How to avoid common mistakes while buying Health Insurance policy

     

Dr. Bhabatosh Mishr, Director, Claims, Underwriting, Niva Bupa Health Insurance Company Ltd

Health insurance is becoming indispensable in the current times. Unhealthy lifestyle and food habits has made even our young population susceptible to many health conditions at an early stage in life. To add to that, high medical inflation and increasing frequency of epidemic such as dengue, malaria, typhoid and not to mention Covid-19 has made having health insurance more crucial than ever. So, here is a deep dive to ‘zero-in’ on the right health plan best suited for you and your family.

Step 1:

How much Health Insurance Do I Need?

The first mistake is to try and understand the policy details without evaluating how much health insurance cover would be sufficient to meet your requirements. Therefore, the first step is to determine the sum insured based on the following three parameters:

  • Location - It is important to note that healthcare costs varies depending upon the geographical location one lives in. The treatment costs in a Tier 1 metropolitan city is invariably higher than that in a Tier 2 small town. A person living in a smaller town would in all likelihood undergo most of the regular treatment locally and only consider going to a Tier 1 metro city for any advance treatment or surgery. Whereas a person living in Tier 1 metro city will take all his treatment in the Tier 1 metro city itself and hence would need a higher sum insured.
  • Life stage - An elderly person approaching retirement will need a higher sum insured compared to a millennial who is just starting her/ his career. Similarly, a married person with a family will need a higher sum insured compared to an individual with no dependents. Moreover, like any other insurance product, starting early is key to enjoying all the benefits. If you buy a health plan before 30, you will make the most of embedded offers of the policy, including the benefit of accumulating no-claim bonus over initial years.
  • Medical Inflation - The cost of medical treatment has been increasing rapidly every passing year. Therefore, you will not only have to revisit your requirements and disease progression from time to time, but also have to evaluate the prevalent cost of medicare over the years. Accordingly, you must keep increasing the health cover to match up with the current times. At any given point in time, you must have a sum insured which should be adequate for the next few years and not just suffice for present day needs. Therefore, you must buy a health insurance policy keeping in mind the future cost of hospitalization.

Step 2:

How to select the right health insurer

Once you have analyzed your health cover requirements, it is time to choose the right health insurer. One of the important points to consider is the claim settlement ratio of the insurer. Besides, one should check on the insurer’s network hospitals strength, especially to know how many hospitals in your area/ city have a tie-up with the insurer. This will ensure that you don’t end up running from one hospital to another during an emergency.

Step 3:

Important points to consider before buying a comprehensive health insurance policy

  • Whether to buy indemnity or fixed benefit plan - Indemnity plans are those health insurance policies where the insured is paid for the actual hospitalization expenses up to the sum insured. It is meant to provide for the unforeseen medical expenses. Whereas fixed benefit plans pay a fixed lump sum amount to cover expenses for a predetermined illness or condition that has been insured. These plans provide financial support to the affected person due to the impact of the illness / condition on their income and occupation.
  • Capping - Many indemnity plans have limitations such as capping on room rent charges, OT charges, diagnostics, or doctor’s consultation fees. This means that even if you have a higher sum insured, you will only be paid up to the specified limit under these heads. Any expense over the specified limit will need to be borne by the customer. One should therefore look for policies which offer minimum or no capping.
  • Sub-limits - Many policies have treatment specific sub-limits for specific conditions such as cataract, knee replacement, maternity, etc. As a customer one must be aware of these sub-limits in his/her policy to ensure you do not get any surprises at the time of settlement of claims.
  • Co-payment - Co-payment is the percentage of cost which you need to share with insurers in the event of a claim. Many policies have a co-payment clause in the policy which reduces the premium amount to be paid by the customer.
  • Waiting period - Your policy does not go live for pre-existing or certain specified illnesses on Day 1. The waiting period in such cases could be a minimum of two years and could go up to four years. It is advisable to check the waiting period and opt for the policy which offers minimum waiting time.
  • Standard exclusions - There is a separate section on exclusions in every health insurance policy. Exclusions are standardized by the IRDAI as well as the TPA (Third Party Administrators) to promote uniformity, keeping the customer in focus. As per IRDAI guidelines, certain diseases such as Hepatitis B, Alzheimer's disease, Parkinson's disease, HIV & AIDS are permanently excluded in the policy.
  • No-claim bonus - For every claim-free year, customers get an additional sum insured at no extra cost. The range of annual no-claim bonus varies from 5 percent to 50 percent with some maximum limit depending on the number of years you have been insured under a policy.
  • Wellness benefits - Today many health insurance policies offer innovative wellness benefits such as regular health check-ups, online doctor consultation, incentives in policy renewal premium for maintaining a healthy lifestyle, etc.

One should thus evaluate their health needs and do thorough due diligence before selecting the right policy. So, don’t be in a hurry. Take your time, once you tick all the boxes, you can sit back and enjoy the benefits of your health insurance plan.