7 Common Mistakes to Avoid While Buying a Health Insurance Policy

September 23, 2021 Mutual Fund

Health and health insurance awareness in India has been a concern for many years. Besides, the COVID-19 pandemic has been an eye-opener; people now realise the importance of balanced nutrition, exercise, mental well-being, and securing themselves and their families with the right health insurance.

To gain the maximum benefits from your health insurance, one must avoid these seven common mistakes when buying a health insurance policy:

1. Not doing the research:

People often buy a health insurance policy in a hurry, without understanding the policy features and terms. If you do not take the time to research and make an informed decision when you buy or renew a health insurance policy, you could end up with a policy that is unsuitable for you and your dependants.

How to avoid it – Do your research before buying a health insurance policy and choose the one that is best suited as per your requirements. For e.g.: If you are a small family of two adults and 1 or 2 children, it is advisable to opt for a family floater plan instead of an individual plan. Also, buying a separate senior citizen health insurance policy or an individual health insurance policy is advisable to cover your parents and/or parents-in-law. This will save a considerable amount on the premium, and such special policies may offer more benefits.

2. Opting for insufficient coverage:

A policyholder should choose the health insurance coverage based on his/her personal requirements and health situation. However, most people decide about the health insurance coverage based on the premium they will have to pay. This could lead to having inadequate coverage when the medical emergency occurs; you may end up paying for the excess medical expenses from your own pocket.

How to avoid it – Although it is necessary to carefully consider the yearly premium you will pay for the health insurance coverage, it should not be the sole decision-making factor when buying a health insurance policy. It is advisable to take in account your family size and health history, and analyse the medical expenses you could possibly face in the future. Having adequate health insurance coverage will save you from any out-of-pocket expenses if/when a medical emergency occurs.

3. Concealing medical history or lifestyle:

While buying or renewing a health insurance policy, it is necessary to provide accurate details about your medical history. Sometimes people think that sharing their medical history will lead to a policy rejection or higher premium, but this is not always the case. If you continue buying a policy by concealing your medical history, the insurer will reject any claims arising out of your existing health condition that were not disclosed while buying the policy.

Similarly, it goes with certain lifestyle questions that the insurer asks when you buy or renew a health insurance policy, such as a smoking habit. If a medical complication arises out of your undisclosed smoking habit, treatment expenses will not be covered by the insurance company.

How to avoid it – If you do not want any claim rejections, do not be secretive about your medical history and lifestyle habits. You might have to pay a slightly higher premium, but you will not have to pay for any medical complications arising out of the disclosed conditions.

4. Buying a standard policy:

Insurance companies offer basic coverage in their standard policy and many illnesses and situations under which you might need medical coverage are not covered under the standard policy. However, a policyholder can purchase certain add-ons that are suitable for him/her. Since the add-ons increase the premium, many people opt for a standard health insurance policy. Though the premium for a standard policy is lower, it does not cover any specific medical conditions/situations unless you buy related add-ons.

How to avoid it – Go through the list of add-ons that the insurer offers and purchase the ones most suitable for you. Add-ons like critical illnesses and personal accidents are worth paying a slightly higher premium.

5. Not considering other insurers:

People generally do not consider changing the insurer when renewing their policy unless they are completely dissatisfied with the service. Most tend to stick with the same insurance provider because they do not want to lose their accumulated benefits, such as waiting periods for pre-existing diseases. Also, people prefer to avoid the hassle of changing the insurance provider.

How to avoid it – It is possible that other insurance companies are offering the same or even more benefits for a lower premium. Therefore, it is advisable to check with other insurance companies at the time of renewing your health insurance, as the hassle of transferring an insurer is worth the premium you save. Moreover, the benefits you have accumulated with your existing insurer are easily transferrable to your new insurer.

6. Not checking the exclusions:

Every health insurance policy has its own list of exclusions that explains the situations that are not covered in the particular policy. The list of exclusions differs from insurer to insurer. Since the insurance companies state in advance that these situations will not be covered under your policy, they do not accept any claims pertaining to those exclusions. Many people ignore reading the list of exclusions and regret it when they have to make a claim and realise it will not be accepted by the insurer.

How to avoid it – Thoroughly check the list of exclusions before you buy or renew a health insurance policy. It is better to know in advance what is not covered under your policy to avoid any unpleasant surprises later. If a specific condition/situation you might want insurance cover for is mentioned in the list of exclusions, you can make a decision to buy that particular policy or look for another insurer that does cover it.

7. Not reading the policy document:

Though financial experts constantly advise us to read all policy-related documents carefully before buying a health insurance policy, many people avoid it. The policy document contains all the information related to it, including product features, terms and conditions, inclusions and exclusions, exemptions, etc., which a policyholder must be aware of. Not reading the policy document beforehand can lead to future disputes.

How to avoid it – Make sure you read all the policy documents beforehand to make an informed decision and avoid any future disputes. A health insurance policy document may have certain terms that you do not understand; hence, make sure to ask the insurer and understand these terms and conditions before you decide to purchase the policy.

Conclusion:

You can get maximum benefits from a health insurance policy if you do proper research and choose the policy and add-ons best suited to your requirements. It is advisable not to make a hasty decision about your health insurance policy. The time you spend researching, assessing and selecting the best health insurance policy for you is worth it in the long run..

This article first appeared on PersonalFN here