Don't Buy Health Insurance Without This Checklist!

In the Health Insurance for India's Missing Middle report by NITI Aayog, it is stated that Ayushman Bharat PMJAY covers 40% of India’s population. Overall, 70% of the population is covered by social schemes run by the central government and state governments. However, despite this coverage, a significant portion of the remaining 30% of the population does not have access to any form of health insurance. A single unexpected medical emergency can lead to severe financial strain for a family, potentially causing financial ruin overnight.

The real question is: Do we really need health insurance?

Let’s be honest, life is unpredictable, and no one expects to get seriously ill or injured.

But when a sudden medical emergency occurs, hospital bills can rise very quickly, draining years of savings within days. Health insurance acts as a reliable safety net. Instead of worrying about high costs for unexpected surgeries or long hospital stays, you can pay a regular, affordable amount each month. This way, your insurance will cover the unexpected expenses when they arise.

Beyond protecting your finances, health insurance also provides a sense of security and peace of mind.

When you or someone you care about is dealing with a health issue, the last thing you want is to worry about affording medical care or essential tests. With a good insurance plan in place, you can avoid financial stress and receive the necessary care without hesitation. It is a simple, caring choice that helps secure your future and supports your overall well-being.

However, it is important to remember that insurance companies operate with the goal of making a profit. They often include exclusions and complex terms and conditions in the fine print. It is crucial to understand these details together so you can make informed decisions when purchasing a new health insurance plan.

Before we proceed lets understand few terms that would help us to navigate with ease:

What is Base Sum assured/Insured Amount?

It is the maximum financial limit up to which the insurance company will pay for your medical expenses during a policy year, it’s the amount that you opted for when you started a Health Insurance.

Cashless Hospitals/Centers: These centers have direct relationship/network with the insurer, and the claim is settled directly with the insurer. If the facility doesn’t have cashless facility with the insurer, then firstly you need to pay out of your pocket first then you can claim the expenditure amount by providing all necessary documents.

So, these are the following things we need to look out for before purchasing a health Insurance.

Essential Things to look out for that are non-negotiable:

(1) Co-Payment: This states that the insurer is liable to pay a part of the claim while rest of the claim is to be settled by you out of your own pocket.

For example, 20% Co-payment means you need to pay 20% of the total cost while theoretically the insurer pays the rest 80%. In my opinion you should not opt for Co-payment as its better to have the full coverage. If you read the fine print, then many insurers have a clause of Co-payment if you are getting your treatment from non-cashless hospitals/centers.

(2) Room Rent Cap: This is the maximum liable amount that they will pay per day for a hospital room during your hospitalization. This is denoted by a Number or a percentage of your Base Sum Insured.

For example, in many policies you can find the Room Rent Cap is 10,000/ 12,000/ 15,000 etc. In case of percentage for a 10L base Sum Assured it can be denoted as 1%/2% etc. Many people think that its not a problem but if you opt for a room more than the room rent cap then then if affects the claim settlement hugely.

Suppose the Room Rent Cap is 10,000 in your policy but if you opted for a room with a 20,000 rent your claim will be halved since you have opted for room that’s double the Rent Cap. Here the Insurer company pays the claim in proportion to the Room rent Cap. Ideally there should not be a Room Rent Cap in your policy.

(3) Waiting Period: This is the cooling period after you buy a policy before the insurer covers for medical treatments, and medical expenses.

·       Initial Waiting Period: This is an industry wide waiting period of 30 days after you buy a policy and in this 30-day period you cannot make claim for regular illness and hospitalization. But you need to make sure that your policy covers you for any hospitalization occurring due to accidents.

·       Specific Disease Waiting Period: These are usually non-emergency chronic ailments that are covered usually after 1-3 years of waiting period even if you didn’t know you had them they include Hernia, Cataract, Knee replacement surgery etc. you should read your insurer’s specific disease waiting period list.

·       Pre Existing Diseases: There are the health conditions that you are already suffering and have disclosed to your insurers so any further health treatment regarding these conditions is usually covered after 1-4 years of waiting period, depending upon the policy. Such conditions usually include diabetes, hypertension, asthma etc.

·       Maternity related: If your policy has maternity benefits then it is usually covered in 1-5 years waiting period.

(4) Sub Limits: In many policy there are sub limits for specific diseases which is denoted by a number or a percentage of the Base Sum assured. For example, if your Base Sum assured is 10L your policy can have Sub limit of 100,000 or 10% of Base Sum assured on cardiac procedures etc. Ideally you should choose the policy that has no Sub limits.

(5) Restoration of Sum Assured: In case you exhausted your Sum Assured then you are left with no insurance cover for the rest of the year, so it’s strongly advisable that your policy has restoration of cover, but you need to read all the terms and conditions.

(6) Pre and Post Hospitalization Expenses: Your policy should include at least 60 days of prehospitalization and at least 90 days of post hospitalization but keep an eye on the limits. In this case the more the better.

(7) Cashless Network and Settlement Ratio of the Insurer: The more cashless network and claim settlement track record for the settlement by the insurer is better.

(8) Cover For Consumables: Your Health Policy should include cover for consumables such as syringes, gloved, cotton, bandages etc. as these consumables can quite rack up the bill.

Few Bonus things to look out before purchasing a policy:

(9) Top up of Sum Assured: As you continue the policy in form of incentives the insurer offers to increase the Sum assured by a number of percentages. For example, on the 1^st renewal the insurer increases the Sum assured by 30% of the base, for a 10L base sum assured you are now getting the sum assured of 13L.

(10) Alternative treatments such as AYUSH treatments that includes Homeopathy, Yoga, Ayurveda, Unani etc.

(11) Day Care Treatment: Modern day-care treatments refer to medical or surgical procedures performed under anesthesia in a hospital or specialized center that take less than 24 hours, meaning you can return home the same day. Thanks to advanced medical technology, these procedures are now safely completed without requiring the traditional overnight hospital stay of more than 24 hours that they would have demanded in the past.

(12) Flexibility to add new members: Your Policy should be open to add new dependents, such as a spouse or a newborn baby, directly into your existing policy rather than requiring you to purchase separate coverage. This flexibility ensures that your entire household stays protected under a single plan, making it effortless to manage updates and additions as your family grows.

(13) Annual medical test: This is an optional cover is many of the policies in which you can opt for Annual medical tests so that you are well aware of your medical conditions and if there is a brewing health hazard that can be diagnosed early.

(14) Viability to customize your Policy: Before buying a Health Policy, you should be able to customized the optional features and if you think they are needed then you should opt in for it. Such as you should option to have income protection in case of hospitalization for that you need to pay extra premium.

Final Thoughts:

A sudden medical emergency can be a make-or-break condition for a family. Buying a health insurance is a total necessity for today’s circumstances, the medical inflation is rising quite rapidly by more than 10% a year so making an informed decision is very essential as the Devil lies in the details.

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