How do you buy a health insurance plan? If you just settle with the plan your agent sells or are happy knowing you have bought the cheapest plan, there is a bit of unlearning and a lot of learning in store for you. A health insurance policy packs in several features and caveats. To give you a ready comparison, we designed Mint Mediclaim Ratings (MMR), which was developed by SecureNow Insurance Broker Pvt. Ltd. The full ratings along with the methodology can be seen here: http://www.livemint.com/mintmediratings .
In the ratings, for family floater plans, we have considered two sum insured amounts (Rs.10 lakh and Rs.20 lakh) and three age categories in each—eldest insured member is 35, 45 or 65 years old. For individual plans, the age categories are the same but the sum assured is Rs.5 lakh. The newest edition of the ratings (July 2015) also includes individual plans of Rs.5 lakh, Rs.10 lakh and Rs.20 lakh for a person aged 70 years.
This week, we spotlight family floater policies with sum assured Rs.10 lakh, the eldest person being 45 years old and the coverage is for two adults and two children. We also explain some of the important aspects that one should look at while choosing a policy.
Let’s look at no-claim bonus. Health insurance plans are usually annual contracts that you renew every year. Each year you can make a claim on your policy up till the sum insured. The insurer would prefer if you didn’t make a claim and, therefore, would reward a no-claim year by, usually, increasing your sum insured for free. Keep in mind that an increase in sum insured does not alter any other features of the policy. So, if there is co-pay or sub-limits in the policy, the same would apply even on the increased sum insured.
Insurers, typically, increase the sum insured by 5% every year up to a maximum of 50%, but if you make a claim, it could proportionately decrease the extra sum insured. But the base sum assured doesn’t get reduced. No-claim bonus is nice to have as it could also serve as a cushion against inflation. But given that medical inflation is over 10%, an increase of 5% may not be sufficient. In MMR, no-claim bonus has been assigned a weightage of 7.5%.