Health care costs are rising faster than health care inflation, which is why it is a must for everyone to have health insurance that not only helps you save money for emergencies, but also saves your life in the event of a medical emergency. or your near and dear ones, but also help you deal with rising health care costs.
Experts believe that health insurance must be part of your financial planning and should be purchased early when you are young and responsible to stay safe. Investing in a health insurance plan at an early age also provides other numerous benefits like better insurance coverage, lower premium rates, no medical tests and so on.
Here is a guide that clearly explains everything about health insurance, factors affecting health insurance, what are the different types of health plan to opt for and much more.
What Is Health Insurance: Importance of Health Insurance
Health insurance is an insurance policy that provides immediate financial assistance in case of any medical emergency. It is a contract between the policyholder and the insurance company that covers medical expenses that may occur as a result of illness, accident or injury. If you have health insurance, then some or all of the medical expenses will be borne by the insurance company, to which the insured has to pay a certain amount known as the premium.
Two Ways for the Insurance Company
There are two ways for the insurance company to compensate your medical expenses:
Cashless treatment: Here, the policyholder is assumed to pay nothing to the network hospital. Because the insurance company pays the hospital directly.
Reimbursement: Here, the policyholder must first pay the medical expenses and later request reimbursement from the insurance company.
Why Should I Have Health Insurance?
Buying a health insurance plan is something that we all avoid until we understand its importance. Before buying, it is important to understand the various benefits of a health insurance plan because medical emergencies can come knocking anytime and could make a big hole in your pocket. That is why it is advisable to take out health insurance at a very young age, where you can have comprehensive insurance at an affordable premium price and you also get the benefit of tax deductions on the premium paid.
In short, one should buy health insurance because:
- It makes it easy for you to get excellent medical care without worrying about high medical costs.
- It offers specialized cover for critical illnesses.
- It covers the cost of a roadside emergency ambulance.
- It offers an affordable youth premium.
- It provides a cashless claim benefit that allows you to take care of your health instead of having to worry about hefty medical bills.
- Protect your savings during a medical emergency.
- It provides tax benefits under Section 80D.
- Last but not least, it protects you and your family and protects your savings
Types of health insurance policies
There are basically two types of health insurance policies such as individual or self plan and family policy. As the name suggests, an individual policy would provide coverage and benefits only to the primary policyholder. On the other hand, in the case of a family plan, there is only one plan that provides coverage for your entire family such as spouse, dependent children, parents and in-laws or dependent siblings.
One should choose a plan depending on factors like your age, family history, children’s age, medical history and of course budget. Let’s take a closer look at each of these plans:
Individual or custom health insurance plan
Individual health insurance is issued in the name of one policyholder, which means that the sum assured and benefits of the policy are entirely reserved for the insured and does not cover anyone else. Here, an individual buys a policy to maintain his own health, which in turn provides financial assistance in case of his own medical emergency.
Floater Family Health Insurance Plan
Family health insurance is one of the policies that aims to provide sum assured to both the individual and his family members. A family health insurance plan is a better option than taking out one policy for each family member as it acts as an umbrella for the entire family. Here, the total insurance cover is shared by all the members covered by the same plan.
However, it is advisable to have a separate plan for parents or in-laws of a senior citizen as it will prove to be a more affordable option. Similarly, if any family member has an extensive medical history, it is also better to buy a separate plan for them rather than including it in the family plan.
Factors to consider before deciding on a health insurance plan
Step 1: Find the Right Insurance Company
Here are some factors you can use to decide on the right health insurance company –
Range of Plans Offered
Check out the different types of plans offered by the company and also the USP plan. Some companies offer a range of products to suit the different coverage requirements you have. Choose a company with a wide variety of plans so you can find the right policy that fits your needs.
Network of Hospitals
The hospital network is extremely important for non-cash receivables. The wider the network the insurance company has, the better it would be. This allows you to easily find the nearest cashless hospital.
Claim Handling Ratio
The claims settlement ratio shows one thing – what percentage of claims the company has settled in a financial year. A higher ratio indicates that the company is persistent in handling its claims. A factor that works in favor of the insurer.
Retrieval Based on Claim
Some companies tend to increase the renewal premium if you have made claims in previous years. This leads to higher insurance costs. Therefore, avoid companies that follow this practice.
Premium Rate
Pricing policy is what premium a company charges over its competitors. You can check the pricing policy by comparing similar plans across different companies.
For example, the Aarogya Sanjeevani policy offers uniform cover features across all insurers. However, the amount of his premium depends on the pricing policy of the insurance company. Compare insurance plan premiums across insurers and find the insurer that charges the least. Its pricing is likely to be fair across all its plans.
Easy Handling of the Complaint
Insurance companies have revolutionized the collection process and simplified it. The following concepts are gaining momentum:
- AI-powered claims processing
- Intimate WhatsApp
- Digital documentation
- Faster approval
- Notification and tracking of claims based on application etc.
- Such facilities speed up the claim process and make it hassle-free
7. Reviews
Finally, don’t ignore customer testimonials and reviews. Most insurance companies list their customer reviews on their websites. You can check them. Alternatively, you can talk to your friends and relatives about their insurers. If they have made a claim, find out about their claim experience so you know which company follows best practices.
Step 2: Finding the Right Plan
Once you have zeroed in on the right insurance company, the next and also the most important step would be to choose a plan. Since multiple insurers offer multiple plans, you have plenty of options. However, choosing the right policy is important.
Here are some factors that will help you with the same –
Benefits of Coverage
- The first thing you need to check is the coverage benefits offered by the different plans. While most plans offer basic coverage benefits, look for plans that have unique features.
- First, assess your coverage needs and then look for plans that offer them. For example, if you’re planning to have a baby in the near future, check out plans that offer maternity. Alternatively, if your family is complete, skip such plans.
- Second, look at other add-on features that could expand the scope of coverage. For example, sum assured renewal, high no-claim bonus, value-added benefits, annual health check-ups, etc. are some of the features to look for.
- Choose the plan that has the most comprehensive range of coverage. This would minimize your out-of-pocket expenses during claims and give you better financial security.
2. Possibility of Customization
Look for plans that let you customize your coverage features to suit your needs. This is possible through the add-ons that health insurance plans offer. Add-ons help you choose additional coverage features to suit your needs and allow customization.
Amount of Insurance Premium
Of course, the amount of the insurance premium is important. Check the premiums charged against the cover offered. Compare for a better idea. Compare premiums across other plans from different insurers that have similar coverage benefits. See if the premium is competitive or inflated relative to the coverage.
Choose the plan with the most competitive premium rate for the same coverage benefits, even if it means choosing a different insurance company.
Partial Limits
Health plans may have sub-limits for various expenses like room rent, ICU room rent, AYUSH cover, home treatment etc. These sub-limits restrict the scope of coverage and may lead to out-of-pocket expenses. Therefore, choose a policy that has no partial limits so that you can enjoy the maximum coverage possible.
Co-participation Clause
- Health insurance plans may have deductibles for a variety of reasons. Co-payment means that in every case of a claim you have to pay the specified part of the claim out of your own pocket. For example, a 10% deductible means you pay 10% of each claim. Common co-payment clauses apply in the following cases:
- If the insured is over 61 years old at the time of purchasing the policy
- If you buy a policy in a city that belongs to a lower tier and avail treatment in a higher tier city
- In case of specific diseases and/or treatment
- Look for health insurance plans that do not have a deductible. Even if the clause is unavoidable, as with senior plans, choose plans with lower deductibles.
Waiting Period
- The waiting period is the time when a specific coverage is not allowed by the health insurance company. After the waiting period, coverage is allowed.
- Health insurance plans impose waiting periods in various cases. These include the following:
- The first 30 or 60 days of the waiting period for sickness coverage. This is also called a cooling off period during which illnesses are not included. However, accidental injuries are covered from 1.
- Waiting period for a specific disease or treatment such as hernia, fissure, hydrocele, tonsillectomy, cataract, joint replacement, etc. This waiting period is generally 24 months. However, tenure may vary in some plans.
- The previous waiting period ranges from 12 months to 48 months. This waiting period applies to illnesses or medical conditions you may have when purchasing a new policy. Complications arising from existing conditions are not covered during this period.
- The waiting period in maternity can vary from 9 months to 48 months.
- Waiting period for reimbursement of OPD expenses, bariatric treatment etc.
- Waiting times are inevitable. However, you can find a plan where the period is low. This is particularly important if you are looking for maternity cover or if you have pre-existing conditions and want cover as soon as possible.
Discounts Available
- Health insurance plans allow different types of discounts to attract customers. Some of the commonly available discounts include the following:
- Discount when purchasing a policy for two or three years
- Discount for covering two or more members under the policy on an individual basis
- Discount when buying insurance online
- Discount when paying the premium in one go, not in installments
- Discount for existing customers of the company
- Discount for maintaining a healthy lifestyle
- Renewal discount if you have not made a claim in the last policy year
- Discount for choosing a voluntary deductible
- Discount for using treatment in a network hospital
- Check out the available discounts. Choose the plan that offers the highest discount to get the best deal on your premium.
- Now that you’ve found the best company and the most suitable plan, you might think your work is done. It isn’t. You should remember another aspect – choosing the right sum insured.
Step 3: How to Find the Right Amount of Coverage?
- Optimum sum assured is important to ensure that your health plan adequately covers your medical expenses. A low sum assured defeats the whole purpose of investing in health insurance and is a strict no-no.
- Choosing the right insurance amount is easier than you think. Just consider the following factors:
- Number of members insured under the policy
- Whether you or any other member suffers from a pre-existing condition
- Basic costs of hospitalization and medical treatment
- Rising health inflation
- Most insurers will help you calculate the ideal sum insured based on your income, expenses, existing coverage and members to be insured. You can also estimate the optimal requirement using a simple formula which is as follows:
- Sum Assured = 50% of your annual income + total hospitalization expenses incurred during the last 3 years
- For example, let’s say your annual income is INR 15 lakhs and you have incurred a hospital bill of INR 5 lakhs in the last three years. In this case, the optimal sum insured would be calculated as follows:
- 50% of INR 15 lakh + INR 5 lakh = INR 12.5 lakh
- Step 4: How to afford a health plan
- Health insurance plans premiums are affordable. In addition, insurance companies offer you the option of installment insurance, where you can pay the insurance monthly, quarterly or semi-annually. This makes health plans affordable.
- Additionally, if affording a high sum assured is a challenge, you can opt for super supplemental health plans. Super top-up plans help increase coverage while keeping premiums low. For example, say you want a cover of INR 15 lakh, but the premium is unaffordable. In such cases, you can opt for a comprehensive health plan of INR 5 lakh or INR 10 lakh and add a super top-up plan of INR 10 lakh or INR 5 lakh.
- The super recharge plan helps you enjoy a total coverage of INR 15 lakhs. However, the total premium would be lower compared to buying a health plan of INR 15 lakhs.
- How to buy health insurance online?
- Easiest way to buy health insurance through online mode which can be done in minutes without paper process and without physical signatures.
- All you need to get is complete detailed information about various health policies as per your needs and requirements.
- Check out the best health insurance and compare them further and according to your needs and requirements to finally choose the best one. Explore them online to find out more about coverage, benefits and premium offers at your convenient place and time.
- After finalizing the policy, read the policy document carefully and complete the documentation process.
- After uploading the documents, it’s time to make the final payment, which can be done by credit card, debit card or online banking. Insurance companies usually take seven to ten days to complete the entire process and then provide you with the policy document.
- What to avoid when buying health insurance
- He embarked on buying a policy: Don’t buy a health insurance plan in a hurry. It is advisable to do proper research and then choose the best health insurance for you or your family. Before choosing health insurance, you can do your own research and compare premium prices online.
- Choosing Inadequate Coverage: When shopping for a health plan, premium price is a major consideration. Don’t choose insufficient or limited coverage to save on premiums. Better go for a comprehensive coverage plan considering your family size, medical history and your financial situation.
- Hiding health-related details: Reveal all the necessary details about your health, lifestyle habits or pre-existing conditions when purchasing a health insurance plan. Concealing relevant medical history can cause great harm, as insurance claims may be denied based on undisclosed medical information.
- Don’t buy separate health insurance: Don’t rely entirely on the medical care provided by your employers, as they only have limited coverage. Also, when you leave the organization, the contract will be terminated immediately. It is important that you purchase a separate health insurance plan where the amount of coverage is greater and will not be affected by the terms of your current employment.
- Ignoring the Terms of the Policy Document: Do not ignore or disregard the terms of the Policy Document. Be it coverage, premium costs, renewal terms, discounts, partial limits, free period, waiting period, co-payment clause or any kind of deductions, everything is clearly stated in your policy document. If you still have any doubts, do not hesitate to contact the relevant insurance company, who will clarify the conditions of your health insurance.
- Buying a policy just for tax savings: Don’t buy health insurance just to save tax on the premium paid. You should definitely be aware of the tax benefits provided under paid health insurance premiums, but the main objective of buying a health insurance plan is to get enough coverage to help you and your family financially in times of health and medical emergencies.
