Usually what swings your decision as a buyer is the price of a product. The same psychology works when buying a health insurance cover. The one with the cheapest premium is what you buy, only to realize perhaps the hard way later that it wasn’t the one suited to your needs.
When readers write in for advice on health covers, Mint Money finds it difficult to suggest the cheapest basic health policy since products have evolved over the years. You need to look beyond the premium and ask your agent whether it is the best in terms of facilities and features.
Also See | Health Cover Ratings(PDF)
Beyond price, we found four important parameters that should swing your decision when shopping for the most efficient health plan. To make it easier for you to choose across companies and products, we commissioned Health and Insurance Integrated, a health insurance consulting company, to rank products and companies according to the parameters we chose.
Even if the policy you have chosen is not a part of our list, asking the following questions will help you decode it. If you are already into a policy, you can assess its efficiency by applying these and switch if need be.
What it covers?
A basic health policy is one that covers your hospitalization expenses. Hospitalization expenses include accommodation cost, surgical operations, nursing expenses, doctor’s fees and cost of medicines and diagnostic tests.
An ideal policy is one that ensures that you only have to pay your insurance premium and nothing else. The policy should be able to fund your hospitalization expenses as well as day-care procedures. Technological advancement has done away with the need for hospitalization for many ailments; these ailments come under day-care procedures. A good policy will cover all these or at least all the important day-care procedures.
What also get sold as health insurance are defined benefit policies, which pay you a lump sum against a pre-specified condition. For instance, a critical illness policy will give you a lump sum if you contract a pre-specified illness, a hospital cash policy will give you daily allowance for the time you are hospitalized, and a major surgical benefit policy will give you a lump sum on a pre-defined surgery. We like to see them as top-up policies since they basically act as income supplements for the period you are unwell and unable to work.
If you are single, then what you first need is a basic health insurance policy—buy it even if your employer offers you a cover. You can then top it up with a critical illness plan. If you have a family, you could look at a family floater plan but ensure that the sum insured is huge enough to protect your entire family. A floater policy treats the entire family as one unit so if the cover amount is inadequate, a single claim within the family may mean the rest of the family members are left with little cover.
Till when can it be renewed?
As you grow older you may need enhanced medical care and, therefore, you must ensure that you have a long-term relationship with your insurer. Says Yashish Dahiya, co-founder and CEO, Policybazaar.com, an insurance portal: “About 70% of the medical costs happen post 70 years of age. And that is why one needs to ensure that they have a lifelong relationship with the insurer. Nearly 80% of the policies that are bought from us are from Apollo Munich Health Insurance Co. Ltd and Max Bupa Health Insurance Co. Ltd. Both of them offer lifetime renewability.”
Health insurance is typically an annual contract and many insurers offer to renew the cover till a certain age. If you outlive that cut-off age, you are basically on your own. However, insurers, especially stand-alone insurers, have now begun offering lifetime renewability. Ask your insurer if you can renew your policy all your life.
Does it have sub-limits?
In order to avoid inflated charges that hospitals levy on patients with an insurance cover, some policies may have sub-limits on room rents or ambulance charges. But you need to be wary if the policy has sub-limits on important parameters, such as doctor’s fees and day-care procedures.
These sub-limits can come in the form of co-payment, where the insurer will ask you to pay a predetermined percentage of the claim amount. They can also come as deductibles, where the insurer will have a cut-off till which you will have to bear the cost yourself; the insurer comes in the picture only when the cut-off is breached.
Co-payment and deductibles clauses usually come with policies meant for senior citizens. What you need to ensure is that such claim-sharing agreements are not unreasonable. Says Amarnath Ananthanarayanan, chief executive officer, Bharti AXA General Insurance Co. Ltd: “The main problem is many people don’t know what the sub-limits in their policy are. It is important to go over all the sub-limits. For instance, a very low sub-limit on a room rent may actually mean you may not be able to go to a good hospital. Sub-limits on doctor’s or surgeon’s fees may hurt, too.”
Does it give other benefits?
Apart from providing the bread-and-butter cover, many health policies offer other benefits, including discounts and extra features. Sift through these features and see whether they work for you. For instance, the most common and a useful feature is no-claim bonus. While some insurers bump up the cover, some give a discount in the premium. Another common feature is a free health check-up, typically after four claim-free years. Some policies also offer bundled critical illness policies or cover the expense for a donor.
Opt for these only if the premiums are not being increased exorbitantly.
Additionally, look at policy exclusions. These largely specify diseases, conditions and medical services that your health policy doesn’t cover and even the waiting period on certain specified diseases. For instance, any congenital disease is excluded permanently. Cosmetic surgeries, dental treatment and medical consultation are also excluded. Certain other diseases such as cataract, piles and hernia come with a waiting period of one-two years. However, some insurers either have no waiting period at all or offer sub-limits either for a specified period or permanently. If your policy has more exclusions than standard ones, there is a problem.
What is its premium?
In the pecking order of important parameters, premium comes last. If the bunch of policies that you are comparing satisfy you on the four parameters mentioned above, you could look at the cheapest premium. Says Shefali Chhachhi, director (marketing), Max Bupa: “You will find that policies that are very cheap usually don’t have a comprehensive cover. One needs to do a price-to-benefit comparison. If the benefits are such that they take care of all your health insurance needs, are transparent and ensure you will not get any last-minute shocks, paying extra doesn’t hurt.”
Health insurance is gradually becoming a tightly regulated sector—problem areas such as pre-existing diseases, maximum age at entry and unjustified loading or refusal to renew have been taken care of. And, with the advent of stand-alone insurers, the products are evolving in the favour of the customers. So, when buying health insurance, what you should look at is whether you are getting a lifelong comprehensive plan.
Graphic by Yogesh Kumar/Mint