Since covid started, the medical inflation rate has been growing at 13%, and at one stage, the medical inflation was above 8%. Now it has lowered to 5.43% as of Aug 2022 (Check here).
But are you prepared for such a surge in health expenses? In this modern world, unless you have crores in the bank, you can’t afford to live without health insurance. So let’s discuss everything about health insurance.
Also, if you haven’t brought life insurance yet. Buy asap. We covered everything about life insurance here.
Estimated read time: 5 minutes and 03 seconds
Buckle up, here we go!
For starters, you pay a premium to the insurance company every year to cover you and your family. If you are hospitalised, the insurance company will pay the hospital bills up to the covered amount for you.
And everyone needs health insurance. Yes, we can’t stress enough about it. The importance of having insurance is increasing day by day.
You never know what will happen in the future. You may plan for something 10 years ahead, but the uncertainty is very high even if you feel very young and healthy. New diseases are being found every year, and health is being affected by the climate change problem. We don’t want to sound too negative, but this is the uncertainty of life.
And insurance helps you reduce the risk of the uncertainty of life. That is why insurance is a protection tool and not an investment tool.
Ideal health insurance cover
The right amount depends on several factors, like the city you live in, the type of hospital you prefer, current age and health conditions, lifestyle and affordability, etc.
Various experts suggest different thumb rules, like the sum assured should be enough for an artery bypass in a hospital of your standard. Or the sum assured should be 50% of your income, or the premiums shouldn’t cost over 2% of your annual income, etc.
So we can only suggest picking an amount that gives you peace of mind. You can start with ₹5 or ₹10 lakhs if you are young and live in a top city and slowly increase the sum assured by top-ups.
Now let’s discuss crucial features to look at in health insurance policy.
Top features to look for in health insurance policy
1. No co-payment
Some policies include a co-payment option, where you pay a part of the hospital bill jointly with the insurance company. It could be 20 to 30%. Usually, these policies have low premiums compared to others. But the savings on premiums are not worth it.
So avoid buying a policy with a co-payment option unless you don’t have any other choice. Why do we say so? Sometimes when you are planning to buy insurance for your parents, the insurance company might insist on a co-payment option to reduce risk from their side. If you don’t accept, they might charge a high premium or reject your policy.
2. No restriction on room rent
Often insurance policies place a limit on room rent. They set most of the cap at 1% of your sum insured. If you are insured for ₹3 lakhs, then you can’t select a room with rent above ₹3k. If you do, the insurance company will only pay a partial amount for the room rent and other expenses.
So avoid policies with a limit on room rent.
3. Pre and post-hospitalisation care
Before being hospitalised, you often take a lot of blood tests, body scans, etc. Sometimes these costs can be a lot to pinch your pocket.
Pre and post-hospitalisation options in your policy will take care of these expenses. This will cover 30–60 days before and after you are treated in a hospital.
4. Waiting period & disease-wise limits
Most Indians buy health insurance only after getting some serious health issues. This increases the risk for health insurance companies as they might have to pay out a lot. To reduce this risk, they have installed waiting periods and disease-wise limits for many diseases.
Let’s say you have heart-related issues. The insurance policy has a waiting period of 4 years from the purchase date. They won’t cover you if you get hospitalised for a heart-related problem within 4 years. They also reduce payments with disease-wise limits.
So buy your health insurance when you are young and undiagnosed with any disease. Or buy a policy with the lowest waiting period and no disease-wise limits.
5. No claim bonus & restoration benefits
If you don’t claim your insurance for a year or two, they should reward you for being healthy, right? For that, health insurance companies provide a no-claim bonus. This bonus can be 10-50% of the sum insured. Your sum insured will increase every year with the bonus amount when you don’t make any claims. Your premium won’t change.
Let’s say you have taken a family policy. Now you are hospitalised, and your insurance claim exhausted 80% of your sum insured. What if your spouse falls ill in the same year? You won’t be able to make an insurance claim again, right?
With restoration benefits, the insurance company will restore the sum insured in full as soon as you make a claim. Some policies provide unlimited restoration, and some have limits.
So buy an insurance policy with a higher no-claim bonus and restoration benefits.
There are a lot more features to look for. Ditto insurance has covered them here. We are not affiliated with them. Sharing their work because they have done an excellent job.
Now there are a few things which you should beware of.
Important things to remember
1. Don’t lie to the insurance company
If you lie to get your insurance policy accepted or to lower the insurance premium, you will get in trouble.
Imagine you claim insurance for a major surgery after paying premiums for 5 years. And the insurance company rejects your claim because you lied about your health conditions? So don’t lie. Maybe get a complete body checkup before buying insurance.
2. Insurance provided by your employer isn’t enough
Almost all companies provide health insurance to their employees. This can be individual or group insurance. Often they select an insurance policy with a lower premium with bare minimum benefits.
So it is better to recheck the policy and purchase a separate policy for yourself and your family.
3. Claim settlement ratio is a lagging signal
Often, while selecting an insurance policy, people focus too much on the claim settlement ratio (CSR). You should know that if a company has a 98% CSR today, it doesn’t mean it will have the same CSR after 5 years. So don’t give CSR a higher weightage while choosing a policy.
Instead, look for the claim intimation ratio (CIR). This ratio takes the total amount settled to the total amount claimed. Bekifaayti has done an excellent job explaining it here.
4. Claim procedure
There are two types of claims – cashless and reimbursement. To receive the cashless claim facility, you have to get treated in a hospital networked with your insurance provider. Check for a hospital connected with your insurance provider in your city.
Also, you have to inform the insurance company 2-3 days before the treatment if it’s a planned one. And for emergency cases, inform them within 24 hours of hospitalisation.
For reimbursement claims, reach out to your insurance provider within 1 week of hospitalisation.
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