Money
Will health insurance riders matter in a post-covid world?
Summary
The decision to include a rider in one’s health insurance policy should be based on specific requirements alone
Hospitalization costs at all major private hospitals have increased by up to 20% over the past 16-18 months, according to data provided by Policybazaar.com. This has happened owing to increased consumption of consumables such as PPE kits and syringes, and the addition of sanitization charges in the wake of covid.
Consumables, sometimes, are not covered under insurance companies’ underwriting guidelines. And, as a health insurance policy holder, you should be aware that your insurer may or may not cover consumables.
In such a situation, is it necessary to buy health insurance riders?
“Before covid-19, consumables accounted for roughly 3-5% of hospital expenditures; but now the share of consumables in hospital bills has risen to a staggering 25-30%. This has put countless families in financial distress across the country, forcing them to take out loans or seek help from relatives and friends to pay their hospital expenses," said Amit Chhabra, head - health insurance, Policybazaar.com.
Fortunately, given the significantly high proportion of consumables in hospital bills, insurers have begun to offer riders that can be purchased in addition to base health policies to cover the cost of consumables in your hospital bills.
“For the time being, Care Health Insurance and Max Bupa Health Insurance provide such riders. Both cost about 5% of the base plan premium and can be added to any Care Health Insurance or Max Bupa Health Insurance policy to cover consumables and non-payable items such as belts, gloves, braces, masks and spirometers," Chhabra said.
Other add-ons that can be included in your health policy are accidental death benefit rider, critical illness rider, maternity rider, outpatient department (OPD) rider and a permanent disability rider.
Pros: Having a rider can give you extensive control on your out-of-pocket expenses while making a claim. The main advantage of having a rider is that it is affordable and provides extra coverage under the base health policy. However, policyholders must be very cautious while choosing riders in a health policy.
Cons: The primary disadvantages of having a rider are a slight increase in premiums, limits on the coverage and the waiting period. For instance, most insurance companies have limits on coverage for the maternity benefit rider, and certain conditions must be met to avail of the benefits. Therefore, it is necessary to ensure that the product being bought is aligned with buyer requirements.
John Mayne, executive director, Coverfox said, “Some specialized riders might prove to be expensive. For example, OPD covers are generally heavy on the wallet, costing 15% of the base premium. Yearly OPD costs might be lower than the additional cost that you pay for adding the rider."
Further, Subramanyam Brahmajosyula, head - reinsurance and product development, SBI General Insurance Ltd, said, “A comprehensive insurance policy, even if it costs you a little more, will give you peace of mind that you are fully covered, whereas with a basic health policy with a number of riders you would need to evaluate each one carefully to decide which is appropriate and it is possible that there could be gaps in coverage, which would be evident only at the time of a claim."
Pricing: Various riders can help insurance buyers save significantly on their out-of-pocket expenses during hospitalization. For instance, suppose you bought a health insurance policy of sum insured ₹5 lakh for a premium of ₹7,000. If you add a HospiCash insurance rider to your policy, you will get a fixed amount benefit ( ₹1,000-1,500) per day of hospitalization. HospiCash covers policyholders for hospitalization expenses for up to 30 days.
You can add this rider for an approximate cost of less than ₹500.
Mayne said, “Riders on average cost 5-15% of the base premium. From a regulatory perspective, the Insurance Regulatory and Development Authority of India (Irdai) has capped the costs of any rider at 30% of the base premium."
Choosing riders: Rakesh Goyal, director, Probus Insurance, said, “First, we must understand what consumables are and how the cost has escalated in the last one-and-a-half years. Typically, they are medical equipment discarded after use. Since last year, as covid-19 cases increased in the country, even the cost of consumables went up. In the months to come, as things come back to normal, we might see the cost of consumables coming down." Thus, the decision of adding a rider to one’s health insurance policy should be based on specific needs.
Mayne said, “It is advisable to add riders such as HospiCash or room rent waiver in your base health policy, as they may prove beneficial in times of need. Specific coverage, such as critical illnesses, can be covered under your health insurance policy by adding a particular rider based on individual need-gaps. But riders such as OPD cover have various limitations on use. So, policy buyers looking for these benefits should go with policies that cover these riders as ‘in-built cover’ under their base health plans."
