Things to know before buying Health Insurance in India
Today, in times of high medical inflation, not having adequate medical insurance cover for oneself and one’s family can be a major financial drawback. Medical adversities come unannounced and have a dampening effect on one’s spirits, not to mention the apparent instability that they financially cause. A health insurance policy acts as your adequate cover against overbearing medical expenses, giving you access to quality healthcare.
Many of us mistake health Insurance as an Investment to show in our tax declaration every financial year, which is an extremely flawed point of view. The primary purpose of Health Insurance is to financially safeguard you against unforeseen medical exigencies. Today market today has a lot of health insurance policy options that provide a multitude of benefits such as high cover, less premium, maternity benefits, OPD cover, quick claim settlement, etc. Moreover, insurance companies are now offering health insurance policies tailored specifically for individuals, families, senior citizens, critical illnesses, and employees working in an organization, and so on.
Why an employer health insurance is not enough?
Many jobs come along with an added benefit of health insurance plans by the employer. Since such a prerequisite is already built into the contract and bear thin chances of rejection, employees hardly analyze or compare these plans and their benefits.
Health insurance plans provided by the employer are usually master policies designed for covering all the employees within an organization. While these employer health insurance policies are definitely useful, they do not always suffice.
A number of people covered – The employer health insurance policies are generally group insurance policies, and only cover the individuals working in an organization. These may or may not necessarily cover the dependents (spouse, parents, children, etc.) of the employees.
Co-pay clauses – The whole idea behind purchasing a health insurance policy is to gain maximum possible coverage against health-related expenses. This, however, is not the case with company health insurance. They are tailored to cover only a certain part of the total medical expenditure incurred by you; you yourself will have to take care of the remaining.
Employment status – Company health insurances cover an individual only till the time they are a part of the company. The moment their employment is terminated (for whatever reason that is), their health insurance coverage shall also cease to exist.
Post-retirement coverage – One of the biggest disadvantages of a company's health insurance policy is that it does not provide post-retirement coverage, which is what anyone needs the most. Medical complications and the related financial burden increase with age, and so do the premium rates of health insurance plans.
Room rent limit – Company health insurances also include a room rent limit clause, as per which only a part (somewhere around half the total amount) of the room rent is covered under the policy. The clause only includes the charge of room occupancy and excludes the extra charges for everything else within (doctor or nurse care etc.).
Overall effective cover – Another drawback of company health insurance plans is that the coverage these provide is not much. Given that all terms and conditions are fulfilled, the total financial coverage is generally around Rs. 1.5 lakhs to Rs. 2 lakhs, which may not be adequate in times of a serious medical issue or long-term hospitalization.
Apart from the above, another thing to note about employer health insurance policies is that these are offered to the employees within any organization as a part of their perks. Such health insurance is not considered as their right and can be changed or revoked anytime the employer wishes to, without involving any legal ramifications.
Hence, it is always smart to have a primary health insurance policy (private policy) to back oneself up and treat employer-provided insurance plans as a secondary cover.
Why buy health insurance at a young age?
Lower rejection rate–People with a medical history of chronic diseases are either rejected or have to pay high premiums in India. Since young people with sound health care at a lower risk, they are less likely to face inconvenience on the said grounds.
Low premium rates–Since younger people have lesser health risks associated with them, the rate of premium for health insurance is lower for them than it is for the older ones.
Waiting period–Health insurance policies in India come with a waiting period during which insurers cannot make claims even if there is an emergency. Purchasing a health insurance policy at an early age not only allows insurance holders to pass the waiting period without any concerns but also saves them from longer waiting periods and exclusions, which they would otherwise have to bear during the later stages of their lives.
Coverages–The latest health insurance policies provide wide-ranging coverage, right from daycare facilities to maternity benefits. However, at old age, health complications increase and the cost of health cover steeps higher.
Financial Planning–Besides higher coverage, health insurance plans at a young age also boost financial planning. With an adequate medical cover by your side, you receive the freedom to make long-term investments.
Duration–Buying health insurance at a younger age lets you benefit from the policy coverage for a longer duration, without worrying about the ceiling on the upper age.
Tax benefits–Since premiums for health insurance are eligible for tax deductions, buying health insurance plan at a young age also let's enjoy tax benefits for a longer duration of time. With that said, ‘tax benefits’ should never be a deciding factor when buying health insurance.
Bonus–Young insurance buyers are more likely to renew their policies at the end of every term to benefit from the “No Claim Bonus”, in the absence of any claims throughout the policy year. The bonus thus accumulated will result in insurance coverage at a lower premium amount, which will be of advantage later on.
Factors that affect health insurance premiums
Medical history of the family– Often, individuals with a family history of medical conditions (heart disease, cancer, etc.) that put them at a higher risk, have to bear a higher rate of premium.
Pre-existing health issues – People with pre-existing health disorders also have to pay higher premiums, in case their health insurers do not cover them under their existing health insurance plans.
Age – Older people have a number of identified and unidentified health problems and are liable to visit the doctor more often. Hence, premium rates are higher for them.
Profession – People in professions that put their health or safety at risk (construction sites, industries involving radiation, chemicals, etc.) end up paying higher premiums.
Body Mass Index – Higher BMI often leads to health issues such as joint problems, heart disorders, etc., which is why people with high BMI end up paying more premiums.
Lifestyle – Smokers, alcoholics, and tobacco addicts pay higher premiums or may even be rejected from being covered under a health insurance policy since their chances of suffering from chronic ailments including cancer are higher.
No previous insurance – People with no previous coverage under any medical insurance, may have to pay higher premiums under the assumption that they will make frequent trips to doctors and hospitals.
Dos and Don’ts to keep in mind when buying health insurance
Health emergencies come without prior notice and can be quite financially testing. At times, these might even put people in debt, and also affect their future earning ability. This is why it is important that you do not just purchase a health insurance plan for the sake of it. Instead, buy the one that fits your major needs perfectly. Apart from saving taxes, a health insurance policy is what will actually be your savior in case of a medical crisis.
Mentioned below are certain dos and don’ts that all investors must consider when buying health insurance, to avoid mistakes and get themselves the best health insurance cover –
· When buying a health insurance policy, it is important that you inspect all the details very carefully, including –
1. Terms relating to co-payment, wherein you as the policyholder will have to contribute some amount to the claim.
2. The clause regarding the coverage of pre-existing diseases.
3. The waiting period after which coverage for some diseases shall begin.
4. Maximum age limit for the entry and renewal of the policy.
5. Conditions regulating the renewal of the policy.
· Disclose details regarding any pre-existing disease or medical condition to your insurer.
· Be prepared with all the documents including medical reports.
· Inquire about the place where the medical tests are to be done and who shall be covering the cost.
· Pay premiums only when you have ensured that your insurance proposal has been accepted.
· Once accepted, make sure to pay your premiums and get the policy renewal in time.
· Do not hold back facts related to your health conditions when purchasing a health insurance policy as it could land you in a mess during claim settlement
· Do not keep any gap in your policy renewals that could adversely affect your cover.
While your health insurance policy may not generate returns, it will definitely save you from major unwanted healthcare expenditures. Hence, if you haven’t bought yourself some health insurance, it’s time you get a move on.
**To understand exactly about the policy coverage, exclusions etc read the Policy Wordings carefully.**