A Comprehensive Guide to Buy a Health Insurance Policy in India

September 1, 2021 Mutual Fund

With the rising cost in healthcare, health insurance is seeing a sharp increase in its sales. Of course, like many people, you are aware of the importance of a health insurance plan that secures you and your family.

But, do you know which plan suits you the best?

Do you know all the aspects of health insurance, like the waiting period, policy exclusions, no claim bonus, top-up health insurance, critical illness, etc.?

Today’s article is a comprehensive guide to health insurance that will explain the basics and nuances of health insurance plans. You will avoid any claim rejection if you know all the technical aspects of health insurance. And, most importantly, you must first identify your healthcare requirements to select the best health insurance coverage for you and your family.

What is Health Insurance?

Health Insurance is a type of insurance that provides coverage against any medical emergencies arising out of an injury, illness, or accident. Health insurance extends its coverage to medical expenses, such as hospital bills, medicines, and consultation fees, etc.

A health insurance policy can be bought for a specific period by paying a monthly or yearly premium. The three major deciding factors of health insurance premiums are – Age of the insured, sum insured, and health habits.

What are the important terms used in Health Insurance you should know?

1. Waiting period:

   Generally, most health insurance policies come with a waiting period of 30 days. The waiting period applies to hospitalisation arising due to certain illnesses and diseases. Hospitalisation arising due to an accident is covered in your health insurance right from the policy starts.

2. Pre-existing diseases:

   Pre-existing diseases or illnesses are existing health conditions that you and/or your family have before purchasing the health insurance policy. Health insurance companies generally do not provide coverage to pre-existing health conditions without a minimum waiting period of 2-4 years.

3. Survival Period:

   In case of a critical illness cover, the claim benefit is offered to the insured only if he/she has survived for a minimum of 30 days after the diagnosis of the illness.

4. Network hospitals:

   Your insurer will have tie-ups with some hospitals to give you the benefit of cashless claims. This means, when you go to a network hospital listed with the health insurance company, it settles the hospital expenses directly with that hospital.

5. Add-ons and Riders:

   Add-ons and riders are additional benefits that are not included in your base plan. Insurance companies offer such riders and add-ons for a slight increase in the premium. These add-ons and riders are optional and can be bought as per the requirements of the policyholder. Personal accident cover, critical illness cover, room rent waiver, maternity cover, top-up cover, daily hospital cash, etc. are some examples of add-ons and riders.

6. Inclusions:

   Every health insurance company has a list of inclusions. Inclusions are the situations and illnesses that are covered under the policy. Therefore, if you are looking for coverage against a specific condition, you must check if it is a part of a list of inclusions.

7. Exclusions :

   Exclusions are the situations and illnesses that are not covered under the policy.

8. No Claim Bonus:

   No Claim Bonus, also known as NCB, is a reward added to your sum insured for every claim-free year. Hence, if you do not make any claim in a policy year, the insurer rewards you with an additional sum insured.

9. Co-Pay:

   Co-pay is the part of a claim amount that a policyholder pays from his/her own pocket. The percentage of co-pay is mentioned in your policy documents; as and when you claim, you have to pay that part of the claim by yourself. Many renowned insurance companies do not ask for any co-pay as arranging for the money can be more stressful in during medical emergency.

What are the benefits of having a Health Insurance Policy?

• It pays and/or reimburses the medical expenses and hospital bills of the insured members, as mentioned in the policy document.

• If you avail of treatment in a network hospital of the insurance company through a cashless claim, you do not have to pay anything from your pocket. In other words, the insurance company will directly settle the amount with the hospital, you just have to show the cashless card to the hospital.

• If you would like to go to a hospital of your choice which is not a part of your insurer's network hospitals, you can claim the amount later with the original hospital and medical bills.

• Most of the health insurance companies provide coverage against treatments done under AYUSH (Ayurveda, Yoga and Naturopathy, Unani, Siddha, and Homeopathy).

• Normally, health insurance plans cover pre-hospitalisation expenses of 30 days, and post-hospitalisation expenses of 60 days, including treatments done under AYUSH.

• Some critical illnesses are covered under basic health insurance policies.

• Many insurers provide medical coverage with a condition of minimum 24 hours hospitalisation, but nowadays many insurers have included certain day-care treatments that do not require hospitalisation.

What are the different types of Health Insurance plans?

1. Individual Health Insurance:

   Individual health insurance plans are designed for the coverage provided only to a single person. So, if you want to cover all your family members, you will need to buy a separate policy for each member. The plan is ideal for single men and women, and members who are not eligible for the family floater health insurance.

   For example, suppose Mr Mehta, age 55, has a total of five members in his family, which includes his son, daughter-in-law, 2 grandchildren, and himself. He has bought an individual health insurance policy for himself with a sum insured of Rs 5 Lakhs. Since it is an individual plan, only Mr Mehta is eligible to claim medical benefits. He does not share his sum insured with any of his family members.

2. Family Floater Health Insurance:

   As the name suggests, family floater health insurance is a health insurance plan specifically made to cover an entire family under one roof. Since it is a single policy, you pay a single premium that provides coverage to multiple members. The coverage is distributed to all the insured members. Therefore, it can be used by a single person or multiple persons in a policy year. The family floater plan is ideal for small families with two adults and 0-3 children.

   Let's continue with Mr Mehta's example; Mr Mehta's son has bought a family floater health insurance policy with a sum insured of Rs 5 Lakhs that provides coverage to his wife, two children, and himself. Since it is a family floater plan, anyone covered under this policy can claim for the benefit. The sum insured is distributed to all four of them. Suppose, one of his children uses a sum insured of Rs 4 Lakhs, then only 1 Lakh remains for the use of other family members covered under the policy.

3. Group Health Insurance:

   Most of the companies provide health insurance coverage to their employees in the form of Group Health Insurance. These plans are offered by Insurance companies at affordable premiums which are paid by the employers. The employee can utilise the benefit of the policy as long as s/he is working in the same company, and provided the company has not discontinued the coverage.

4. Critical Illness Insurance:

   Every health insurance policy has a list of exclusions which consists of situations and illnesses that are not covered under the policy. In most policies, critical illnesses, such as cancer and kidney failure are not covered under the basic health plan. However, treatment for such illnesses can cost a pretty penny. Critical illness insurance provides coverage against all critical illnesses for a lower premium. Some insurers let you buy critical illness cover as an add-on with your basic plan. Before making a purchase decision, you must go through the list of critical illnesses that the insurer covers since it differs from an insurer to an insurer.

5. Senior Citizen Health Insurance:

   With increasing age, the risk to health also increases. Although senior citizens can buy individual health policies, such policies do not provide coverage against certain illnesses or diseases to which senior citizens are more prone. Many health insurance companies are now offer special policies to cater for the needs of senior citizens who are more than 60 years old.

6. Maternity Insurance:

   Maternity insurance extends its coverage to normal as well as C-section deliveries, termination of pregnancy due to pregnancy complications, pre and post-natal expenses, and newborn cover. This insurance plan comes with a waiting period of 2-4 years.

7. Top-up Cover:

   With new milestones in your life, you might feel that the existing sum insured is insufficient for you. In such cases, instead of buying separate health insurance with a higher sum insured, you can buy a top-up cover that can increase your sum insured in your existing policy.

What points should you consider while buying a Health Insurance Policy?

1. Benefits offered:

   Not all insurance companies offer the same benefits under a health insurance policy. You must check if the sum insured is sufficient for you or not. Also, compare the various benefits offered, such as ambulance charges, the cap on the room rent, day care treatments, critical illnesses, list of inclusions, etc.

2. Premium:

   You should compare and check the premium you are paying against the sum insured and the benefits offered. You can easily check the premiums of various health insurance policies by using premium calculators available on the official websites of the insurers.

3. Network hospitals:

   Make sure your preferred hospitals are on the list of insurer's network hospitals. This will help you to avail of the cashless claim facility. Plus, you nor your loved ones will have to worry about arranging money to cover medical expenses in a stressful situation.

4. Claim settlement process:

   The claim settlement process should be quick and easy. And, the insurance company should have prompt customer service.

5. Claim settlement ratio:

   The claim settlement ratio represents the number of claims successfully settled against the number of claims filed in a year. A high claim settlement ratio means the chances of the settlement of your claim are high.

6. Company reputation:

   Apart from the claim settlement ratio, you should also consider the company's goodwill, the number of years it is in the business, the solvency ratio that defines the company's ability to pay its short-term and long-term liabilities, and the number of policies issued in a year.

7. Convenience:

   Ensure that buying and renewing of your health insurance policy can be done smoothly. Many insurers offer online purchase and renewal of the policies which saves a lot of your time and money. Also, flexibility to make changes in the existing policy is another feature that can be of great convenience.

8. Exemptions, exclusions, and terms and conditions:

   Before buying the health insurance policy, ensure you thoroughly read the list of exclusions, policy exemptions, and terms and conditions of the policy. Reading all the policy documents beforehand will help avoid any future disputes.

Conclusion:

This article explains everything you must know before buying a health insurance policy. Make sure you understand all the important terminologies explained in the beginning before starting to compare the plans as this will help you understand the plan differences better. Also, consider the points suggested before making a purchase decision that will help you choose the best-suited health insurance policy.

Ensure you understand the plans, compare the plan benefits and premiums, and read all the policy documents carefully. This will help you make an informed decision.

This article first appeared on PersonalFN here