“I need a health insurance policy that covers me for expenses incurred while visiting doctors or undergoing diagnostic tests without getting hospitalised. Is such a policy available?”
— One of the many such queries received on Apnapaisa website.
We did a survey on the above topic and found that the cost of the few policies that provide such benefits were far higher than the cost of a regular mediclaim (which covers expenses incurred only if you are actually hospitalised) from the same insurance company.
Also, the sub-limits for such out patient procedures or OPD expenses (without getting admitted in the hospital) are low and it makes little sense to pay extra premium for very limited benefits.
But most consumers do not want to forgo their tax entitlement — Rs15,000 deduction is available for premium paid on a health insurance policy — and hence, look for these policies. Claiming for OPD expenses and paying them is administratively very cumbersome (since there will invariably be multiple claims) and hence, providing this facility comes at a stiff cost, which the insurance company builds into the premium.
Currently, there are limited numbers of policies that have the OPD option (see table for analysis).
Pay it yourself
As you can see, the OPD benefits that you get (assuming you actually incur those expenditure) is less than the extra premium you are paying.
So at best, even if you incur OPD expenditure, you are only paid back what you have anyway paid to the insurance company. There is also the extra hassle of making a claim from the insurance company.
Therefore, it is cheaper and better to pay for such expenses from your pocket.
What you can do
As for the deduction, I believe it is wrong to buy insurance just to get a tax deduction. If you are hell-bent on using your full tax entitlement, you should take a higher mediclaim cover from the same company, which will help you in future, when inflation makes the existing cover low.
Alternatively, you can use it to take a critical illness cover that will pay you a lump sum if you are diagnosed with any of the covered critical illnesses (such as cancer, organ failure, stroke, etc). This will make sure that you can generate a regular income to replace the loss of income that invariably occurs if you are unfortunate enough to get these diseases.
Consumers need to understand that there is no free lunch. Just like it is advisable to keep your investment and insurance needs separate, you should also keep your hospitalisation expense insurance needs separate from regular medical expenditure. Reader comments are welcome.
The writer is CEO, Apna Paisa, a price & features comparison engine for loans, insurance and investments. He can be reached at firstname.lastname@example.org