Health Insurance

The term “Insurance” mean protection from financial loss against a possible eventuality.

You work day in and day out, save meticulously for years. Unfortunately, you fall ill and the doctor advices you to get hospitalized for a few days. Would you want to dip into your savings? The one which took you years to save. The one which you had carefully accumulated to buy a dream car or a dream house.

What’s worse? You may even be denied for a health cover when you come out of the hospital and finally consider buying a health insurance. If not, you would have to wait for 3 or 4 years to avail insurance for the same disease.

My uncle forced my mom to buy a policy for herself and my sister. After a lot of thought my mom did budge and finally bought a policy. She bought a policy for herself and my sister of 1 lakh each. She felt this was a good enough amount and the premium was too high for higher cover. However, she bought it and the life went on. After a couple of years, my sister at the age of 12 got diagnosed with renal infection (kidney disease). This got worse as the days passed. At the age of 15 she had to undergo kidney transplant. The cost of the treatment had touched several lakhs. We could tap into the insurance for just a lakh. Post that all the expenses had to be borne by my parents. They had to dip into their savings, sell their property, change their lifestyle entirely to cover the costs.

We can plan for our life. But our life has its own plan for us!

Now this situation is highly unlikely to happen to everyone. But the fate is such that we have no idea what life has planned for us. Some idiot might just bump into you . Life is highly unpredictable and we ought to protect ourselves as much as possible.

Today, we can not increase the cover amount for my sister even if we are ready to pay the primum. Insurers explicitly reject my sisters case right at the beginning. God forbid none of us get into a situation like these, but it is imperative for each of us to protect ourselves financially – FOREVER.

We all might’ve always wanted to buy one but have pushed it to some other day. That some day would never come.

You may be already covered under your employer’s insurance, but they work as long as you are working at the company. If you happen to leave the company or develop a disease before buying an individual policy, you would land in trouble. Sure you may not plan to leave your company for next few years but why would you want to risk a rejection for a small premium. My neighbor had to undergo heart surgery just a few years before his retirement. He then had to settle for an insurance which makes him wait for 3 years to make a claim, and that too by parting 30% of the bill. He also can opt only a shared room when hospitalized. Insurer does not cover if he intends to stay in a private room. All these for very high premium. You may be younger but if you get diagnosed with a series health condition, insurers might consider rejecting your application like my sister’s case. However, if you are holding a policy prior to getting diagnosed by the same condition you will continue to enjoy the benefits. We can still utilize 1 Lakh for my sister but can neither increase the cover nor can buy a new policy for her today.

How to choose a policy?

This is where most of us back out. You know you want to buy a policy. You head to a portal and input your age, name and place. You get boat load of insurances, all with different features, different premiums and each of the companies have many other types of polices. You feel the cover you chose is too low, you increase the cover and the premium looks too expensive. You get a call from an agent and they start pushing you for some insurance you are not sure of. You feel the mess and simply push it for a further date.

Understand that the numbers would slightly change depending on your location and the kind of hospital you prefer. Get a sense of which would your preferred hospital be in case of emergencies, which would your preferred hospital be in case of planned hospitalization, location you are highly likely to be spending most of your life and correspondingly estimate a rough costing for hospitalizations. That amount could be a guideline for the amount of cover you would need. Let us discuss a few key elements that you have to look at while buying a policy and that should make it easy for you to close in on your policy.

Room Rent Capping

When you get hospitalized, the room you choose kind of controls the prices of everything else. Every upgrade in room adds loading on most of the other charges. A medicine that would cost you Rs. 1000 if you chose double sharing will cost 10% higher (Rs. 1100) if you prefer to stay in a private room. This loading will apply across many other charges like doctor’s fee, medicines, gloves they use etc. If you choose a private AC room, the loading might be 20%.

If you choose a policy with room rent capping, you have to take the burden of all the excess loading above the capped limit for all the charges. For example if your policy covers a room worth 5000 and you choose a room that’s costs 6,000 you might have to pay 20% of the entire bill.

So, it is best to make sure that your policy does not have any caps on room rent. Most of the policies would offer Private single AC room without any limit which would suffice in most cases.

Pro tip: No Room rent capping.

Co-payment

This clause makes you part the bill with the insurer. You may have to pay 20-30% of the bill when you claim your insurance. It is best to avoid this clause and let the insurer pay the entire bill unless it is mandatory. It could be a mandatory clause if you have a pre existing disease or above an age limit when you buy the policy. Beware of those policies that would ask you to share the bill once you cross the age of 60. Avoid Co-payment completely even if the premiums look way cheaper. You may end up paying in lakhs trying to save a few thousands.

Pro tip: Say No to Co-payments.

Pre & Post Hospitalization

Doctors prescribe a host of diagnosis tests before asking you to get admitted to the hospital. Some of these could be very expensive say getting an MRI done. Typically, insurance companies will only cover your hospitalized bills. However, if you have opted for Pre and Post hospitalization, some of these could well get covered under your policy.

Let’s say you have been feeling sick for a few days now. You call your doctor and she asks you to get a routine check up done. You take the reports to her and she gets suspicious about your heart condition and asks you to undergo a coronary angiogram test just to rule out any possibilities of blockages in your heart arteries. She says it is a small procedure and doesn’t need you to get hospitalized. You get tested the next day. On testing, they find a small blockage and suggests you to get admitted. You agree to get admitted after 2 days. Everything goes well and the insurer pays the hospital bill. Doctor suggests you to get a test done after 30 days to see the progress.

Had you opted for Pre & Post hospitalization, all the expenses before getting admitted (doctors fee, medicine and angiogram) and all the expenses of the tests and medicine after getting discharged for a agreed upon period would be borne by the insurer.

Pro tip: Opt a cover that have 30 or 60 days of pre hospitalization and 60 or 90 or 180 days of post hospitalization. The more the better.

Sub limits

You may buy a policy of 10 Lakhs but when you ask your insurer to pay the bill for your knee replacement that costed you 2 Lakhs, they respond by saying you have opted for a policy that have a sub limit for knee replacement at 1 Lakh. Some insurers have sub limits for many procedures like knee replacement or cataract surgery. Some of your employer provided health insurances have these kinds of sub limits. It is best to stay clear from any limits for any procedures or diseases.

Pro tip: No sub limits

Waiting Period

This comes into effect if you are diagnosed with a health condition prior to buying a new policy. Even conditions like diabetes would be considered. Situations if you were hospitalized a few months ago could be considered to initiate a waiting period. Insurers can connect your past health condition like blood pressure to heart attack and might reject your claim within the waiting period. This makes it even more important for you to buy a policy when you are absolutely fit. Nevertheless, always seek for a low waiting period as much as possible.

Waiting period can also be valid for few diseases other than the disclosed pre existing diseases. Certain chronic diseases and planned surgeries could be under a fixed waiting period even if it was diagnosed after purchasing the insurance. Hence, always seek for the lowest possible waiting period.

Pro tip: Low waiting period.

Day Care Treatments

These are coverages for treatments that last less than 24 hours. You feel numbness on your hand. You go to the doctor. She advises you to take a few medicine and visit her after few days. You visit her but you say the problem still persists. Doctor asks you if you would want to get a minor surgery done which lasts less than a few hours. You choose to do it and get relived from the problem. The surgery costs 30,000 and you would have to pay that from your pocket. Most of the insurances does not cover claims unless you get hospitalized for more than 24 hours. This is where day care treatments like these or dialysis gets covered if you opt for it.

Pro tip: Ensure your insurer provides insurance for day care treatments upto the sum insured.

No Claim Bonus (NCB)

In case you do not make a claim for a given year, your insurer will increase the cover for free. Say you have a 10 Lakh policy and your NCB is 10% increase for a claim free year. You would now have a coverage of upto 11 Lakhs. You do not make any claims for the next consecutive 2 years and you would be enjoying a coverage of 13 Lakhs. If you happen to get hospitalized and the bill turns out to be 12 lakhs, you would be glad that you had this option and the insurer will pay the entire bill of 12 lakhs. However, insurer would reduce the bonus once you make claims usually at the same rate. This is a great option to have in your policy where you get an upgrade for free for a claim free year. Usually insurers go up to 100% of your base sum insured. Just make sure that the upgrade is a min of 10% every year if not 50%.

Pro tip: Opt for NCBs which increases your cover by 10% or more and up to 100%.

Restoration Benefit

This is a bit tricky to understand. Let me try to keep it to the basics. Say you have a cover of 10 lakhs and you happen to get hospitalized and your bill of Rs. 7 Lakh gets paid by the insurer. Now that you have utilized 7 lakhs out of 10, in case you had to get hospitalized again in the same policy year and the bill comes out to be 5 lakhs the insurer will only pay 3 lakhs and you would have to pay 2 lakhs from your pocket.

What restoration benefit does is once you have made a claim of 7 lakh, the insurer will automatically restore your entire 10 lakhs again and you would be able to claim your entire 5 lakhs during your second hospitalization. This is even more important if you are choosing a single policy for your entire family. Most insurers will provide restoration benefit for a different illness but ensure that you get restoration benefit for the same illness.

Pro tip: Try to get unlimited number of restorations for same and different illness. Try to get atleast one time restoration for same and different illness.

Cashless Network Hospitals

Your insurance provider should have the maximum coverage area and the list of network hospital should have all the major hospitals especially around your locality. One thing to look for is the coverage area in the country and city while another factor should be to check if the hospitals that you would prefer for both emergencies and planned are included. This list is important because if in case they are not a partner you would have to pay the bill first and then run behind the insurer to reimburse.

Pro tip: Maximum number of network hospitals with extar focus on your refered hospitals around your locality.

Other features

There are many other good to have benefits like maternity benefits, alternative treatment cover (cover for ayurvedic treatments), Domiciliary expenses (expenses if you happen to be treated at home in case you don’t find bed at the hospital), out patient department (cover if you simply visit a doctor or dentist and take some prescribed medicines etc). But these are just good to have features and the extra premiums you pay for these may not justify the benefits. Keep them in your mind and choose them if you think it would benefit you and the justifies the premiums paid.

Like in my sisters case, when she was covered under my employers health cover for a brief period I had opted for OPD as well. I had to pay extra 17,000 for an OPD cover of 44,000. Through that I could make claims for her medical bills. On top of that I knew I had to visit a dentist. These expenses could be higher than the premium I would have to pay in the beginning. In this case it would make sense to buy the OPD cover. While in most cases, you would not want to pay the extra premium to cover Rs. 500 of doctors consultation fee.

Your Health Insurance cheat code

How much of the Sum Insured should be enough?

The answer to this question would lie in the response to the question discussed at the beginning. Which location you are likely to stay? Which hospital would you prefer in case of emergencies and which hospital would you prefer in case of planned hospitalization? What is your age?

You would be the best person to gauge the kind of expenses at your preferred hospitals. If you happen to live in a metro city, the expenses are likely to be on a higher side. If you are young, you need a cover that wouldn’t look small even after 10 years from now. Having said that the premiums you pay for higher sum insured should also be in your budget and you should be able to pay the premium every year with out fail.

One way to manage this situation is to opt for a sufficient base cover and buy a Super Top Up.

Super Top ups are way cheaper than your main insurance. They provide you cover over and above your base sum Insured. They are cheap because you agree upfront to a deductible.

Lets assume you want to buy an insurance for 50 lakhs to protect your future as well. But the premium for a 50 Lakh package come out to be very expensive. So you can buy a 10 Lakh base insurance and top it up with a 40 Lakh super top up with 10 Lakh deductible. This means your top up will only be activated if you exhaust your entire 10 Lakh cover and need more money to cover your expenses. It is ideal to select your top up insurer as the same insurer from whom you bought your base insurance. This way you get most of the benefits while the premiums are reduced drastically.

If you do not have your personal insurance yet, the best time for you to buy your insurance was long ago. The next best is now.