Choose a health insurance that works for you

Most of us know that we need medical insurance and plan to get one, but are frozen by the way the market is set up offering choices that we do not understand. It takes one episode of a hospital admission and one episode of using the policy you were sold for you to figure out how much there is to understand before you buy. You are introduced to words like deductibles, pre-existing exclusions and sub-limits when you realize that you have to pay part of the bill that was supposed to be fully taken care of. Despite having a policy, you are spending out of pocket.

That there is a terrible market failure in health insurance in India and the regulator oversees this failure is a fact. But this piece is not about why the market is broken and why you need to jump through so many hoops to just buy a policy, but about helping you choose a policy. Mint, in association with Secure Now Insurance Brokers, eight years ago, set out to bridge the knowledge gap between dense disclosures in insurance policies, a lack of trust in online portals and the increasing need for own cover as medical costs exponentially rise. A one-week stint in a large corporate hospital will set you back by ₹6 lakh-8 lakh without there being a major surgery.

As you set out to buy, the first step is to figure out if you need a solo policy or a family floater. A nuclear family should go for a floater. Young single adults should step out of the family policy and begin their own solo cover. A senior citizen couple can take a family floater or take individual covers, depending on the pricing.

The next decision to make is how big should be the cover. This depends on where you live and what kind of medical facilities you want. Those in large metros wanting a five-star hospital experience need at least ₹25 lakh-50 lakh of a family floater. Those in smaller towns or with lower expectations from their hospital can take a lower cover of ₹10 lakh-25 lakh. A base ₹5 lakh policy for the family is a must for everybody, irrespective of where you live.

Then comes the most difficult part—which policy to buy? There are 28 companies offering more than 100 plans. We tend to look at just the price of a policy to take a decision, but price is the least important among the three parameters that you need to evaluate before you buy. The moment of truth of a policy is on the benefits it gives and the claim going through.

There are five basic benefits that you need to look for. One, pre-existing exclusion waiting period should be not more than one year, or the policy should pay up claims on diseases you had before you bought the policy after one year of buying the policy. Two, it should have no sub-limits on rooms, which means that the entire room rent should be eligible for payment. Some policies put limits on what the room rent can be, so though you have a high-value policy, it won’t pay the entire bill since medical service costs are linked to room rents. Terrible practice, but a rant against hospitals is not where we are going in this piece. Three, you should get a benefit of no-claim-bonus for a claim-free year. Four, you should get a benefit for maintaining good health. Five, the policy should restore the sum insured in case there is a claim in the year and the cover is exhausted.

After benefits you need to look at how well the company services claims and how prompt it is in customer service and addressing complaints. Go for a company that settles 95% or more claims. Find a company that settles claims within a month. Look for a company that has 30 or less complaints per 10,000 claims registered. Some companies fudge their data and give the complaint number as a percentage of total polices instead of those that came in for a claim. Insurance in India is a minefield of tricks and traps.

After you have shortlisted polices on the above two parameters, now look at the price and from this sub-set choose one that is on the cheaper side. You can do all this work, or you can simply spend 30 minutes going through the mediclaim ratings that have done this very difficult data work for you. You can see the 2020 ratings here: livemint.com/mediclaim-rating.

Monika Halan is consulting editor at Mint and writes on household finance, policy and regulation