Buying an insurance policy is easy but buying the right policy is not. With so many options available in the market, it is important to know the need and analyze what will meet the requirements. Following critical considerations will help in buying the right health insurance policy.
Adequate cover
It is important that health insurance policy provides sufficient coverage for the insured and his/her family. The amount of coverage is dependent on various factors such as the city of residence, age, etc. In metropolitan cities, medical costs are usually higher, and therefore, one should opt for a higher cover, and similar will be the case the insured is getting old since the need will be for higher coverage assuming increased risk for age-related illnesses.
Pre-existing illness
One should always disclose a pre-existing disease while buying an insurance policy. As per Insurance Regulatory and Development Authority (IRDA) pre-existing disease is any ailment, injury or any disease in any form which was diagnosed within 48 months prior the purchase of the policy.
Pre-existing diseases are not covered under the policy or most of the insurers impose a waiting period during which insurance coverage is not available for the diseases identified as such. The tenure of waiting period differs from insurer to insurer, so it is a good idea to check about this with the insurer in case there is any pre-existing disease.
The information provided to the potential insurers will decide whether the insurance company will provide the coverage or not. In the event of non-disclosure, the insurance company is not liable to pay any cover. Hence, it is advisable to be transparent when it comes to any such information being provided to the insurers at the time of purchasing the policy.
Exclusions
It is also crucial to read the policy documents for all possible exclusions, which define what will not be covered under the policy. There are certain standard exclusions such as the cost of spectacles, dental treatments, and injury under the influence of alcohol. Apart from these, many companies also choose to exclude certain disease from their coverage lists such as general debility, congenital external defects, venereal disease and AIDS.
To get the maximum value for money, it is best to understand the exclusions in the insurance policy and how much it is expected to impact.
Sub-limit
Certain policies have sub-limits, which means that there is a cap on the amount of claim one will get, for example, on room rent or medical treatment of certain diseases. For instance, some policies cap the room rent to 1 or 1.5% of the policy. So, if the medical policy is for Rs. 1 lakh, the insured can only claim Rs. 1,000 or 1,500 for room rent. Any amount higher than this sub-limit will have to be borne by the insured.
Obviously, the policies with sub-limits will have lower premium compared to policies without sub-limits. Also, it is critical to check if the policy has sub-limits on certain ailments because in such a case even if the total sum assured is high, one may not be able to avail the entire amount of hospitalisation.
This is another factor to give a deep thought as it can help in reducing the insurance premium at the cost of lower claims upon any hospitalization and vice-versa.
Cashless facility
Insurance companies offer two types of claim facilities – cashless and reimbursement. Under cashless, the insurer pays directly to the hospital while in the case of reimbursement facility, the insured pay the hospital bills first and then claim it from the insurer.
It is advisable to take cashless facility as then the insured does not have to pay from his / her pocket and avoid the hassle of reimbursement from the insurance company. It is also helpful as the insured does not have to block any working capital till the time money is received from the insurance company.
Co-payment
Co-payment means that the insured will have to bear certain part of the total medical bill that he or she claims from the insurer. For example, suppose the hospitalisation cost is Rs 100 then the insured will have to pay, for instance, 20% from his or her pocket. In the case of a co-payment clause in the insurance plan, the premium is usually lower. However, experts believe that in an event of the high claim amount, co-payment can become a burden on the individual.
So while in the short term it can help in reducing the insurance premium amount, in the long term it can negatively impact by resulting in a large co-payment on a high medical bill. Hence, it is best to give deep thought to what is more important.
In conclusion, one should pay attention to the above factors and try to get a perfect balance between the cost and the benefits of the insurance coverage before purchasing a policy. In most cases, the commitment towards an insurance policy is a long-term commitment and hence it is beneficial to spend some time to get the ideal policy as desired.
Harneet Kaur is a Chartered Accountant, CPA and chief editor at workzippy.com
