Picking a Healthy Product

Chandralekha Mukerji   Delhi     Print Edition: January 2012

Whatever your portfolio, your personal life and health will always remain the best investment. With medical and healthcare costs escalating, even a small surgery can hit your finances. Health insurance is a tool to mitigate this risk. There is a plethora of plans, from traditional indemnity policies to critical illnesses covers, the latest being unit-linked health plans (ULHPs).

With insurance firms now offering a vast variety of products, the process of choosing a health plan best suited to your needs can be quite cumbersome, especially if you are not familiar with industry jargon such as co-payment, sub-limit clauses, and the like.

Akshay Mehrotra, CMO, Policybazaar.com, says: "Plans are being designed for different needs. Hence, it is imperative to know what each of these policies have to offer and then choose one that meets your requirements." Once you know the kind of plan you want to buy, it's time to search for the devil in the details. Here is a checklist of some parameters for comparing health plans to help you make sense of the various options available in the market.

Scope of coverage

The Wellness Tree
The Wellness Tree
When you are paying for a comprehensive cover, make sure the risk covered is comprehensive as well. Don't buy a plan just because it's cheaper than the rest . It should be a premium versus benefit comparison.

Even if the sum insured is the same, there are other benefits you must check, such as critical illnesses covered, OPD cover, ambulance service and insurance against pre-existing diseases. For instance, some insurers cover pre-existing ailments only after four continuous claim-free policy years. All insurers have a waiting period before they cover pre-existing ailments. Four years is the maximum prescribed by the regulator. However, some companies offer plans with a shorter waiting period.

Maximum Renewability
Though there are several health plans for senior citizens, getting a health policy at this age is difficult. There may be stringent criteria for issuance with specific clauses and sub-limits. Plus, the plans will be costlier with a fixed coverage and critical illnesses covered may have special exclusions.

A good insurance advisor will advise you to buy a health plan when you are young and the premiums still low. However, the benefits of buying early will go in vain if your policy is a typical annual contract that does not guarantee renewability after a certain age.

Divya Gandhi, head, general insurance and principal officer, Emkay Global Financial Services says: "Our experience shows that about 70% of medical expenses arise after the age of 70 years. If you buy a policy that is renewable only till, say, 65 years and you are basically on your own after that. Hence, it is advisable to buy a plan that offers life-time renewability."

Cashless Hospital Network
Following up with the insurance company for reimbursement of a claim is tedious. Moreover, if the cost of treatment is high and you don't have sufficient cash, arranging for money during an emergency will only multiply your troubles. So, check if the policy provides for cashless treatment in hospitals near your residence. Antony Jacob, CEO, Apollo Munich Health Insurance says, "Choose an insurance company that promises the largest network of cashless hospitals because, during an emergency, accessibility to healthcare facilities is of utmost importance."

Premium Loading
mosimageA 30% rise in annual premium a year after you make a claim is a common surprise. There are numerous complaints against insurance companies increasing premium without prior notice after a claim is made. If so, you will have no choice but to pay a higher premium to retain the sum assured. This happens because we don't check for premium loading conditions of our policy. "It is recommended that you purchase a plan from insurers who guarantee not to charge additional premium on renewal in case a claim is made," says Antony Jacob. Make sure to check the premium loading clause and ask the insurer for data on premium fluctuation for at least the past five years.

Sub-limits and Co-Payment
In order to avoid inflated charges that hospitals levy on patients with an insurance cover, some policies have sub-limits on room rents or ambulance charges. But you need to be wary if the policy has sub-limits on important expenses, such as doctors' fees and day-care procedures. "The problem is that many people do not know what sub-limits are and their implications. For instance, a very low sub-limit on room rent may actually mean you may not be able to afford a good hospital," says Gandhi.

Sub-limits may also come in the form of co-payments, where the insurer will ask you to pay a predetermined percentage of the claim amount. These can also take the form of deductibles, where the insurer will have a cut-off cost which you will have to bear and the insurer will come into the picture only when the bill goes beyond this limit. "One should always go for plans that come devoid of restrictive options, such as co-payments, limits on room rents and treatment-specific limits. They may cost a little more but hedge financial risk during emergency," advises Gandhi.

Credibility and Claims

 Did you know?
  • It's cheaper to buy a top-up policy (and increase sum assured) to extend your health cover than buy a separate cover. However, they come with huge deductibles.
  • Insurance regulator Irda has capped commissions for health insurance agents at 15% of the premium payable These are also payable on renewals.
  • When you port your health insurance policy, the premium may not be the same even if the cover is similar.

The most critical moment in the tenure of an insurance policy is when a claim is filed. After all, it is for protection against this unfortunate moment that you pay hefty premiums. Rejection at this point is surely going to make you feel cheated.

It is important that you buy your policy from a reliable insurer with a high claims settlement ratio. Too many changes in the product since its launch is also a bad sign. Though all insurance companies have a few dissatisfied customers, discussing the quality of service with existing policyholders on online investor forums can help you get a fair idea.

In-house TPA
Many insurers are now moving from outsourcing claim settlement procedures to an external third party administrator to having their own internal health administration team. "This helps insurers in reducing the turnaround time of claim settlement, the risk of erroneous approval or rejection of claim and having tighter control over their operations," says Mehrotra.

Floater size
You can include your spouse, children and parents in a typical floater health plan. However, there are policies that limit the number of members who can be covered under a single policy, say, for instance, a maximum of two adults and two children. So, when opting for a floater plan that is to provide cover for the whole family, make sure the upper cap on the number of family members who can be insured suits your requirements.

Other features
Apart from cover, many health policies offer special benefits and discounts. The most common is the no-claim bonus. While some insurers increase the cover, others give a discount in premium. Another common perk is free health checkups after four claim-free years. "Opt for these only if premiums are not hiked exorbitantly," says Gandhi.

  • Print

A    A   A