 "Reduce your health insurance cost")
In the past year, health insurance cost has increased across insurers. The insurance regulator's decision to abolition claim-based loading and introduce life-long renewability are the main reasons behind higher premiums, besides rising medical inflation, say insurers. These raise the sector's costs, too. But the regulator allows companies to raise rates only once every three years.
Says Atrey Bharadwaj, principal officer and head of Probus Insurance Brokers, "Public sector companies' pricing has shown an increase of 14 per cent in the last financial year compared to 2012. And, though private sector companies have not raised prices steeply, they have accounted for a higher premium in age bands beyond 45 years, posting a rise of 10-12 per cent in the same bands."
In the older regime, premiums increased when a policyholder made a claim (claim-based loading) or when he moved from one age bucket to another. You move from one bucket to the other roughly every five years. The new norms allow premiums to increase only when there is a change in the age bucket.
"So, while fixing premiums, we will have to factor in this. Therefore, to a certain extent, some kind of cross-subsidisation will happen between the younger and the older customers," says T A Ramalingam, chief technical officer, underwriting, Bajaj Allianz General Insurance. Given that premiums for higher age brackets are anyway high, a further rise in premium gets restricted or coverage for seniors will become impossible.
Bharadwaj adds in the coming years, health insurance cost could rise by another 15-20 per cent for individuals. Public sector companies' projected increase would be 25-30 per cent.
In such a scenario, how to cut your rising health insurance cost? Here are a few ways:
If a family needs to be covered, opting for a family floater could be cheaper than individual plans for each member, says Manasije Mishra, chief executive of Max Bupa Health Insurance.
Younger families (where the senior-most member is below 45 years) should opt for family floaters, as the price is based on the age of the senior-most family member. Higher the age of the oldest member, more the premium. Also, utilisation of family plans is higher than individual plans, each of which might not get used. With Bajaj Allianz Health Guard Family Floater, a Rs 10 lakh policy for a family of four (self, spouse and two children) costs Rs 21,826 plus service tax (eldest family member between 26 and 40 years).
Typically, two adults (oneself and the spouse) and two children are covered in a floater policy; parents and siblings are not. A few companies like Oriental India Insurance (Happy Family Floater) also offer cover for parents also. Max Bupa's family floater covers up to 13 relations.
"One can look to be covered under very basic plans like a critical illness, personal accident and hospital cash covers, which are cheaper than a comprehensive cover but provide only conditional coverage," says Mishra. Of course, these covers are no substitute for a comprehensive insurance.
Opt for two-year policies
Insurers Apollo Munich, HDFC Ergo, Star Health offer two-year health plans. Chances are you will benefit on more than just the premium front. Health insurance policies are annual contracts. HDFC Ergo's two-year 'Health Suraksha' helps you save Rs 4,469 of premium for a Rs 4 lakh policy for a 30-year period. A one-year policy would cost Rs 5,587, whereas a two-year policy would cost Rs 10,056.
Use top-ups for higher cover
Say you want a cover of Rs 5 lakh. Buy a standalone policy offering sum assured of Rs 1 lakh or Rs 2 lakh and buy a top-up of the remaining Rs 4-5 lakh, suggests Amarnath Ananthanarayanan, chief executive officer of Bharti AXA General Insurance.
This structure will be significantly cheaper than increasing the base insurance. Such plans get triggered only after you have exhausted your base cover. A Rs 2 lakh standalone policy with HDFC Ergo's Health Suraksha and a Rs 4 lakh top-up will cost you Rs 5,577 (Rs 3,217 + Rs 2,360). Whereas a Rs 5 lakh standalone cover will cost you Rs 7,254.
Check deductibles & sub-limits
Customers can opt for voluntary deductible policy, says Amit Bhandari, vice-president, health underwriting and claims, ICICI Lombard GIC. "The main aim behind such plans is for bigger claims to be paid by the insurer. Based on their paying capacity, policyholders pay smaller claims from their pocket, thus cutting the insurer's and their own cost," he explains.
Bajaj Allianz's product offers a 10 per cent discount in premium if you choose a voluntary deductible - amount you have to shell out before the insurer pays up - of Rs 10,000.
Similarly, a policyholder could opt for sub-limits for non-life threatening diseases (hernia, appendicitis, knee replacement) and no sub-limits on critical illnesses (cancer, stroke). In case of non-life threatening illnesses, you could go to smaller hospitals or be ready to pay from your pocket if the bill exceeds the sub-limit, adds Bhandari.
Ananthanarayanan suggests checking all the benefits available and lowering higher sub-limits if not required. "For instance, say a policy offers room rent of Rs 20,000. You may lower it to Rs 10,000, as there's no need for such a high room rent," he explains.
No-claims benefit
Policyholders should check for no-claims benefit in their health plans. If this is unavailable, shift or port to another plan offering it, says Ananthnarayanan. Unlike motor insurance, where non-claims bonus can be used to lower renewal premium. No-claims can only increase coverage in health insurance.
Customers covered under group health insurance from employers can port to individual policies of the same company at the time of changing jobs. This way they can get the benefit of continuity in terms of pre-existing diseases. But they must remember that while porting, they will not get a mirror policy of the group scheme. They will only get what is available in the individual plan. For instance, maternity covers are typically not included in individual policies, says Ramalingam.
Buy online
Some companies offer online health cover, like Bajaj Allianz, HDFC Ergo and Apollo Munich, which are cheaper than offline plans. Online policies are available at a 10 per cent discount to offline plans.
Says Atrey Bharadwaj, principal officer and head of Probus Insurance Brokers, "Public sector companies' pricing has shown an increase of 14 per cent in the last financial year compared to 2012. And, though private sector companies have not raised prices steeply, they have accounted for a higher premium in age bands beyond 45 years, posting a rise of 10-12 per cent in the same bands."
In the older regime, premiums increased when a policyholder made a claim (claim-based loading) or when he moved from one age bucket to another. You move from one bucket to the other roughly every five years. The new norms allow premiums to increase only when there is a change in the age bucket.
"So, while fixing premiums, we will have to factor in this. Therefore, to a certain extent, some kind of cross-subsidisation will happen between the younger and the older customers," says T A Ramalingam, chief technical officer, underwriting, Bajaj Allianz General Insurance. Given that premiums for higher age brackets are anyway high, a further rise in premium gets restricted or coverage for seniors will become impossible.
Bharadwaj adds in the coming years, health insurance cost could rise by another 15-20 per cent for individuals. Public sector companies' projected increase would be 25-30 per cent.
In such a scenario, how to cut your rising health insurance cost? Here are a few ways:
If a family needs to be covered, opting for a family floater could be cheaper than individual plans for each member, says Manasije Mishra, chief executive of Max Bupa Health Insurance.
Younger families (where the senior-most member is below 45 years) should opt for family floaters, as the price is based on the age of the senior-most family member. Higher the age of the oldest member, more the premium. Also, utilisation of family plans is higher than individual plans, each of which might not get used. With Bajaj Allianz Health Guard Family Floater, a Rs 10 lakh policy for a family of four (self, spouse and two children) costs Rs 21,826 plus service tax (eldest family member between 26 and 40 years).
Typically, two adults (oneself and the spouse) and two children are covered in a floater policy; parents and siblings are not. A few companies like Oriental India Insurance (Happy Family Floater) also offer cover for parents also. Max Bupa's family floater covers up to 13 relations.
"One can look to be covered under very basic plans like a critical illness, personal accident and hospital cash covers, which are cheaper than a comprehensive cover but provide only conditional coverage," says Mishra. Of course, these covers are no substitute for a comprehensive insurance.
Opt for two-year policies
Insurers Apollo Munich, HDFC Ergo, Star Health offer two-year health plans. Chances are you will benefit on more than just the premium front. Health insurance policies are annual contracts. HDFC Ergo's two-year 'Health Suraksha' helps you save Rs 4,469 of premium for a Rs 4 lakh policy for a 30-year period. A one-year policy would cost Rs 5,587, whereas a two-year policy would cost Rs 10,056.
Use top-ups for higher cover
Say you want a cover of Rs 5 lakh. Buy a standalone policy offering sum assured of Rs 1 lakh or Rs 2 lakh and buy a top-up of the remaining Rs 4-5 lakh, suggests Amarnath Ananthanarayanan, chief executive officer of Bharti AXA General Insurance.
This structure will be significantly cheaper than increasing the base insurance. Such plans get triggered only after you have exhausted your base cover. A Rs 2 lakh standalone policy with HDFC Ergo's Health Suraksha and a Rs 4 lakh top-up will cost you Rs 5,577 (Rs 3,217 + Rs 2,360). Whereas a Rs 5 lakh standalone cover will cost you Rs 7,254.
Check deductibles & sub-limits
Customers can opt for voluntary deductible policy, says Amit Bhandari, vice-president, health underwriting and claims, ICICI Lombard GIC. "The main aim behind such plans is for bigger claims to be paid by the insurer. Based on their paying capacity, policyholders pay smaller claims from their pocket, thus cutting the insurer's and their own cost," he explains.
Bajaj Allianz's product offers a 10 per cent discount in premium if you choose a voluntary deductible - amount you have to shell out before the insurer pays up - of Rs 10,000.
Similarly, a policyholder could opt for sub-limits for non-life threatening diseases (hernia, appendicitis, knee replacement) and no sub-limits on critical illnesses (cancer, stroke). In case of non-life threatening illnesses, you could go to smaller hospitals or be ready to pay from your pocket if the bill exceeds the sub-limit, adds Bhandari.
Ananthanarayanan suggests checking all the benefits available and lowering higher sub-limits if not required. "For instance, say a policy offers room rent of Rs 20,000. You may lower it to Rs 10,000, as there's no need for such a high room rent," he explains.
No-claims benefit
Policyholders should check for no-claims benefit in their health plans. If this is unavailable, shift or port to another plan offering it, says Ananthnarayanan. Unlike motor insurance, where non-claims bonus can be used to lower renewal premium. No-claims can only increase coverage in health insurance.
Customers covered under group health insurance from employers can port to individual policies of the same company at the time of changing jobs. This way they can get the benefit of continuity in terms of pre-existing diseases. But they must remember that while porting, they will not get a mirror policy of the group scheme. They will only get what is available in the individual plan. For instance, maternity covers are typically not included in individual policies, says Ramalingam.
Buy online
Some companies offer online health cover, like Bajaj Allianz, HDFC Ergo and Apollo Munich, which are cheaper than offline plans. Online policies are available at a 10 per cent discount to offline plans.