Practical Tips To Choose a Health Insurance Policy – Part 1

Too many choices often confuse the customer. This is specially true in case of health insurance plans. With more than 20 insurers ( health and general ) offering at least 3-5 different types of health insurance plans each the customer is spoilt for choice. It is therefore important to know the important features, exclusions , list of coverage’s etc before choosing a health insurance plan for your family’s security. In this 2-part series, we will cover practical tips which help you choose the right insurance plan.

Here’s The First List of Hacks :

Sum Insured

This is the maximum amount of money that will be paid by the insurer in case you fall sick. Please take note of the rising medical inflation costs as well as the kind of hospital you will go to while deciding the Sum Insured. Also, additional sum insured becomes cheaper as you go up. A 10 lac cover does not cost twice as much as a 5 lac cover. Calculate the premium for higher sum insured amounts also and the additional amount spent will probably be worth it. Typically, go for at-least 5 lac of coverage if you stay in a metro/tier-1 city.

Room Rent Limit

This looks simple. This is basically the highest rent or category of room you are eligible for. Your limits can be 1% of Sum Insured or upto a single private room ( irrespective of cost).

1. If you go to a tier-1 hospital in a tier-1 city, average room tariff is typically Rs 10000 for a single private room. Hence, if you have a 5 lac cover and room rent limit at 1% of sum insured, you will be covered only upto Rs 5000 for the room.
2. There is another disadvantage with lower room rent limits which most people are unaware of .Most insurers also have a concept of proportionate deduction. In simple words – If your total bill for the hospital stay is Rs 2lac and you stayed in a room which cost Rs 10000. If your room rent limit is Rs 5000 only, then the insurer will reimburse only 50% ( 5000 divided by 10000 ) of the 2 Lac bill . Hence, you will lose roughly 1 Lac on the treatment costs also if you stay in a higher category room. In case the budget allows, it is typically advised to get a health insurance plan which at least covers upto a single private room. This is a practical tip which most people miss and most agents wouldn’t tell you.

List of network hospitals

This is especially relevant if you stay in a non-metro city. Although the list of hospitals may also get revised during the policy year , it is important to check if your preferred hospitals are covered while buying the policy.

Co-payments

This refers to the share of the treatment cost that you need to pay from your own pocket. Insurers introduce this clause so that your financial interests are also aligned with the insurer’s while you are admitted to the hospital. This can be as low as 0% to as high as 20%. A copay me apply if you take treatment in an out-of-network hospital. Some insurers charge a lower premium in non-metro cities due to the lower treatment costs there. In case , you live in Bhopal and opt to pay a lower premium than a person staying in Delhi, you may have to pay 10% from your pocket if you decide to take treatment in Delhi. Generally, avoid copayment plans for extra peace of mind during the claims/ discharge process.

Waiting Periods

Waiting period refers to the time you have to wait in order to be eligible to take certain kind of treatments. This is typically of 3 types

1. Initial Waiting Period : It is typically 30 days. For the first 30 days of the insurance policy purchase, you can take claims only for accident related hospitalizations. No disease/illness will be covered within the first 30 days. Initial waiting period is valid only at the time of first policy purchase and not renewals.
2. Specific Disease Waiting Period : This is typically 2 years.
3. Pre-Existing Disease (PED) Waiting Period – This is typically 3 or 4 years. Pre-existing diseases are the specific diseases like high blood pressure, diabetes, thyroid etc which exist at the time of first policy purchase. Insurers cover the treatments for these conditions only after the PED waiting period. Plans with lower PED waiting periods are more expensive than the ones with higher PED waiting periods. It makes sense to opt for a plan with a lower PED waiting period only if you have any of these specific health conditions. Otherwise, if you are a health individual, PED waiting period should not be a deciding factor in your health insurance purchase.
4. Maternity Waiting Period : It is typically 2-5 years. Insurance companies cover maternity related expenses up to a certain amount after a specific time of the policy purchase. Normally, maternity related expenses are covered only after 3-4 continuous policy years have passed. Practically, considering the restrictions associated with maternity coverage, the additional premium paid for a plan with maternity coverage may not be worth it.

As a rule of thumb, in case you need the benefit – it is generally preferred to choose a plan with a lower waiting period. In case you don’t strongly need that particular benefit, waiting periods should not have a high weight age in your decision.

The second and final part of this series will cover other important features of health insurance plans as well as various health benefits offered by different insurers to get the most value out of your insurance policy.