Fixed benefit critical illness plan can cover the loss of pay

Health Insurance is one aspect of financial planning which often gets missed in India. However, with health issues on the rise, it is pertinent that due consideration is given to the type and amount of health cover required when carrying out the analysis of one's financial protection/planning needs. While the importance of purchasing adequate protection for health issues cannot be stressed enough, with the number of health insurance products available in the market, it can be quite confusing when deciding what is relevant to you and how much cover should you consider taking.

In this article, I will try and decode some of the benefits which key health insurance products provide which will hopefully help consumers make the right decision in regards to purchasing health insurance as well as the factors to consider when making a claim under these products.

One of the most common health insurance products is hospitalisation benefits policy. This plan typically provides cover for the costs of hospitalisation together with pre and post hospitalisation medical expenses up to the chosen sum assured. This plan, being available to cover a wide range for hospitalisations, can be quite expensive, and hence, one should look at what other savings/plans that one has before deciding how much cover to purchase. For instance, this benefit is often included as part of the corporate benefits for salaried individuals so these individuals may buy a lower cover when buying this plan on an individual basis. Similarly, buying this policy on a co-pay basis where a certain proportion of every claim is paid by the consumer also reduces its costs. When buying this product, due care should be given to understand what all kinds of treatments are covered, what all aspects of hospitalisation costs are included for the covered treatments, whether the plan is cashless or on a reimbursement basis, and if it is former, then at which hospitals, etc. This will ensure that at the time of claim there are no confusions with regards to how much will the insurer pay and how much the individual has to pay, especially as that is the time when hospital discharge is happening and the patient is eager to go home.

Another extremely important health insurance product is a fixed benefit critical illness plan which provides a fixed lump sum upon the diagnosis of any of the stated critical illnesses covered irrespective of the actual amount of funds being incurred on the treatment. This product should be taken over and above the hospitalisation benefits products as the former's cover may not suffice for the cost of treatment of more major illnesses where treatment can extend for a longer period of time.

Further, the funds from this product can also be used to cover the loss of pay which often occurs due to the inability to work when getting treatment for major illnesses. There are a range of products available in the market to choose from and the type of product one should opt for will depend upon their specific circumstances. As before, it is important to read the fine print to understand what are the exact conditions that are covered and at what stage of the diagnosis will the claim be paid.

For instance, some products provide part benefit even if the condition is diagnosed at an early stage and may not eventually develop into a full-fledged version whereas some will only pay up if the condition reaches a particular stage.

Overall, it is important for the customers to ensure that they select the appropriate kind of products to cover their health insurance needs and critically consider the above aspects when making the purchase. This will ensure that if some unfortunate onset of a health condition was to occur and a claim was to be made, the process is as smooth as possible and the patient can focus on the most important aspect – their health.

The writer is appointed actuary, Canara HSBC Oriental Bank of Commerce Life Insurance