand the exact requirement. However, in case of health insurance there is no such standard method. But you can still calculate the same based on basic things such as whether you live in a metro or a non-metro city, understanding medical inflation, availability of advanced medical facility near you, etc. Not just that, you also need to review your health insurance requirement.
For instance, when you were unmarried you might have taken an individual health insurance plan but post marriage you might have taken a family floater of Rs10 lakhs. However, after a few years when you have children, you must add their names to the family floater. But in this case you also require reviewing the cover as here it would be more beneficial for you if you upgrade your cover to say Rs15 lakhs. Therefore, prior to any renewal, check the changes that have happened in your life and upgrade the cover accordingly. One thing to note here is that the waiting periods will apply afresh for the increased portion of the sum assured. So, be prepared about that at the time of renewal.
Super Top-Up Plans
There is a possibility, especially in case of the old and PSU insurers, that the sum assured is almost equal to the maximum coverage allowed under the policy. In such a situation, you would not have an option to increase the sum assured under the policy.
Therefore, under such circumstances what you can do is to check for a super top-up plan. Remember it is always prudent to have it from the same insurance company in order to ensure dealing with only one insurer at the time of the claim. Therefore, at the time of renewal if your policy is such that it does not allow you to increase the sum assured, then do consider doing it via a super top-up plan. A super top-up plan covers the hospitalisation expenses up to the limit specified in your super top-up plan above the deductible amount. So, once your deductible is paid, the super top-up policy becomes active for subsequent claims. Unlike regular top-up plans that cover single claim over and above the deductibles, a super top-up plan covers cumulative expenses.
Amendments in Terms and Conditions
According to the IRDAI’s regulations, at the time of renewal the terms and conditions of the policy remain the same. The insurance company cannot change them based on an adverse claim experience. Also, any change in benefits or premium can only be done with prior approval from IRDAI and has to be informed to the insurer at least three months before renewal. Therefore, if your insurance company revises its terms and conditions which are not acceptable to you, then you have the option to migrate to another similar policy with the same insurer or you also have an option to port the policy to a new insurer as per the IRDAI’s portability guidelines.
Adequate Disclosure
As we know, health insurance is a yearly contract and requires to be renewed every year. Therefore, it can be considered as a fresh contract with the same terms and conditions prevailing in the last year. However, during the year there are chances of material changes in your health profile. Remember, unless the insurance company asks, it is not mandatory on the part of a policyholder to disclose any changes. However, to be on the safer side and holding the spirit of the principle of utmost good faith, you are advised to inform your insurance company of the same. Let the insurer take a decision on your policy accordingly rather than facing the pain of rejection during claim settlement.