A health insurance policy is a must because hospitalisation for even a small ailment can burn a big hole in your pocket. A plethora of products are available in the market, so you should plan meticulously based on your requirements. There are a few critical points that you should keep in mind while buying a health insurance policy.
It is important that your health policy provides sufficient coverage for you and your family. "How much cover one should take will depend on various factors such as city where the person is residing and his age. In case of metros, medical costs are higher, therefore one should opt for higher cover... Also, if you are getting old, your coverage requirement will be higher," says Naval Goel, CEO, PolicyX.com, an insurance policy comparing portal.
"In large metro-cities, a family should have a cover of Rs 10 lakh while in other cities Rs 5 lakh cover is sufficient," says Anand Roy, senior vice president, marketing & sales, Star Health and Allied Insurance.
You should always disclose a pre-existing disease while buying an insurance policy. As per Insurance Regulatory and Development Authority (IRDA) pre-existing diseases is any ailment, injury or any disease in any form which was diagnosed within 48 months prior to purchase of the policy.
Generally, pre-existing diseases are not covered under the policy or most of the insurers impose a waiting period during which insurance coverage is not available for that disease. The tenure of waiting period differs from insurer to insurer.
"Based on the information you give, the insurer will decide whether to provide cover to you or not. In case of non-disclosure, insurance company is not liable to pay you any cover," Mr Roy said.
You must read your policy documents for all possible exclusions, which basically defines what will not be covered under the policy. There are certain standard exclusions such as cost of spectacles, dental treatments and injury under the influence of alcohol. Apart from this many companies exclude certain disease from their coverage list such as general debility, congenital external defects, venereal disease and AIDS.
"You should look at exclusions related to pre-existing diseases and waiting period," says Sanjay Datta chief underwriting and claims, ICICI Lombard General Insurance Company.
Certain policies have sub-limits, meaning there is a cap on the amount of claim you will get, on room rent or medical treatment of certain diseases. For example some policies cap the room rent to 1 or 1.5 per cent of the policy. So, if the medical policy is for Rs 1 lakh, you can only claim Rs 1,000 or 1,500 for room rent, if the cost is higher you will have to pay from your pocket.
Policies with sub-limits will have lower premium compared to policies without sub-limits. Also, it is critical that you check if the policy has sub-limits on certain ailment as in this case even if your sum assured is high, you may not be able to avail the entire amount of hospitalisation.
"Ultimately it is a call that an individual has to take, whether he wants to pay a higher premium or bear part of the cost of hospitalisation," says Anand Roy of Star Health.
Insurance companies generally offer two types of claim facilities--cashless and reimbursement. Under cashless, the insurer pays directly to the hospital while in case of reimbursement facility, you pay the hospital bills from your pocket first and then claim it from your insurer. It is advisable to take cashless as then you don't have to pay from your pocket and avoid the hassle of reimbursement.
Co-payment basically means you will have to bear certain part of the amount that you will claim from your insurer. Suppose your hospitalisation cost is Rs 100 then you will have to pay 20 per cent from your pocket. In case of co-payment clause, the premium is lower. However, experts believe that in case of high claim amount, co-payment can be a burden on the individual.
"It may reduce the premium to about 5-10 per cent on co-payment of 20 per cent. But it is vital to understand co-payment. People may agree to co-pay thinking that it will reduce the premium but on a high claim amount, it could be a significant amount," Mr Datta said.