Things to watch out for when you buy health insurance

Over 26% of India’s population still live below the poverty line, and almost 35% is illiterate. Living conditions in semi urban and rural India make them vulnerable to diseases. Nearly one million Indians die every year due to inadequate healthcare facilities. And 700 million people have no access to specialist care while almost 80% of medical specialists live in metros and urban cities. Only a select few can afford inflationary healthcare and medical costs. Hence, health insurance is a must.

Unlike medical costs, health insurance is affordable, and offers freedom from insecurities. Individual health insurance provides cover for surgeries, medicines, hospital stays, diagnostic tests and other medical expenses related to the hospitalisation. Health insurance products cover indemnity, reimbursements, fixed hospitalisation, surgery benefits, lump sum amount towards diagnosis of a critical illness, so on. Policies differ in what they cover, the size of the deductible and/or co-payment, limits of coverage and the options for treatment available to the policy-holder. Health insurance can be purchased directly by an individual, or it may be provided through an employer.

Know your health insurance
You should understand the plan, including its limitations, conditions, the coverage and the price. For example, insurers insist you take treatment at prescribed hospitals. So be aware of the closest in-network doctors, hospitals and other medical facilities before an emergency arises. Else, you may land up paying a larger percentage of the bill (if you go to an out-of-network hospital in an emergency). Some plans levy a co-pay for treatment taken out of the prescribed network. Most health insurance plans provide coverage for spouse and children. Some plans extend coverage to parents as well. Check and pre-determine your eligibility for your spouse and family.

Most health insurance providers in India offer one-year cover with renewal options and a bonus coverage increase or premium discount, if the insured sum is not utilised. Health plans are available in two formats: individual and group plans. In an individual policy, you are personally the owner of the policy. In a group plan, the sponsor owns the policy and the people covered under it are called its members.

While deciding on your coverage, you may come across a term called “rider”. A rider  is a certain add-on which gives you additional benefits. You will have to pay for the rider but usually the incremental costs are minimal. You cannot purchase a rider without first having a health insurance policy. Some of the riders commonly available with health insurance policies are critical illness cover and hospital cash benefits. These riders may be insurer- or plan-specific and may not be available with all policies.

Right age to buy insurance
There is no right age to buy health insurance as such, but it is beneficial to purchase at an early age. This is so because there are waiting periods for some ailments and full coverage generally kicks in after certain years have elapsed (usually four years). Also, at an advanced age, there may be some ailments already existing, which may get excluded from future coverage or a higher premium may be charged, depending on the results of the pre-issuance health check-up.

Things to watch out for
Health insurance will not cover all the costs that you might incur for medical related reasons. But it will still go a long way in saving you money.

Even after buying health insurance, it is essential that you set aside some part of your savings for health-related expenses as the product inherently has some limitations that you should be aware of when planning for the future.

No coverage for routine medical expenses, check-ups or medicines: A minimum of a day’s hospitalisation is needed to claim health insurance. If you incur an expense that does not result in hospitalisation (like a hairline fracture, for instance), you cannot claim any compensation. Most policies also do not cover outpatient care, hence routine expenses are also not covered.
Limited coverage amount: Insurers usually have a limit of up to Rs5 lakh on their policies. So, your compensation is limited to that amount. Modern medical care, particularly for critical diseases, is very expensive and may not be covered by Rs5 lakh alone and you might need to foot the excess bill.

Exclusions in policies might result in expenses for you: Medical insurance policies usually have exclusions. This means that they do not compensate the policy-holder for certain illnesses or medical conditions. If the policy-holder is afflicted by any of these excluded medical conditions, he will have to pay for the expenses on his own. Expenditure on pregnancy and related ailments may not be covered under individual health insurance policies.
Protection against loss of income: Lastly, health insurance covers only the expenses that you might incur for treatment, but it does not protect any loss of income due to injury or disease. It should ideally be complemented by disability insurance for total protection of your family.

— The writer heads the retail business of HDFC ERGO General Insurance