Health Insurance- Shield for your medical emergencies

We would have heard several stories about medical bills, hospitalization costs, diagnostic fees, etc. during such times. Many families have used up all of their savings as a result of this unexpected pandemic.

Though we live in a new normal today, it has altered our way of life and approach to protection needs, and having adequate health insurance coverage is regarded as one of the smartest financial decisions an earning individual can take.

To simply this, let us first understand,

What is Health Insurance?

Health insurance is a policy contract between the policyholder (Insured) and the Insurance company (Insurer), in which the policyholder agrees to pay a certain amount known a Premium, and in exchange, the insurer agrees to cover medical expenses such as hospitalization, day-care, pre and post hospitalization, and so on. So, if the insured has a medical or health emergency that is covered by the plan, the insurance company will indemnify the eligible medical expenses.

Choosing the best health insurance plan for yourself may be tough given the range of health insurance products available in India.

Here’s a quick guide on 10 Must look features to consider before choosing the appropriate plan for you.

• Coverage and Pricing

One must identify what is the cover amount one should opt for. Well, there is no definite way to arrive at the coverage amount. Few assumptions and situations explained here may help decide one:

1. Identify whether you are looking at Individual health insurance or a family cover. The individual cover as the name itself indicates will be entirely used for yourself as per your needs. The family floater cover will float amongst all the family members. Hence, this can be a starting point to decide on the cover amount.
2. Identify the highest claim amount you came across in your family or friends circle and the treatment cost in your vicinity.
3. It also depends on the history of pre-medical condition in the family.
4. If you are starting early, one can start with the minimum individual cover of 5 lacs to cover the medical expenses comfortably and keep on increasing by way of Super top-up or within the same policy as per the change in the life stage.
5. Few specialists suggest having an Ideal cover equivalent to ½ of your annual salary amount as part of Emergency planning.

Well, these are just enablers to help you arrive at a cover amount, It all depends on your life stage, your current needs, pre-medical condition, if any.

Once the cover amount is decided, one must look out for the pricing for the said cover amount against his age. A policy with a lower premium may be more attractive to customers, but it’s important to consider the overall value of the policy, including the coverage amount and the policy’s features and whether it is value for money.

• Room Rent

Room rent is the most important aspect to consider because it is linked to all incidental expenses such as doctor consultations, nursing charges, and so on. It is best to choose a plan that has no room rent restrictions or sub-limits.

• Waiting Period & Pre-Existing Diseases

It is apparent to know the waiting periods in the policy.

There are three major waiting periods: a 30-day initial waiting period, a 2-year waiting period for Specified Diseases listed in the policy, and a 4-year waiting period for pre-existing diseases. Pre-existing diseases is a prevalent medical condition before taking the policy for which the medical treatment is sought for.

A policy with a shorter waiting period for pre-existing conditions is advisable.

• Co-Payment

Co-payment means that the policyholder must contribute a set percentage of the claim with the insurer, say 10% or 20%, depending on the policy terms and conditions. Few policies include a mandatory co-payment, and even fewer include voluntary options. It is usually preferable to choose a policy with NO co-pay and to avoid the voluntary choice. Though it will lower your premium because you are sharing the risk with the insurer, it will have an effect when you file a claim.

• No Claim Bonus

In a health insurance policy, the terms “Cumulative Bonus” and “No Claim Bonus” are interchangeable. As the name itself indicates, when there is no claim in the policy, the policyholder is entitled to receive a certain percentage in the form of bonus which is a variable percentage of Sum insured (SI). 

This amount is available to be utilised in addition to the base sum insured, should the claim exceed the base sum insured. Fewer policies provide a discount on your premium instead of Bonus. 

Higher the No claim bonus say 100% or 150% of SI over a period of time, the better for the policyholder. As this is a monetary benefit available for the policyholder by way of bonus or discount for no claims.

• Recharge of Sum-Insured (SI)

This is one of the crucial features that comes to the rescue, especially when a medical emergency occurs that exhausts the full Base Sum insured in the policy during the one-year period.

This feature helps to restore or recharge the SI up to 100% depending on the terms of the policy. This feature is known by several names depending on the offering, such as Restoration of SI, Recharge of SI, Regain of SI, and so on. In some cases, a 150% restoration is available for unrelated diseases. One need to comprehend these variations to take advantage of this benefit. The following are some of the variations:

• Some provide the benefit by default once a year.
• On the Second claim after SI exhaustion.
• Once a year by default.
• Unlimited times for Related or Unrelated diseases.

One must look out for this feature in the policy and understand the variations implied.

• Health & Wellness Benefits

Some of the benefits to look out for include annual health check-ups, rewards for healthy behaviour, OPD for future chronic diseases, wellness benefits, and so on.

Annual health checks will keep you informed about your health on a yearly basis. If you are a fitness enthusiast, you will appreciate this feature as it rewards healthy behaviours such as step counts, gym visits, or fitness activity. These rewards are available in the form of points which then can be converted to cash at specific diagnostics, buying medicines or availing a premium discount at the time of renewal. 

Look for comprehensive health insurance product which provides “Health and Wellness benefit”.

• Network Hospitals

Health insurance policies have two claim processes: cashless claims and reimbursement claims. As the name implies, cashless claims are often honoured in Network hospitals affiliated with the insurer.

Reimbursement claims, on the other hand, are reimbursed based on the medical eligible bills provided by the policyholder once the claim has arisen. These could be pre- and post-hospitalization expenses incurred before and after the hospitalisation within the available number of days.

Choose a policy with the greatest number of network hospitals in your area for a hassle-free claim experience.

• Claims Settlement Ratio (CSR)

The claim settlement ratio (CSR) measures the number of claims settled by the insurance company against the total claims made. The CSR shows the goodwill of the company in paying its claim. Moreover, High CSR is desirable.  You can also check for ageing of claims to evaluate the frequency at which these claims are settled, number of complaints registered per 10,000 claims registered and so on. The main purpose of health insurance policy is to mitigate the risk of getting indemnified due to medical emergency, understanding this feature provides insights into the financial stability and overall claims experience.

•  Incurred Claim Ratio (ICR)

The incurred claims ratio (ICR), on the other hand, measures the amount of premium used to pay the claims. The ICR shows the financial standing of the company. High ICR shows that the company is paying most of its premiums for claims and is a bad indicator of the company’s financial standing.

Some of the popular health insurance plans available in India are as under:

One must evaluate these plans on the above factors before purchasing and read out all policy terms and conditions on the product or reach out to your qualified financial advisor for your financial well-being journey.

Remember having health insurance is a necessity and not a luxury.

Please note:

The Views in the article /blog are personal and that of the author. The idea is to create awareness and not intended to provide any product recommendations.