What is health insurance?

Health insurance covers medical expenses that arise due to an unforeseen illness. These could be related to hospitalization, cost of medicines, etc.

Why is health insurance important?

Health risks and uncertainties are a part of life. With the constant increasing prices of healthcare, insurance today is a necessity. Health insurance provides people with a much-needed financial backup at times of medical emergencies.

Which type of health insurance to buy?

A comprehensive insurance plan must be bought. There should be no –

  • Co-pay
  • No room rent limit
  • No sub-limits on any specified disease
  • The pre-existing waiting period should be clearly mentioned

Let’s discuss each one in detail

Co-Pay: Copay is the share in the claim that you would be required to pay each time there is a claim. For eg: If your policy has a 20% co-pay. You will have to bear 20% of the bill every time there is a claim. Co-pays are undesirable and should be avoided.

Room rent limit: Across many policies, insurers apply a “room rent limit” which not only restricts the type of room you may have but also the associated medical expenses like surgeon fees. Room rent limits can severely hamper your access to quality healthcare.

Sub-limits on specified diseases: Insurers apply limits on some major lifestyle diseases so that the claims are in control. For eg: there is a limit the insurers apply on Cataract and Hysterectomy. One must be aware of sub-limits that the insurer has put in the policy.

Pre-existing disease(PED): If a person suffers from any PED, the insurer will not cover any illness related to that disease for a specified no of years which is called a waiting period. In the waiting period, any claims arising out of that disease will NOT be paid by the insurer.

No claim Bonus: Suppose in a year you don’t make any claim, then the insurer rewards you with a No claim bonus by increasing your insured value. The quantum of increase is pre-defined and can be from 10-50%. Similarly, the insurer downgrades the bonus in case of a claim.

Re-instatement of the sum insured: A policy can offer multiple reinstatements of the sum insured in case of claims for multiple diseases. For eg: The 10L policy is there, if you claim for 5L for disease A, the Insured sum available is reset to 10L in case the claim is for disease B.

What type of insurance do u buy if have a family of 4?

You buy a family floater plan – A family floater is a plan which covers the entire family on the payment of a single premium. The sum covers the entire family & can be used in case of hospitalizations in the family.

For Eg: You buy a 10L family floater policy for the entire family. The total cover will be 10L and can be used for any family member in case of any hospitalization. These plans are much cheaper to buy rather than buying policy individually for each member!

How to build a 1cr cover?

The cheapest way to build a 1cr – Build a base policy of let’s say Rs 10L. Then buy a SUPER TOP UP plan of 90L with a deduction of 10L. A super top-up plan covers the total of all hospitalization bills above the deductible amount.

Hence, once the deductible is paid, the plan becomes active for subsequent claims. Therefore after claims of 10L are paid from the base policy. The super top can be used to pay any further claims that may arise. Such plans are much cheaper to buy.

Conclusion

  • Buying health insurance is very very important
  • Buy a clean comprehensive policy
  • Be careful of agents
  • Make clean disclosures while buying the policies
  • Know the clauses while buying a policy

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