Buying health insurance is among the most important decisions that you will make in your adult life. But sometimes it may feel a bit daunting to pick the right insurance out of the many available in the market. Calculating the correct coverage that you need may feel like advanced calculus - but it need not be. Here are 11 things to keep in mind before buying health insurance that will make the decision simplified.
Thumb rule for calculating insurance that you need
Let us start by answering the most obvious question: how much health insurance do you need? Think of it like getting a vaccination: you should get the mandatory ones, and you should get the ones for diseases you may catch when travelling someplace before your trip – rest you can ignore. For example, you don’t that costly vaccine for that rare strain of influenza that is spreading fast in Africa. Similarly, your health insurance should provide sufficient cover for common causes for medical expenditure, but you will have to worry about that rare disease only if you actually catch it. This also means that you should look at your family’s medical history to find out what diseases you are susceptible to – diabetes in the family? Make sure your health insurance covers it.
This may feel too daunting. The thumb rule is to use your income as the base to calculate the amount of cover you should get – your health cover should be equal to at least half your annual income. If that seems too low. It should at least be sufficient to pay for a coronary artery bypass in a hospital of your choice.
Given the rising inflation, the group insurance cover you get from your employer may not cover all medical expenses to a sufficient degree - like post-hospitalization charges and room rent may have a cap. Therefore, you should consider getting add-on insurances to provide sufficient coverage for all manner of expenses. You should also consider buying a top-up insurance. This will cost you less than a regular insurance as it will have a large cut-off and will kick in only after you have exhausted your primary health insurance cover.
Whether you should buy individual plan or family floater plan
A family floater provides coverage towards the medical expenses of your entire family, so that you do not have to worry about getting individual covers for all members. Remember that not all your family members will need medical attention at the same time – so instead of getting a 5 lakh cover for each member separately, getting a 7 lakh cover for the whole family may suffice. Further, a family floater provides for a larger coverage at lower cost.
That said, if some of your family members have a high health risk – for example, if your spouse is a regular smoker – it is better to get an individual cover for them. So, a family floater is best suited for young couples with kids not yet in the workforce. It is best to get an individual insurance for family members with high health risk as they may end up using 100% of the sum-assured leaving other members practically without insurance.
Check for pre-existing illnesses and make a list
A few years back, a friend of mine had applied for a health insurance for her mother. Her mother had no illnesses or disorders at that time, so she left the column for preexisting illnesses empty and declared the absence of such conditions.
Unfortunately, her mother was in a road accident about a year later. But the claim filed by her was rejected by the insurer! The reason listed, as you may have guessed, was ‘non-declaration of pre-existing illness’. It turned out that her mother was taking medication for blood pressure when she had applied for the cover. Even though her pressure was normal at that time, any condition that she has previously had treated or diagnosed with or has been treated for is considered pre-existing.
To avoid any miscommunication, and subsequent rejection of claim in the hour of need, you should list down your complete medical history and pre-existing illnesses. This list should include the following:
- Medical history of illness: History of heart attack, gestational diabetes, etc.
- Hospitalization history: Hospitalization in case of angioplasty, kidney stone, etc.
- Signs: Increase in sugar level, obesity, etc.
- Symptoms: Having brain fog, feeling sweaty, etc.
- Medication for any disease or illness: Hypertension medication, diabetes medication, etc.
- Skin disorder: Psoriasis, Vitiligo, etc.
- Major accidental injury: Head injury, having prosthetic limb, etc.
- Diagnosed illnesses: Diabetes, hypertension, etc. that you have or had before applying for a policy.
It is unlikely that your application will be rejected due to your medical history. In the most likely scenario, some of your pre-existing conditions will get coverage after a waiting period. In some cases, the insurer may charge a higher premium to cover certain conditions. Nevertheless, it is better than having your claim denied and even being sued for insurance fraud.
Waiting Period
One of the persistent myths about health insurance is that the coverage starts as soon as one purchases a policy. Typically, the policy has a waiting period at the start of the first year of coverage during which only accidents are covered. Further, an additional waiting period may be stipulated for pre-existing conditions and specialized covers like maternity benefits and critical illness cover.
Always pay attention to the waiting periods and only buy insurance where you are comfortable with the duration of these. If you feel that the waiting period for some of the illnesses is too long, you can ask the insurer to shorten it but at a substantially higher premium.
Pre/Post Hospitalization expenses should be covered
When one gets ill, hospitalization expenses are just one aspect of the medical expenses incurred. There are also expenses incurred for various tests that may have to be conducted pre-hospitalization, medicine expenses, consultation charges both pre-and post-hospitalization, and other post-hospitalization expenses when you are still recuperating – all these add up to a significant amount. It is important that these expenses are also provided for by your insurer. In most cases, medicine costs can far outweigh the hospitalization charges – and therefore make sure that your policy does not exclude these from coverage.
Maternity benefits
Given the rising average age of women at first pregnancy and the rising caesarian to normal delivery, it is important to get a maternity cover when planning to have a child. Typically, maternity benefits are bought as an add-on to standard health cover. These come with a waiting period ranging from 9 months to 6 years, and therefore it is important to invest in one as soon as possible. While the coverage varies with the insurer and the policy opted for, at the minimum it should cover:
- Hospitalization expenses, pre-hospitalization expenses for 30 days and post-hospitalization expenses for 60 days.
- Delivery expenses
- Vaccination costs for the new born
- Ambulance charges
- Post-natal expenses depending on the type of delivery – caesarian delivery would typically involve higher expenses
- Health insurance for the new born and
- Cover for pregnancy related emergencies
Free medical check up
Prevention is always better than cure, and towards this you should get an annual health checkup. Most insurers cover a preventive check-up during the policy period. Further, claiming this does not impact your no claim bonus. So, make sure your insurance policy has a provision for the same, and don’t forget to take advantage of the same.
Life time renewal
Most health insurance policies stop coverage after the insured reaches the age of 60-65 years. But if you get an insurance cover when young, you can get the added advantage of life time renewal, that is you can keep renewing the cover regardless of your age. This can prove to be a boon given the higher life expectancy and escalating medical expenses as one ages. Therefore, make sure your policy has the clause foe life time renewal; even if you have to pay a slightly higher premium for it – a small investment today will pay back rich dividends over your lifetime.
Cumulative bonus
Most health insurance plans provide a cumulative no claim bonus. This is like a reward for maintaining a good health. The quantum of the bonus varies from 5% to 100% of the sum assured, and typically 4-5 years of no claim result in doubling for the coverage. Make sure that your policy has a provision for the same, and be willing to make small out-of-pocket expenses to allow this bonus to build up over the years.
Claim Process
Before you buy an insurance policy, make sure you understand the claim process well – both for cashless and reimbursement claim. Check the claim settlement ratio of the insurer – that is the percentage of claims submitted that the insurer honors. The higher the CSR, better are the chances that your claim will not be rejected. This is important as the moment of truth for an insurance policy is when the claim is made.
Check whether your preferred hospital is there in the TPA network
Every insurer has a network of hospitals where they provide cashless treatment to the insured. This means that the insured need not spend a single paisa from her pocket as the insurer will directly pay the bills to the hospital. In the time of emergency, you do not want to be rushed across the city just because the network hospital is there. Make sure that sufficient number of hospitals in your locality are part of the network, and the hospital that you prefer getting treatment at is part of the network as well.
With these points in mind, you will be able to pick the right health insurance policy from the plethora of options available. Remember that some of the advantages that you get from a health insurance policy get restricted as you age, therefore get a cover as soon as you can.
