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Odishatv Bureau

Sanjay, 28,  who works in a large broking firm, used to visit me frequently. One day he came and said, ‘‘Sir, I should have listened to you.’’ 

‘What?’  was my natural response. 

“You always insisted I should buy a health insurance cover. In fact, I was also keen but somehow it was getting postponed.” He stopped for a few seconds and said, “Last week I had to hospitalise my wife. However she is going to be released tomorrow.” 

“So, she is fine now. That’s good news,” I replied. 

“But I could have saved Rs 95,750 if I had a health policy. In fact, I have encashed most of my FDs- from my safety net.” Sanjay repented. 

I looked at him and thought this happens to most  people as they try to postpone taking health cover. In fact, most people don’t forget to buy insurance for their vehicles but defer buying health insurance. 

Let us take an example…If you have a cover of Rs 500,000 and your hospital bill is Rs 300,000 you will get from the insurance company full refund of Rs 300,000 (maybe some deductions  depending on the policy). But, you don’t have to draw from your savings. Yes, you have to pay a premium to the Insurer who is ready to pay for you in case of any eventualities. 

Let us look at the premium. For example, if your age is 32 and you want to insure your family (your wife and two children) for Rs 500,000 (these are called family floaters as any member of the family will be covered) you have to pay a premium from Rs 6000 to Rs 10,000 per annum (depending on policy offers).  

So don’t dip into your savings, rather pay a premium and buy health insurance. It may not reduce your mental trauma but financially you will be taken care of. 

Which health insurer? 

There are currently 30 insurance companies in India that offer reliable health insurance plans. Out of these, 25 are general insurance companies and five are standalone health insurance companies. All these companies have unique features of their own and cater for different requirements of customers. Their products are offered by many agents and brokers online or offline- enough to confuse you.  
 
In fact, I advise one to do good due diligence before buying the policy. Standard advice you may get – “Is it a well managed company? Does the company have a wide range of hospital tie-ups (cashless facilities), what about TPA (third party arrangement who processes the claims), claim settlement track record.” 

Hold on. You don’t have to be a financial or risk expert or legal expert. You need to understand the policy properly. Apparently, most policies look similar but you have to read the fine prints. 

I have shortlisted nine points one needs to go through and understand clearly and then only should decide on the Insurer. 

Pre existing diseases 

Most the policies do not cover your pre-existing diseases at least for some period (generally four years). Present insurance rules allow this facility to insurance companies. So suppose you have gall bladder problems and you take a policy and within six to nine months you are hospitalized for treatment, Insurance company will not reimburse your expenses.  

That’s why you must disclose all your existing diseases correctly otherwise insurance company may refuse to pay your claim. Check carefully. Discuss with your advisor/agent. 

Pre and post hospitalisation

Almost all insurance companies reimburse pre-hospitalization expenses for one month and post-hospitalization expenses for two months. Be clear which are the expenses they are going to cover so that you are aware how much claim you can make.  

Check for sub-limits

Usually, companies offer one or two per cent of sum insured as room rent for specific room category. For example for a policy of Rs 5 lakhs, room rent limit may be Rs 5000 in AC single room whereas for policy sum of Rs 3 lakhs the limit may be AC room 
with twin sharing subject to Rs 3000. 

So you know that five-star hospitals charge high room rents, say Rs 7500 for a single AC room and you will be reimbursed Rs 5000 only. Also note that in most five-star hospitals many other charges are linked to the room rent. So you need to be careful regarding choosing the hospital room  

Limit on certain diseases

Also there is a limit for some of the diseases like cataract. 25% of the some insured or Rs 40,000 whichever is lower. So if you have a policy of Rs5 lakhs you will get only Rs 40000 for cataract even if you have spent Rs 75000 in a luxury hospital. 

Daycare

Many policies offer day care facilities for cataract and other ailments. You should ask for an exhaustive list for daycare treatments which are reimbursable. 

Disease waiting period

Insurance regulator has clearly mentioned that there should be a a compulsory waiting period for a few diseases like tonsillectomy, hernia etc. You may get the  list from the company. Ask your agent.  

No claims bonus (NCB)

For every year of “No Claim” you are entitled to get an NCB. Different companies offer different types of bonus. 

Co- pay

Last but not the least, read carefully and if there is any co-pay facility avoid that, if you can (beyond a certain age or for standard health insurance product co-pay is mandatory.  

Let me explain what co-pay is. You have a policy of Rs 500,000 with a co-pay clause of 10 per cent. In case your claim is Rs 300,000, you have to pay Rs30,000. So get an assurance by writing or through mail that there is no co-pay in your policy. 

Claim settlement ratio 

The companies declare their claim settlement ratio- 95 per cent, 98 per cent etc. That means out of 100 claims they settle 95 or 98 claims. This is very an important matrix to know that insurer is willing to pay for genuine claims. 

You can secure all these information from your advisor/agent or websites of the company. Mint newspaper and SecureNow Insurance Brokers Pvt Ltd publishes Mint-SecureNow Mediclaim Rating. You may google for the ranking of different companies in different matrixes. 

However, my suggestion is do your own diligence on the above parameters before deciding on which company’s policy you will take.

Finally, don’t buy a cheap policy just because it costs less. After all it is your health. 

By Binodgopal Mukherjee

An alumnus of IIM Kolkata and has more than 30 years of experience in financial services and has worked with different companies like Karvy, Motilal Oswal and Religare Securities. He resigned from Religare as Associate Vice President and joined academia to pursue his passion. He has wide experience in personal finance and investment domain.

(Caveat: People are requested to consult with their own financial advisors or do their own due diligence before buying a health cover.)

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