Top 10 things to know about health insurance

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When we talk about financial planning we only tend to focus on increase our wealth year on year. However we often forget that protecting your already earned wealth is as important as increasing it. By protecting I mean minimizing our cash outflow for any expense.

One of the major cash outflow for a normal person would be the medical expense that he/she would incur in the coming years, especially when in India the cost of medical treatment is sky rocketing. Buying a health insurance provides you with an option to transfer your risk of high medical cost to someone else.

Key things that you should be aware about health insurance policy –

  1. Co- payment Feature –
    1. Co payment in health plan means certain percentage of the cost incurred while hospitalization has to be incurred by you.
    2. For Example is you have taken a health insurance from XYZ Company of Rs 5 Lakhs with 30% copayment feature and at the time of hospitalization the total cost was Rs 1 Lakhs. Then essentially XYZ will pay only Rs 70k (100%-30%) and rest Rs 30 K (30%) has been borne by you.
  • Most of the time insurance agent don’t specify or mention about Copayment restriction while selling the policy. Copayment is common feature in health insurance plans for senior citizens.
  1. Sub-limits on Room Rent/Cost –
    1. Hospital Room rent or cost is the major part of the total hospital expense that you will have to shell out. Most health insurance company cap there expense in terms of room rent to either 1% or 2% of the sum insured. From the above example, your daily room expense is capped at 1% of Rs 5 Lakhs either Rs5k.Anything above that had to be borne by you.
    2. In case of planned hospitalization, one should check with the insurer on the sublimit on room to avoid any unnecessary expenditure.
  2. Exclusion –
    1. Once you buy the insurance, you might be rest assured that you have covered your family from all the medical expense.However, Insurane companies in India do not cover some specific diseases like Injury or disease caused by nuclear weapons or War, any expenses on any disease/injury incurred during first 30 days from commencement of policy, Cosmetic surgeries, cost of spectacles, cost of dental treatment etc.
    2. Policy wording comprise of many such other permanent exclusion which the policy buyer generally don’t see. While buying the policy you must make calculative judgment of the chance of your hospitalization coming under exclusion list.
  3. Restore Benefit –
    1. Restore Benefit is a feature where in if your sum assured is exhausted than insurer company restore the sum assured to the original level for the policy year subject to the condition that the new sum assured cannot be used for the disease which exhausted the original sum assured.
    2. Eg – suppose if you have exhausted your sum assured of Rs 5 lakhs for hospitalization of heart related issue and in the same policy year if there is again a hospitalization of insured for some other disease than the insurance company will restore your sum assured to Rs 5 Lakhs even though it was already exhausted. However you cannot avail the restore facility for any heart related issue in the same year.
  4. Post Hospitalization Expense –
    1. Health policies also contains a post hospitalization feature, which include post hospitalization expense like doctors visit, Medicine expense etc.In most cases, insurer will cap their expense of post hospitalization to around Rs 5000 or certain percentage of sum assured only. Anything above that had to be borne by you.
  5. Network Hospital list –
    1. Insurance company provide cashless payment facilities at their network hospitals in which the customer need not pay anything and amount will be paid to the hospital directly by the insurer according to the terms and condition of the policy. To avail the cashless facilities, customer is provided with an ID card. Customer also has to inform the insurer about the hospitalization with in a stipulated time (either 24 hrs or 4 days depending upon the policy you hold).
    2. It is very essential to check the list of network hospital near your stay so that same can be availed at the time of emergency.
  6. Waiting period for pre existing diseases –
    1. Most companies keep a cooling period for pre existing disease that the policy holder might have. Generally the waiting period is 2 to 3 years which differ from insurer to insurer.
    2. Any hospitalization in the waiting period due to pre existing disease will not be paid by the insurer.
  • It is always better to buy a policy that requires you to undergo a medical checkup, so that the company is clearly able to understand any pre existing disease. Hence reducing any inconvenience to you at time of hospitalization.
  1. Special waiting Period –
    1. Some insurance company might require a waiting period for certain disease irrespective it is pre existing or not. Hospital Expense for conditions like Cataract, Hernia, Kidney Stone etc are covered after a waiting period of 2 years from the date of first policy issuance.
    2. Eg – Optima Health Restore plan of Apollo has a two year waiting period for Cataract operation.
  2. No claim Bonus –
    1. If there is no claim for a particular year than the sum insured will increase by certain percentage for the next year. Generally the No claim bonus is around 5% to 10%.
    2. Suppose you have a sum assured of Rs 5 Lakhs and there is no claim in the first year. As per the No claim bonus feature, next year your sum assured will Rs5.5 lakhs (10% increase)
  3. Free Health Checkup –
    1. Most insurance companies provide for a free health checkup if there no claim or certain specific years.
    2. For Eg – Apollo Munich Insurance has a feature of comprehensive health check-up involving a number of medical tests, up to 1% of Sum Insured only once at the end of a block of two continuous years for sum insured for Rs 15 Lakhs and above.

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