A Guide To Health Insurance In India: Mistakes To Avoid

Your health is the most important asset you have. It is your most productive asset, and it is up to you to protect it. However, despite your best efforts, there are instances when your health will not be in the shape you would like it to be. These are times when you may need hospitalisation to treat diseases or for surgery. These procedures are expensive, and to save your finances from getting a massive dent and prevent your financial plans from going haywire, you would need a health insurance policy. Many of you may need more confidence in understanding health insurance plans and may be looking for a guide to choosing a medical policy.

On the face of it, a health insurance policy may seem full of jargon and complex terminology, often beyond your easy understanding. However, understanding health insurance is simple. A health insurance policy is an agreement to pay for certain medical expenses if you are hospitalised. A health insurance company charges you a sum of money known as a premium, and in return, it covers your medical expenses up to a pre-agreed amount, known as the sum insured. Keep reading to know more about how you can choose the best health insurance policy.

Health Insurance Guide

While buying a health insurance policy in India, you will find several insurers offering policies. Traditionally, people have gravitated towards the policies issued by public-sector insurance companies owned by the government of India. However, with the advent of numerous health insurance companies in the private sector, the tide has shifted towards the latter, as the features offered in the policies are better.

As per the Annual Report of the Insurance Regulatory and Development Authority of India (IRDAI) for the year 2022 – 23, private-sector health insurance companies have outperformed public-sector health insurance companies in premium collected by 12 per cent in 2021 – 22 and 15.6 per cent in 2022 – 23. So, the traditional bias towards government-owned health insurance companies has been overcome by the features provided.

Top 13 Things to Keep-in-mind When Buying a Health Insurance Plan

On this note, let us look at the health insurance guide to understand what you need to look for when buying health insurance in India:

1. Choose a Good Amount for the Sum Insured: The Sum Insured is the maximum coverage your health insurance company provides when you are hospitalised. While you may be tempted to purchase medical coverage with your budget being the only factor, remember that quality health care is expensive. It would be best to keep in mind the rising medical trend rate in India, essentially medical inflation, which at 14 % in 2022 – 23 is the highest in Asia and higher than the world average. So, suppose you wish to get your treatment done at the best possible facilities providing healthcare by the best medical practitioners. In that case, you need to purchase a policy with a higher sum insured to get your insurance company to cover your medical costs.

2. Consider Purchasing a Super Top Up Plan: A Super Top Up Plan allows you to access a significantly higher sum insured at competitive prices. However, such plans have a compulsory deductible amount, offering additional coverage after your primary health insurance plan.  Care Health Insurance offers the Enhance Plan with high sum insured amounts. It covers major illnesses, advanced technology methods, and organ donor coverage as individual and family floater plans with no maximum entry age and lifelong renewal.

Pro Tip: Go for a high Top-up amount as it will secure you from medical inflation and is available at a very affordable premium.

3. Lifetime Renewal Clause: Lifetime renewal means that your policy can be renewed as long as you live. Some medical insurance companies do not offer you the option to renew your insurance policy beyond a certain age, for example, 70. This is the age when you may be in the maximum need of your medical insurance policy. In case you opt for a medical insurance policy with the benefit of lifetime renewability, you may then have to run around for a new policy with stringent entry barriers in the form of medical tests and underwriting policies and, in the worst case scenario, may even be without a medical insurance policy.

Pro Tip: Although your premium will change with age, the lifetime renewal clause ensures you will never be without medical insurance coverage.

4. Claim Settlement Ratio: The Claim Settlement Ratio is the percentage of claims settled within the prescribed time versus the claims raised in the equivalent period. This is a crucial factor in choosing your health insurance company; otherwise, most companies offer features similar to those mandated by the IRDAI guidelines. Data on the Claim Settlement Ratio is available online and is published by the IRDAI. Care Health Insurance has had a Claim Settlement Ratio of 100%, per data available for the first quarter of 2022 – 23!

5. Wide Hospital Network: Choose a health insurance company with a wide network of hospitals offering cashless facilities. This will ensure that you avoid anxiety and the inconvenience of having to deposit a certain amount of money before you get admitted and risk losing precious time on your treatment. A high sum insured loses its significance if cashless facilities are not available. You may check the health insurance company’s network hospitals online before you purchase their policy.

Pro Tip: Ensure that your policy offers you a cashless facility. In case of an emergency, you and your family will waste time starting the treatment while looking around for cash to deposit before admission.

6. Details of Coverage Offered by Policy: Many policies may offer different benefits. Some may offer a lower waiting period for pre pre-existing diseases, while some may cover Critical Illnesses. Some policies cover advanced treatment methods, while some do not cover maternity expenses. Coverage for COVID-19 is something you need to look out for. Compare the policies carefully, checking what each one offers vis-à-vis your requirements.

7. Use Add-on Riders to Customise Your Policy: As you have seen, a single health insurance policy may not have all the benefits you need or desire. In such cases, you may purchase additional riders to customise your policy. You may buy riders to reduce the waiting period for pre-existing diseases, to cover critical illnesses, or to provide global medical coverage.

8. Check for No Claim Bonus and Cumulative Bonus: Health insurance plans incorporate a feature called No Claim Bonus, which accrues if you do not file any claim during the year. This is like a reward your health insurance company offers for not filing any claim. Another kind of bonus called a Cumulative Bonus is also provided where your sum insured increases by a certain amount every time you renew your policy. This is like a reward for renewing your health insurance policy. Care Supreme from Care Health Insurance offers you a Cumulative Bonus of 50 % in two years and a Cumulative Super Bonus of a maximum of 500 % of the sum insured!

9. Recharge of Sum Insured: Many health insurance companies offer you a recharge of your Sum Insured if you exhaust the same within a policy year. There are a lot of conditions that different health insurance companies must meet for this benefit. Some offer you a recharge only for a different medical condition, and some offer a recharge after a 45-day waiting period. In contrast, others offer unlimited recharge for even the same medical condition with no waiting period. Please check carefully before you purchase your medical insurance policy.

10. Higher Sub Limits: Hospitalisation costs include different components—ICU charges, Operation Theatre charges, Doctor’s Fees, Room charges, Medicine charges, and so on. Often, health insurance policies set limits on what they will pay. For example, room charges may be capped at Rs 10,000 per day or by type in a Double-sharing room. Choose a health insurance policy with higher or no sub-limits for most categories of expenses.

11. Waiting Periods: Most medical insurance plans have standard waiting periods. You need to wait 30 days before you can claim hospitalisation or 36 months for pre-existing diseases. Choose a plan with the least waiting periods.

12. Co-Payments and Deductibles: Clauses for Co-Payment, compulsory and voluntary, are a part of health insurance plans. Deductibles are the amount you agree to have deducted from your claim or expenses and are especially applicable to Top Up Plans. Check for these clauses before you purchase your policy.

13. Discounts: Many health insurance companies offer discounts on online payments or if you pay the premium for multiple years together – both for new purchases and renewals. Check for this before purchasing your policy.

What to Avoid When Buying a Health Insurance Plan?

Now that you are aware of what you need to look  for before purchasing a health insurance policy in India, you also need to know what to avoid:

1. Purchasing a Policy in a Hurry Without Research: Many health insurance companies offer multiple policies with different features and benefits. You need to match your requirements – both in terms of Sum Insured and requirements- before hastening the purchase of a policy.

2. Less Policy Coverage: Decide on your Sum Insured after considering your family size, the age of the family members, and foreseen medical expenses in the near future.

You may decide on what coverage is adequate for you by checking the following benefits offered by a Health Insurance Policy:

• Hospitalisation expenses
• Pre and Post Hospitalisation expenses coverage
• Health Check-Ups
• Waiting Period

3. Concealing Medical History: You may hide certain medical details, fearing higher premiums or policy rejection. This is something to avoid at all costs, as health insurance policies are based on the principle of utmost good faith, and non-disclosure may result in the rejection of claims in the future.

4. Not Purchasing a Personal Policy: Salaried individuals are often covered by their company’s group mediclaim policy and are frequently negligent in buying a personal policy. On retirement from the company or in case of sudden ceasing of employment, it becomes difficult to apply for a new medical insurance policy.

5. Not paying attention to the clauses: You need to read all the fine print, but especially to the  following clauses as they totally alter the coverage and the amounts.

• Co-Payment Clause
• Sub Limits

6. Only as a Tax Savings instrument: You may claim a deduction of the amount of your premium from your taxable income under Section 80D of the Income Tax Act, 1961.  However, a health insurance policy is too crucial to purchase for this purpose only. You need to purchase the correct policy by carefully matching your requirements against the features and benefits offered by the policy.

7. Waiting too long: Medical emergencies may occur at any stage of your life and destroy your carefully planned finances. You need to purchase proper medical insurance at an early age to prevent such incidents from occurring. Another disadvantage of waiting too long to buy medical insurance is that you may be subject to many medical tests if you apply at an older age. The gateway for issuance of medical insurance policies is very high at advanced ages, and underwriters often feel uncertain issuing such policies. Some medical insurance companies have clear policies denying entrance after a certain age. Also, the younger you are when you purchase your medical insurance policy, the cheaper your premium is.

Health insurance is an essential product to purchase to ensure the well-being of you and your family. It also helps safeguard your financial plans and keep your savings intact. It should be purchased after careful research and diligently matching your needs with what the product has to offer.

Disclaimers: All plan features, benefits, coverage, and claims underwriting are subject to policy terms and conditions. Kindly refer to the brochure, sales prospectus, and policy documents carefully.