Is the value of health insurance plan sufficient for your family?

The whole experience of selecting and buying a health insurance policy can be challenging and confusing. It is especially harder when you are a first timer.

There are many different types of health insurance, each with its own pros and cons. The plan that’s right for a single person
may not be best for a family with small children.

A plan that works for one family may not be right for another. Choosing a health insurance plan is like making any other major purchase. You choose the plan that meets both your needs and your budget.

Having a health insurance in the present times is more about security than money and hence it requires your sincere attention to a few crucial things before committing to a plan.

1. Is the cover for you alone or your family. Therefore is the value of the insurance sufficient?
If you and your spouse are both covered by health insurance at work, you must decide whether it makes more sense to have two independent policies or its better for one of you to cover the other?

If you have children, you need to decide who will cover them.

It may be prudent for you to have an individual health insurance policy as well as for the family. An individual policy gives you the leverage of a long standing relation apart from supporting the waiting term requirements for various critical illnesses and pre-existing diseases.

When buying for a family, check multiple options. Sometimes it is useful from a cost point of view for the oldest member of the family to have a separate policy.

Generally, all insurance companies offer policies covering an individual, the spouse and up to two children under one policy. Some policies also extend the cover to include dependent parents in the same policy.

As for the adequacy of the sum insured, do keep in mind the medical costs in your city and the inflationary impact on healthcare costs.

A carefully considered sum insured along with the cumulative bonus of that policy should be sufficient to help you meet your hospitalisation expenses, to a reasonable extent.

2. Understand what the policy covers and also does not cover
Before buying an insurance policy, it is essential to be aware of the covers and exclusions.

What your insurance does not cover is just as important as, and sometimes more important than what it does cover and what you are paying them to cover.

Make sure you purchase a comprehensive policy. While reviewing the extent of cover of a health plan, do bear in mind the fact that your past health history is not really an indication of future events.

Health problems are inevitable as you progress in the human lifecycle. Anticipate those unexpected scenarios and then prepare a checklist of your priorities.

It’s important to choose a policy most relevant to your needs. So it’s best to evaluate, what you want to cover yourself for - is it just critical illness, or injuries resultant from an accident, all hospitalisation expenses or even OPD expenses?

Make special note to ask if the policy will cover inpatient and outpatient costs? If it is just critical illness, find out what critical diseases are covered and buy one depending upon your lifestyle.

Scrutinise the list of exclusions of the health insurance policy - both permanent and period based. Exclusions describe the ailments and the conditions under which the health insurance cover will not be valid.

For example a common permanent exclusion is cosmetic surgery. Such surgery is generally not life threatening and is carried out at the insistence of the patient.

Most of the insurance companies also do not cover pre-existing diseases in the first few years of purchase (waiting period).
Pre-existing diseases are covered after a policyholder has been a customer for a few years.

Other permanent exclusions could be maternity related expenses, (employer provided group insurance plans often cover maternity related expenses) or vaccination or an injury from adventure sports or expenses related to AIDS to name a few.

3. Understand the premiums
It is important to carefully compare cost against the sum of the total cover provided before purchasing health insurance.

Ultimately, the optimal plan is the one that offers comprehensive coverage at reasonable cost.

Whenever you are evaluating health insurance please look at premium rates of the last five years of the insurance company to ensure that you are looking at pricing over a period of time.

Also, look for co-payment option; it may be a good idea to go for it as it can bring down the premium rates significantly at a nominal cost.

4. Understand the hospital network
Ensure that the list of network hospitals that accept the insurance policy from your preferred company includes good hospitals in your city and are at a comfortable distance from your home.

This would help you get quality treatment using the cashless facility.

5. Understand renewal terms and conditions
One cannot sufficiently reiterate the importance of buying and renewing health insurance to take care of medical emergencies.

Take time out to understand the renewal terms of your health plan. Understand the maximum age up to which you can continue to get the benefits of your health plan from the insurance company.

It is important to note that the waiting periods in health insurance policies reduce only in case of continuous renewal of the policy and also provide cumulative bonus in the event of no claims, subject to a maximum limit.

Understand the terms of the policy so that there are no surprises later. An insurance agent is always on hand to provide the best advice in terms of understanding the intricacies of the product.

Do not shy away or hesitate in seeking answers to all your doubts before signing the purchase document.

The writer is managing director, Royal Sundaram Alliance Insurance Co Ltd