Buying insurance, including health insurance, is never easy. Too many options in the market — each claiming to be better than the other — can leave the prospective buyer confused. What should you look for — extent of cover or premium rate or settlement ratio or hospitalisation expenses? The following seven parameters will help you choose the right health insurance policy:
Before buying health insurance, understand what the policy covers and, more importantly, what it does not cover. Read and review the policy thoroughly. Although insurance policies are easy to read, don’t hesitate to ask questions about confusing terms and conditions.
Ensure that the plan covers all healthcare needs, for inadequate insurance coverage is of little or no use. “Similarly, insurance which is more than necessary can lead to wasteful expenditure. By way of an example, a 35-year-old married man may need an insurance cover of Rs 5 lakh each for him and his wife, and a separate cover of an identical amount for his parents. This is irrespective of the health cover provided by his employer. He can opt for higher cover while in his thirties as the premium will still be low,” says Dr Jaideep Devare, managing director, Mahindra Insurance Brokers Ltd.
Claim settlement ratio
Claim settlement ratio is an important factor in selecting an insurance plan. A higher ratio indicates insurance company’s track record of claim settlement It also assures the buyer and the beneficiary of the sincerity of the insurer in fulfilling its obligations. So look out for this ratio when you buy insurance. A claim settlement ratio refers to the total number of claims settled by the insurer irrespective of type of policy. The insurance sector improved its ratio to 97.43 per cent in 2015-16, from 96.97 per cent in 2014-15.
Every health policy comes with an exclusion clause pertaining to diseases and surgeries that are not covered under the plan. So read the fine print before signing on the dotted line. Insurance is governed by rules and regulations and policies contain riders that can either serve or defeat the purpose of buying insurance.
Pre- and post-hospitalisation
Most insurance companies cover expenses incurred before and after hospitalisation, including diagnostic tests like x-rays and ultrasound, specified procedures and treatments, cost of hospital room and prescribed medicines. “In some cases, the expenses may also cover ambulance charges, health check-ups, maternity and newborn, and home or domiciliary hospitalisation. The days covered vary from one insurance company to another. It is important to keep a list of admissible and non-admissible expenses handy, to avoid claims rejection later,” says Devare.
Insurers often impose a co-pay clause wherein a part of medical expenses are to be shared by the insured. Hence, it is essential to select a policy with a lower percentage of co-pay, or no co-pay at all.
Some insurance policies cover pre-existing diseases (PEDs) at the time of purchase. Such pre-existing illnesses are usually covered after a specified waiting period. In case of PEDs, choose a plan with a lesser waiting period. However, some pre-existing diseases are not covered at all in insurance plans.
This aspect is important especially for senior citizens. IRDAI has mandated that maximum entry age for a health insurance policy offered by general insurance companies should be 65 years. However, this age limit varies depending on insurance company and one may get limited options beyond certain age.
In addition to the above, consider the following while selecting a plan:
Existing insurance and the likelihood of additional insurance
Family history of ailments and their age bands, as premium varies accordingly
Capacity to pay annual premiums for adequate coverage
The purchase of a health insurance policy depends on age and health. “The key is to buy a policy at an early age. The younger and healthier one is, the lower the premium and greater the cover. Employees, in particular, should look beyond the group health cover offered by their employers, which may come with exclusions and may not cover all the costs incurred during hospitalisation. In case the insurance document is confusing, one should consult a financial planner for guidance,” advises Devare.