How to buy health insurance - Value Research: The Complete Guide to Mutual Funds

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How to buy health insurance

Follow this comprehensive roadmap if you are planning to buy a
health insurance policy for your family
By Research Desk | Aug 25, 2014
In March, Noida-based interior designer Seema Singh had to
undergo a surgical procedure called uterine arterial embolisation.
She was flabbergasted to learn that although she would be required
to spend only one night at one of Delhi's top hospitals, nonetheless
the procedure would cost her R70,000. Then she remembered that
about six months ago her brother, a certified financial planner, had
badgered her into purchasing a health insurance policy. She looked
around for the policy and the accompanying identity card. These
she deposited with the third-party administrator (TPA) at the
hospital. She was flooded with relief when a couple of days later she
learnt from the TPA that the insurance company had consented to
foot her entire bill.
In these times of
escalating healthcare
costs, buying health
insurance has become
one of the most
important elements of
one's financial
planning. A health
insurance policy
provides protection
against expenses
arising out of medical emergencies and ensures that you do not
have to dip into your savings to pay for unforeseen medical
expenses.
However, with so many health insurance schemes available in the
market, choosing the right policy has become a challenge. Policies
from different insurers have different features, riders and premium,
and to pick the right one that suits both your needs and your budget
has become a complicated exercise. But paying heed to a few critical
points will help you zero in on the right policy with ease.
Adequate coverage: The first thing to ensure is that the health
insurance policy you buy provides adequate coverage to you and
your family. Says Karan Chopra, head of retail business, HDFC
ERGO General Insurance: Customers should ensure that all
members of the family are covered and that adequate coverage
(sum insured) is opted for considering the current high cost of
quality healthcare.
Do not sacrifice cover just to save money on premium. For the same
sum assured, premiums vary across different insurance companies.
Instead of simply going for the cheapest plan, compare features. By
paying a little extra, you may be able to get greater benefits.
Pre-existing diseases: Every health insurance company has a
waiting period before it starts covering pre-existing diseases.
According to the Insurance Regulatory and Development Authority
(IRDA), a pre-existing disease is any condition, ailment, injury or
related condition for which one had signs or symptoms, were
diagnosed, or received medical advice or treatment within 48
months prior to the purchase of the policy. The waiting period for
covering pre-existing diseases differs from one insurer to another

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How to buy health insurance - Value Research: The Complete Guide to Mutual Funds

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and ranges from two to four years. As is obvious, give preference to

policies that have a lower waiting period.
Also remember that most health policies will not reimburse you for
any treatment undergone within 30 days of buying the policy.
Critical illness rider: Many health insurance policies offer a
critical illness (also called dreaded disease) rider along with the
basic policy. It covers a limited number of diseases for which
usually the cost of treatment is very high. Closely scrutinise the
diseases that are covered by the rider. Those diseases for which
there is a higher degree of susceptibility in your family's medical
history should be included.
According to Yashish Dahiya, chief executive officer,
Policybazaar.com, While selecting the right critical illness cover,
ask specifically which diseases are covered and which are not. For
example, procedures like angioplasty are not covered under critical
illness. Also remember that the waiting period for critical illness is
usually 90-120 days and you must survive for at least a month after
the procedure to get the claim. A critical illness rider mostly covers
expenses arising out of cancer, kidney failure, organ transplant,
multiple sclerosis and coronary artery surgery.
Cashless facility: Cashless facility is the most critical feature of a
health insurance policy. Most health insurance companies offer
both cashless (insurer reimburses the hospital directly) as well as
reimbursement facility. It is better to go for the cashless facility as
then you do not have to make any payments to the hospital out of
your own pocket. It also involves less paperwork and hassle than
the reimbursement facility.
Check the network of hospitals in your city where the cashless
facility is available. Karthik Jhaveri, a certified financial planner,
suggests that you should check whether a hospital empanelled with
the insurer is situated near your residence.
Annual bonus: If you have had a claim-free year, companies offer
a 5 per cent bonus on sum assured the following year. The
cumulative bonus could go up to 50 per cent of sum assured. Make
sure that your insurer offers you this bonus.
Hospital room rent: Most health insurance companies place a
cap on the daily hospital room rent they will pay. Says Dahiya of
Policybazaar.com: Insurance companies have a cap on room rent
which is usually 1 per cent of sum assured per day. This figure
varies from company to company. Royal Sundaram General
Insurance, for instance, reimburses up to 1.5 per cent of the sum
insured per day and IFFCO Tokio, 1-2 per cent under its base plan.
Star Health pays up to R1,500 per day, depending on the city. Thus,
whether you will spend your time in hospital in the general ward or
in the privacy and comfort of a single-bed room will also depend on
how high your sum assured is.
Medical examination: Usually persons aged above 45 are
required to go through a medical checkup before the insurance
company agrees to cover them. If your medical report is adverse,
the insurance company may turn you down (which is why you
should purchase a health insurance policy at an early age).
The age limit at which a medical test becomes compulsory varies
from company to company. It is 45 years in the case of Bajaj Allianz
and Reliance General Insurance, 50 years for Royal Sundaram, 55
years for ICICI Lombard, and 60 years for Star Health.
Health cover for senior citizens: Some insurance companies
have designed policies to cater to the needs of senior citizens. These

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policies typically cover both hospitalisation and domiciliary

hospitalisation (critical ailments wherein the patient is bedridden
but not hospitalised for certain reasons).
Some insurers offer policies renewable up to the age of 75 years,
provided the insured had bought the policy before the age of 55.
The longer period for which a senior citizen cover lasts, the better.
Exclusion clause: Carefully go through the exclusion clause
which is included in the brochure that accompanies the policy
(available on the insurer's website). Most companies exclude
certain categories of diseases and expenses from their coverage list.
These include any internal congenital disease, non-allopathic
treatment, pregnancy and childbirth-related conditions, and
cosmetic, aesthetic and obesity-related treatments. Expenses
arising from HIV or AIDS and related diseases, misuse of liquor,
intoxicating substances or drugs as well as intentional self injury
are not covered by health insurance policies. Diseases or treatments
arising out of wars, riots, strikes, acts of terrorism, and nuclear
weapons are also not covered.
The list of do's and don'ts mentioned above for buying health
insurance may look daunting. However, most of the points
mentioned above can be checked out by going through the brochure
available on the insurance company's website. When it comes to
one's health, it is always better to be safe rather than sorry.

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