Check for renewal ceasing age, co-pay norm and sub-limits before opting.
A health insurance policy is a ‘must-have’ according to financial planners. Yet, picking up the right health insurance is not an easy task, given that there are 23 health insurance companies. Consider the six to eight life insurers offering health benefits and customers can be spoilt for choice.
While cost is certainly a deciding factor when choosing a plan, here’s a checklist of what else to consider.
Renewal ceasing age: Customers buying insurance rarely look at the age of policy renewal. The renewal ceasing age is the one when the insurer, no matter how long you have been with it, will refuse to renew your policy. For instance, health policies from ICICI Lombard cease at age 70.
Obviously, the higher the renewal ceasing age, the better. Most companies now offer higher or even lifetime renewal policies to customers.
Co-pay options: Typically, as health risks rise with age, companies ask customers to chip in. Besides higher premiums, customers may also have to co-pay for the policy. Companies follow different parameters to decide when they will convert the policy to a co-pay scheme.
For instance, Star Health Insurance begins co-pay once the renewal ceasing age sets in. So, customers could extend their period of coverage by changing their existing plan to a co-pay scheme. Bajaj Allianz General Insurance asks to co-pay if the customer goes to a non-network hospital.
Exclusions and PEDs: These two factors are the most painful ones. An exclusion is a statement in an insurance policy which describes a condition or type of loss not covered under it. Like, hospital cash plans do not cover dental treatment or surgery, pregnancy-related treatment, childbirth and so on.
KG Krishnamoorthy Rao, MD & CEO, Future Generali General Insurance, says, “Check for the coverage in terms of the inclusions and exclusions. These are mentioned in the policy brochure. And, if it does not cover something, you can either opt for other plans or take a rider.”
Another important feature, pre-existing disease (PED), may or may not be covered in health policies. PED is an illness or medical condition diagnosed prior to buying the policy. Nowadays, most companies cover PED with a lag of two to four years.
Sometimes complications arising from already existing diseases may also not be covered for the first four years of the policy. Senior citizen health plans exclude many ailments and, in many cases, need to be topped up with a rider.
Sub-limits: Check, Krishnamoorthy warns, to check for the limit on payments against the health plan. Health insurers reimburse those expenses that have been incurred reasonably. This is one way for insurers to restrict payments, especially when they think there is overcharging by hospitals. Typically, policies have a cap on the hospital room rent, operation theatre, ambulance charges and so on. For instance, ambulance charges on Bajaj Allianz Health Guard are only up to Rs 1,000.
All other charges, too, are reduced in proportion to the room rent cap. This is primarily because the charge structures levied by hospitals varies by the type of room chosen by you. But insurers are trying to do away with it. ICICI Lombard Family Protect Premier does not have sub-limits or a cap on room charges.
Policy issuer: According to health insurance experts, there isn’t much to debate here. “A traditional plan from health insurers should be the first medical policy that you buy, as these are exhaustive. Those from a life insurer can be an additional buy,” says Mahavir Chopra, head of e-business and retail, Medimange.com.
Traditional policies from health insurers or indemnity plans settle claims on a cashless basis or they may reimburse your bills. Life insurers who offer benefit plans or Hospital Cash Benefit Plans pay a fixed amount as soon as the illness is diagnosed.
Policies from life insurers offer restrictive covereage. They also have limits on the amount paid per day and the number of days the benefit can be availed. Say, you are supposed to be paid Rs 25,000 for a surgery; you will get it. But if the actual expense rises to Rs 40,000, you will bear the extra Rs 15,000.
