How to pick right health insurance policy from myriad schemes

Choosing from the over 180 health insurance policies offered by the 20-odd health insurers is no easy task. Most customers end up comparing only the prices and opt for a health insurance policy that provides maximum coverage for minimum premium.

Apart from price, individuals need to look at a few important parameters before they select a health cover. These include exclusions, sub-limits, waiting period, loading, no-claim bonus, a network of hospitals, claim settlement ratio, the policy is renewable or not, etc.

“They must check that they do not end up paying extra on account of co-pay or room rate restrictions and that there is no loading of premium,” cautions S Prakash, COO, Star Health.

It is important to choose the right health insurance policy to ensure that you get the required treatment when you need it. After all, "Health insurance is not an investment tool but is a protection for an unknown risk,’’ says Dhruv Sarin, director, Policybazaar.

"In any given health policy there may be capping on claim payment or sub-limits and co-pays applied due to which the net premium may look cheaper but at the time of claim the customer ends up paying more out of his pocket,’’ says Sanjay Datta, chief, Underwriting, Claims and Reinsurance, ICICI Lombard.

For example, take the case of Revati Shetty. With a health insurance cover of Rs 5 lakh, Revati was surprised when her insurer paid only 70% of her total bill of Rs 30,000 citing a clause called room rent restriction. This clause restricts the amount paid towards room rent (and associated medical expenses like doctors’ visit charges, etc.) to 1% of the sum insured. So, for a sum insured of Rs 5 lakh, the insurance company reimburses the room rent up to Rs 5,000 per day only.

"Co-pay and deductibles are features that will reduce the premium of the policy, however, the claim under these policies will not be entirely borne by the insurer and a part of the claim will have to be paid by the insured,” says Datta.

It would be wise to choose an insurance policy that meets your needs. There are basically two kinds of health insurance products, Indemnity and Fixed Benefit. “Indemnity products provide reimbursement for expenses incurred on certain medical treatments. Fixed Benefit products provide the customer with a lump sum amount in case of critical illness,” says Bhabatosh Mishra, chief operating officer, Apollo Munich Health Insurance.

According to experts, individuals need three types of health covers. "Firstly, they need a 'comprehensive' health insurance that provides a broad spectrum health cover. Besides, they also need a 'fixed benefit’ plan such as a critical illness cover," says Mishra. Generally, insurers cover up to 20 major critical illnesses, such as cancer, heart ailments, stroke, etc.

"In addition, a personal accident cover that provides funds for treatment and some benefits too in case of disability is also a must," says Mishra.

For frequent fliers, travel insurance is a must. “People who travel abroad frequently should buy an annual travel policy that covers multiple trips,” says Anuj Gulati, MD & CEO, Religare Health Insurance.

The amount of sum insured depends on age, the number of dependents, geography, etc. “One should buy a health insurance policy when one is younger and fitter, as this proves to be cost-effective,” says Jyoti Punja, chief customer officer, Cigna TTK Health Insurance.

Remember, medical expenses in the metro cities are more expensive than non-metro cities. “It is advisable to have a minimum of Rs 5 lakh health cover. The amount of sum insured can be reviewed from time to time,” says Punja.

India has the highest rate of medical inflation in the world. “With a medical inflation rate of about 12-15% every five years, a sum insured of Rs 5-10 lakh may turn out to be very less in the years to come. A knee replacement that costs around Rs 5 lakh now could cost about Rs 15-20 lakh in next 20-25 years,’’ points out Sarin.

Before you buy health insurance, you must do research, talk to people about their experience. “Don’t choose a company where servicing is compromised,” cautions Prakash.

But Sarin believes that one must not waste too much time doing research. “You never know when illness will strike. So it is better to first buy a policy and then do research. This way, at least you are assured of some cover,” says Sarin.

If one is not happy, then one can always port. “Customers have a 15 day 'free look' window when they can cancel the policies if they wish to,’’ says Gulati.

According to the 2017 Cigna 360° Well-being Score - India Report, a whopping 62% of Indians burnt a hole in their pockets by paying for their own medical expenses.

IN SECURE HANDS

• Medical expenses in the metro cities are more expensive than non-metro cities. India has the highest rate of medical inflation in the world
   
• Choose an insurance policy that meets your needs. There are basically two kinds of health insurance products: Indemnity and Fixed Benefit