Which health insurance meets your need the best?

If you are covered under your employer's group health scheme do you need a separate retail family floater health insurance? If you cannot afford a high sum assured should you supplement it with a top-up plan? Do you need to add a critical illness cover? What about benefits like Out Patient Department (OPD) coverage or overseas treatment? Read on to find out which health insurance is best for you.

Base indemnity health plan is must

Even if you are covered under your employer-provided health insurance, it is advisable to buy a separate retail individual or a family floater of your own. Today, with most people changing several jobs during their lifetime, one can never be sure of having uninterrupted health coverage, says Vaidyanathan Ramani, head of product & innovation centre, Policybazaar.com.

The right amount of coverage depends on several factors like the type of hospital you prefer, current age and health conditions of yourself and your family members, your affordability, etc. Healthcare costs vary significantly by hospital and the facilities opted. For example, the cost of a knee replacement surgery nearly doubles if you opt for an imported implant instead of a local one. The size of your health insurance should be linked to your income and lifestyle, says Prasun Sikdar, MD & CEO, Cigna TTK Health Insurance.

"Most personal finance experts recommend a minimum health cover of Rs 5 lakh. You can have similar sum assured as a family floater to include your family members,'' Sikdar adds.

The average idea on the amount of health insurance should be, say 50% of annual family income as a thumb rule, points out Puneet Sahni, head, product development, SBI General Insurance.

"Medical inflation will start pinching when a person is more likely to utilise the insurance cover, which is age 45 onwards. Hence, a reasonable individual cover at that age band should be looked at," he says.

Top-up plans

Top-up health insurance plans cover policies that offer an additional coverage, beyond the threshold limit of the existing health insurance policy. These plans are needed in cases where a policyholder's base cover or self-financing is not enough. Those who have employer-provided cover can take a top-up with a higher amount and a lower deductible early on in their career, say by age 30 years or so. This way, by the time you retire at, say age 60, you will have the top-up to pay for all big expenses, while the base amount can be self-financed if you can't afford to buy a health cover, points out Sanjay Datta, chief, underwriting and claims, ICICI Lombard General Insurance.

Only keep in mind that claims could be cumbersome in case of top-up plans, especially if the base plan and top-up are from different companies. You may need to submit original medical bills at both insurers. Or you may have to get a declaration from your base plan's insurance company stating how much you have claimed, because the top-up will kick in only beyond that limit, Ramani says.

Critical illness covers

A CI plan is a good supplement to the health insurance portfolio, because critical illnesses often come without prior warnings and treatments can be long drawn and can take a major toll on the financial health of the person.

You could buy a disease-specific plan or a comprehensive CI cover. A disease-specific CI plan provides cover for the cost of treatment of a particular disease at all stages -- be it at the diagnosis stage or advanced treatment. Individuals with any pre-existing aliments usually opt for a disease-specific CI plan. Whereas, in an exhaustive CI policy, a lumpsum amount is paid in case of diagnosis of a particular disease, if the disease is in the list covered under the policy.

"CI policies generally cover various diseases such as cancer, heart-related diseases, kidney failure, organ transplant, coronary artery disease, etc,'' Sikdar says.

One of the biggest advantages of a CI plan is the lump sum it offers, but if you have no liabilities like loan, EMIs, etc, then a base plan with a top-up will take care of your needs, says Ramani. "The problem with a CI plan is that it is a fixed benefit plan and offers one-time payment. Once you are diagnosed with the ailment and get the payment, the plan ceases to exist. But most critical illnesses do recur again. So what happens the next time? That is why a top-up is better because it is exhaustive in coverage and also can be renewed for life,'' he explains.

Maternity benefits, OPD and overseas treatment

The OPD element of insurance is, at times, built as a rider along with the indemnity cover. There are few specific OPD covers available in the market.

The outpatient healthcare services are typically small ticket, high volume transactions; therefore it is vulnerable to fraud and misutilsation. Hence, insurance companies charge higher rates. "The OPD premium is more than 50% of the sum assured and increases with age. One should analyse whether the utility value justifies the cost, keeping his health requirements and age in mind,'' says Sikdar

The advantage of having OPD benefit is that customers use it for diagnostic tests, etc, which are predictive for critical illness and hence, preventive, points out Datta.

"Maternity benefit is useful because a normal health policy will not cover complications during pregnancy. And OPD benefit is useful for a family that has small children or senior citizens and is likely to have high OPD expense,'' says Ramani.

Overseas treatment cover is available as a part of health insurance coverage with many insurers. Few plans offer coverage for planned hospitalisation outside India, provided the treatment is taken in a network hospital. A couple of health plans cover emergency medical treatment abroad on a reimbursement basis.

"Worldwide medical coverage is a suitable benefit for frequent travellers or those who opt for a high sum insured coverage where the scope of utilisation increases with global benefit. Remember, the worldwide coverage is not a replacement for your travel insurance. This coverage is generally included within the base cover and separate premium for such benefits are not available,'' says Sikdar.