We will talk about health insurance from the perspective of someone who is not sure whether he/she needs to get one. So that, we can address the common considerations before starting to compare health insurance companies and calculating premiums
Why should you get health insurance?
India is an appalling example of failure of public/government healthcare systems, run by government. Private healthcare providers cater to nearly 70% of all healthcare needs of Indians. As is true in any other sector, if you want better services, you need to pay! Just how much though? Some approximate costs of common treatments is available on Bankbazaar.com, here. But, just to give you an idea: getting your appendix or gall bladder removed will cost somewhere between 76 thousand to nearly 2 lac rupees. If you or your parents need to get a coronary angioplasty it could cost from 2-4 lacs and open heart surgery package will cost rs 6 lacs. Should your infant require cochlear implant, the cost can be anywhere between 8-12 lacs.
It is difficult to get exact cost estimates for hospitalization and ICU management for unplanned treatment or admissions, such as dengue fever or any accident since no predefined packages exist. But, it is safe to say that reaching a bill of 15-20 lac plus in case of a severe diseases is quite common. It is precisely in these times of turmoil that you need the cover of health insurance so that you do not have to beg, borrow or sell in desperation.
So, getting a health insurance makes total sense
Should you get health insurance even if your company gives you one?
Most of us get covers in the range of 2-5 lacs from our employer provided insurance, which is unlikely to be enough in severe health conditions or major hospitalizations. So, we would suggest that you should get top-up cover, to make total health insurance cover to 15-25 lacs for you/your family.
A word of caution: there are two types of top up plans. One which will pay only if total bill exceeds the deductible from your employer given policy in EVERY hospitalization. The other kind will pay if you have exceeded your total employer given cover amount in a given year , WHETHER OR NOT this bill is higher than the employer given cover.
For example: if you have a cover of 5 lac from employer and get admission 1 in which bill is 7 lac, the employer given policy will pay 5 lacs and top up policy will pay 2 lacs. Say, you need another admission and the bill is 3 lacs. Now the employer given cover is not available. Now, some top up policies will NOT pay saying, 3 lacs is less than 5 lacs, so no top up needed. Whereas some will pay the 3 lacs acknowledging that the employer given fund is over. So, make sure to buy the second kind
What are the different riders/ additional benefits available for health insurance?
In its simplest form, health insurance will be an Individual policy for one person, in which you pay premium for a year and get a cover on hospital admissions and/or treatment up to the policy amount. For example, at a premium of 10,000 INR, you get a cover of 5 lac in the given year. On top of this policies can cover pre and post hospitalization expenses, some OPD expenses or even alternate medicine therapies. You should check the list of inclusions and exclusions! Also, check the validity kick in period for various benefits, such as maternity benefit or pre existing diabetes cover etc.
The next big upgrade is a family floater scheme, in which you can cover chosen members of your family under the same cover amount. It is a very good idea for get one for all family members who are not already suffering from any diseases . For senior members or ones suffering from pre existing illnesses buy individual policy, it will help you save some money
Another important rider that health insurance companies want to sell is ‘critical illness’ benefit, which means that for an additional amount you will get cover for a list of nearly 35-40 diseases which demand long and heavy medical management. These include cancers, open heart surgery etc.
Some insurers also offer ‘personal protection plan’ which provides an assured sum in case of disability or death as well
These last two riders are also offered with term life insurance plans and often premiums there are lower than when these are added on top of a health insurance policy. So check out term insurance plans as well, if you do not already have a life insurance, or see if you can add these riders to your existing plan in any way. Some of these term insurance plans also come with a 100% return of premium at term maturity option. This option can give protection+ savings although premiums are higher than the no maturity benefit policies, naturally
For a complete list of riders check out policybazzar etc. But do not add extra cost for things such as ambulance cover or AYUSH therapy or health check up etc. since these are not big ticket items
Why is getting insured early important?
Because the yearly premium increases with the insured person’s age. In fact, there are age slabs. For example premium slabs on the basis of age are 26-35, 36 to 45, 45-50, 50-55, 60-65 years and the premium is higher as age the slabs progress
Secondly, with increasing age your chances of getting lifestyle diseases such as diabetes increase, with which will increase the premium! Also you may have to wait for 2-4 years before you will get cover for the preexisting disease
But you may ask, why should I get insured at an early age when I am less likely to avail the insurance and give away the money? One reason is the medical emergency situations such as accidents or dengue or typhoid or appendicitis etc. for which you can not predict beforehand . Another financial insight is that starting early and locking in a lower premium for a good policy will help you save! Because of inflation in another five years the cost of same benefits would grow higher, but you would have to pay the premium you chose 5 years earlier! Therefore, make sure that you buy a policy for which yearly renewal happens at same or nearly same premium
What would be a sensible plan?
Of course you need to evaluate your own situation carefully and decide accordingly. But, for most people one of the two solutions offered below are a start in the right direction:
If you have existing health insurance cover
- Make sure it is a family floater and covers for relevant situations such as maternity benefit etc.
- Make sure, it does not limit your claim settlement right on the basis of the room you choose. If these restrictions do exist, you should consider getting another ‘basic cover’ if you think you would want a room upgrade in future
- Make sure you have a total coverage for family of 20 lac or more. If the limit in this policy is lower, buy a top up carefully
- For critical illness and personal protection covers explore term insurance also. Especially the ones with ‘return of premium’ options. Choose either health or term insurance but include these riders in your cover plan
If you are buying health insurance for the first time
- Buy a basic family floater plan for 5 lac cover. These days many plans have a ‘renew’ option, which means that they will settle one additional claim up to policy cover amount. For example, if you get admission 1 for 5 lacs for ailment 1 and in the same year, get admission 2 for ailment 2 and bill of 5 lac, they will pay for both
- Buy top up plan of 10 lac
- Buy critical illness and personal protection from term of health insurance companies after comparing premium etc.
Refer to this article also for explanation of some of these points in detail
Which company should I choose?
Apart from benefits and premiums, there are two other important considerations. First: the claims settlement ratio and number of claims settled for that insurer in recent past. This will tell you whether they are likely to quickly process and release payment or reject the claim. Second: the hospital network that the insurer has is also important. Check for your location and relevant specialties if any, before buying
And lastly: read the fine print, get answers clearly before buying. The insurance agents are not the best guide, depend on your self !