It takes years for people to do disciplined savings and investments to achieve their life goals. However, one medical emergency in the family during this journey can potentially derail the entire financial planning of the family. A health insurance plan helps people manage this risk to a great extent. However, even though a health plan provides you a comprehensive cover against fatal diseases and accidents, scope of coverage has some limitation and preconditions. The primary purpose of the policy will stand defeated if you confront surprises later or face rejection of your claim. It is better to know the basic contours of a health insurance policy if you are planning to buy one or already bought one. Here is the list of things that you must know before you buy a medical insurance policy:
1) Individual versus family floater
While buying a health insurance plan, the first dilemma you face is whether you go for an individual plan or a family floater plan. If you are single you may go for an individual health policy. However, it's better to go for a family floater policy if you're married. "Family floater plans are more cost-effective due to discounts on such plans offered by insurers," says Biresh Giri, Appointed Actuary, Head of Product Development & CRO, at Acko General Insurance. Family floater plan gives you the benefit of wholesale. "One should ensure that the total sum insured purchased is sufficient to cover high cost of hospitalisation," he adds. However, if you are a sole earner, you may choose additional individual health policy besides the family floater plan.
2) Know how much cover you will need
It is difficult to find a right cover amount that is suitable for everybody. Although the medical science and treatment technologies have evolved, many diseases that were considered untreatable earlier can now be successfully cured. This comes at a high cost. "With rising cost of healthcare, one should ideally be opting for high sum insured coverage because one should always be future perfect. Around two in 1000 claims may go beyond Rs 15-20 lakh. So, to cover oneself from catastrophic hospitalisation expense event, a higher sum insured is advisable," says Giri. No one can predict with certainty that who will get affected with which disease and what could be the exact cost of treatment. Therefore it's better to base this decision on your affordability in terms of premium payment. The higher you can afford, more protected your family would be. "The cover amount shall always be linked to the family composition of the customer. The cover amount should be increased as number of family members grows as it will make sure that enough cover is available for everyone in case of family floater cover," says Giri.
3) You may need to go through a medical test
When you buy a health plan you may be required to go through a medical test. "Usually a medical test is required or is mandatory for senior citizens as their risk profile is higher (people above the age of 45 or 50 years). Also, a medical test may be required for a person opting for a higher sum insured above the average amount. For example, a person with an annual salary of Rs 4 lakh opting for a sum insured of more than Rs 10 lakh, might need to undergo a medical test," says Amit Chhabra, Head- Health Insurance, Policybazaar.com.
If you are still in your 30s and enjoy good health you need not go through an extensive medical test. "Today, many insurers offer Tele Medicals where a general medical examination is conducted over the phone by a verified doctor. Profiles with pre-existing diseases and smoking habit also need to go for a physical medical test," says Chhabra.
4) Know the coverage network of insurer for Cashless Claim
Claim is paid by the insurer in two modes; one is reimbursement and other is cashless. In the reimbursement process, you have to pay for medical expenses from your own pocket and collect all the documents from the hospital and submit it to insurer to make claim. Reimbursement process may often be time consuming and may require a lot of running around. Another process is cashless claim in which you do not have to pay from your pocket as the claim is settled between the hospital and the insurer. However, cashless facility is provided by an insurer only in hospitals with which it has a tie-up. So, before buying a health plan, make sure you go for the one that has good number of network hospitals not only in India but also in your locality.
5) Beware of things that may not be covered
It is important to understand that no health plan covers all diseases and eventualities. Every health plan has a number of conditions that may not be covered by the policy. "Permanent exclusions like the treatment of diseases such as AIDS, dental treatment, psychological disorder, gender change surgery, sexually transmitted diseases, cosmetic treatments, intentional self-injury and hospitalisation due to war or nuclear perils are not covered in a standard health insurance policy," says Chhabra. Therefore, it makes sense for you to go through the list of exclusion while buying a health plan so that you are aware about it.
6) Understand the waiting period
Not all diseases included in the coverage list of the health plan are covered from the day one of your policy. "Every standard health insurance policy has 30-90 days of waiting period from the day of commencement of the policy for any kind of treatment. Mostly accidents are covered from Day 1," says Chhabra. There are provisions of stant waiting period for many diseases and medical conditions. Some medical conditions have standard waiting period. "Every health insurance policy has a list of disease with a waiting period ranging from two-four years. Diseases like cataract, piles, hernia, ENT surgery, kidney or gall bladder stone will be covered after certain years of waiting period," says Chhabra. Besides there are also some pre-existing diseases (PEDs) whose waiting period varies from insurer to insurer. "Pre-Existing Diseases are the ones that are already detected and are disclosed by the policyholder before buying the policy. Such type of diseases can be hypertension or diabetes, which if detected prior to buying a health insurance policy, will only be covered after a few years of buying the policy," says Chhabra. It makes sense for you to check the list to ascertain the waiting period if you or your covered family members have any such pre-existing diseases.
7) Brace for future escalation of premium
Unlike life insurance where the annual premium generally remains unchanged throughout the policy, in health insurance this is not the case. "Premium increases with the age in most products. Every insurer has a different method of increasing premium. Some insurers do it every five years, some every year," says Chhabra. Therefore, you need to enquire about the frequency of premium increase from your health insurer.
8) Have provision for future rise of coverage
With time, cost of most of products and services rises and medical cost is not immune to inflation. Therefore, your health insurance cover also needs to grow with time to take care of the rising cost of the medical treatments. Some health plans help you deal with the inflation to a good extent. "No-claim-bonus or inflation protection are offered by some of insurers to cope up with rising cost as it increases available sum insured by certain percentage depending on the insurance policy," says Giri. There are some plans that offer restoration benefit, which effectively doubles your cover. If the health cover limit is fully exhausted due to hospitalisation, a health plan with restoration benefit restore the cover again. However, this benefit works only once during a policy year.
9) Disclose all material details
During the claim process, if the insurer finds out that the insured person has hidden critical information, her claim may get rejected. Therefore, it is advisable to disclose all material details and provide accurate information. This is especially needed for people who consume tobacco and alcohol. Such disclosures may increase your premium to some extent, but it will ensure that you do not face hurdles when you make a claim against your policy.
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