Top rated health plans to choose from
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Have you ever bought a nice shirt at a big discount, patted yourself on the back for getting a good deal and just two wears later had to discard it because the quality was poor? Many make the same mistake while buying health insurance. They buy on the basis of price alone. Yes, they do save some money in the process, and that is fine so long as they don’t end up in hospital. And should such a policyholder end up getting hospitalized, that is when she realizes the true value of her cover because what she has to pay the hospital is much more than what she had saved.
In order to reduce the prices, the insurer laces the policy with exclusions, limiting its liability. A policy that has many exclusions and caps may be cheap but won’t be effective. Hence, we recommend that you go beyond premiums—pay close attention to features of the policy, and then buy one that fits your budget. After all isn’t that what you do when buying a car? Why should health insurance be any different? Yes, it may be tougher because while you may know what to look for in a car, you may not in a health insurance plan.
To help you look at important features and compare, we bring to you Mint Mediclaim Ratings (MMR), developed by SecureNow Insurance Broker Pvt. Ltd. MMR rates health insurance policies on the basis of various parameters such as price, features, and claims record of the insurance company, that are important to consider when buying health insurance. But before you jump to the ratings, start with understanding the policies considered, the parameters we have taken and how we have rated them.
Health plans considered
There are broadly two kinds of health insurance policies: indemnity and defined benefit policies. A basic health insurance policy is an indemnity product that pays for your hospitalization. It covers hospitalization expenses, pre- and post-hospitalization expenses and listed daycare procedures. Defined benefit policies pay a stipulated sum on an insured event. For instance, a critical illness policy will pay the sum insured—the defined benefit—if you contract any of the insured critical illnesses, and the plan will then terminate. But a basic health insurance pays for your hospitalization up to the sum insured in a policy year and can be renewed for life.
MMR considers basic health policies because what you need the most is insurance to cover hospital bills. We have rated around 60 products for 23 non-life insurance companies, including stand-alone health insurers, and three life insurance companies that offer indemnity health products.
We have further divided health insurance into individual and family floater segments. A family floater considers the entire family as one unit. If one member makes a claim, the cover reduces by that much for all members in the policy year. This is why we recommend a higher cover on a floater, and accordingly we have rated plans for a sum insured of Rs.10 lakh and Rs.20 lakh for a family of four in two age categories: eldest member being 35 years and 45 years of age. For senior citizens who are 65 years old, we have considered a family of two.
For individuals, we have four age categories: 35, 45, 65 and 70 years. We have taken a sum insured of Rs.5 lakh for each. For the 70-year category, in the January 2015 edition of MMR, we had rated products with a sum insured of Rs.10 lakh. This time we have expanded to introduce another category—Rs.20 lakh.
For ratings we have broadly taken three essential categories, price, features and claims record, and have assigned weightage. With the price of a policy being an important factor, it continues to get a high weightage of 30%. Product features are sub-divided into six categories and together constitute 45% of the weightage, which means the basic features are more important to consider than premiums. Here the exclusion on pre-existing ailment figures on the top as it is one of the main reasons for claim rejection. While most insurers exclude pre-existing ailments for four years, a few limit it to two-three years. Exclusion gets a weightage of 15% and policies with a lower waiting period score higher. Sub-limits on room rent is the second most important feature as the policy doesn’t just cap the expenses on room rent but also other associated medical costs. If you opt for a higher category room, you will pay not just the difference in rent but other incidentals as well. It gets a weightage of 8%, and a policy with no sub-limits gets full marks.
Other features get a weightage of 5.5% each. Initial waiting period on specified ailments such as cataract and hernia, where procedures can be planned, are standard but there are some policies that waive off the wait. These get full marks. Even after the waiting period, insurers can cap their liability on such ailments. Increasingly most restrict this capping to cataract alone and those products get full marks. Co-payment, in which you bear a portion of the claim amount, is another factor to consider, especially if you are a senior citizen. Given that you are more likely to need medical care at that age, insurers limit their liability by asking you to pay a part of the bill. For others, there may be co-payment on certain ailments or if treatment is done outside the insurers’ network of hospitals. Those with no co-payment, get full marks.
The weightage on no-claim bonus is 5.5%. If a claim is not made, insurers reward you by increasing the sum insured. Those that bump up your bonus by 10% or more in a no-claim year get full marks given that medical inflation is at least 10%.
Claims settlement record comprises 25% of the weightage. We have sub-divided it into three parts: percentage of pending claims over six months has a weightage of 5%, percentage of settled claims is 15%, and claims complaints per 10,000 claims registered gets 5%. Complaints registered is a new category and is important as it reflects the number of dissatisfied customers with regards to claims. Since non-life companies don’t break up complaints according to product categories in public disclsoures, we have taken the data for the entire portfolio. Life insurers have sent data specific to their health portfolio. Claims settled is calculated by dividing the number of claims settled by number of claims on which the insurer has taken a decision. The denominator is the sum of claims settled plus claims repudiated plus claims closed.
We took the data from insurers’ websites, product brochures and public disclosures, and sent the same to insurers to cross check and point out discrepancies. Three insurers, Oriental Insurance Co. Ltd, United India Insurance Co. Ltd and Star Health and Allied Insurance Co. Ltd, did not respond.
Each parameter had a weightage, a score was assigned and a weighted score was calculated. This was added up for the final score, which could range between nil and 100%. Policies with most of these features have been rated A and their scores lie between 65% and 100%. Subsequently, policies shift to B with a score of 45-64%, and the rest are in the C category.
Don’t stop at the final ratings; download the granular ratings of each policy for all parameters from www.livemint.com/mintmediratings. Choose the features you need in a policy and then pick one according to your budget.