How to evaluate and compare health insurance benefits?

Insurance is not something most of us pay much attention to, but times are changing. Here’s what to keep in mind when purchasing health insurance.

 How to evaluate and compare health insurance benefits

Insurance is not something that Indians are overly enthusiastic about purchasing. However, because of government regulations, those of us who own vehicles have had to buy motor insurance. And now, given the rising cost of healthcare and a global pandemic refusing to make an exit, it makes a lot of sense to look closely at health insurance. 

Let's see how you can zero in on the health insurance benefits that are most relevant to you.

To buy health insurance or not?

In a word, yes. Medical science has come a long way, and as a result there’s a lot of research, development, and technology that goes into treatments today. Healthcare is not affordable to the vast majority of people, especially when it comes to hospitalisation, so for a small fixed annual payment, health insurance makes sure that you get medical attention at a time when you need it the most.

The basics of health insurance

Health insurance, as with any insurance policy, is like a wager. You bet that you are going to fall ill, and the insurance company bets that you won’t. If you do fall ill, you win the bet, and the insurance company will defray the medical expenses incurred by you. The basic concept and procedure mirrors that of automotive insurance – indeed, a lot of hospitals today offer cashless facilities as well.

Types of health insurance

There are many different types of health insurance, because there are numerous types of illnesses. Let’s start with individual health insurance policies and group policies. As their names suggest, an individual policy is meant for a single person, while a group policy typically covers an organisation, and is provided by the employer for the employees. Either has its advantages and disadvantages. 

A personal health insurance policy can be tailored to an individual's requirements. There are a number of add-ons that health insurance providers offer today, which can include air ambulance costs, coverage for critical ailments, or even a policy that is specifically tailored for cancer coverage. The downside of personal health insurance is that potentially high-risk candidates like individuals over the age of 65 do not get many options to choose from, and their deductions might not be favourable. 

Group policies typically cover employees as well as their dependents like spouses, children, and parents. They also cover the employer that subscribes to the policy. Group policies usually are valid as long as the individual remains an employee of the organisation only, and once the employee leaves, are void. 

Related: COVID-19 and mental health: Is it covered under health insurance? 

What else to look for

Every health insurance policy has something called the ‘waiting period’, which is a time frame during which pre-existing conditions won’t be covered. For example, if a policy states that its waiting period is three years, and if you’ve just had surgery done on your knee, it will not be covered for the first three years of the policy you’re subscribing to. So, subscribe to a health insurance policy as early as you can, no matter how little the coverage. You can always upgrade the policy or switch to another plan or insurance provider later, but as long as you can prove continuous coverage, it counts towards the waiting period for pre-existing conditions. For this, look for insurance policies that allow you to 'port' - that's the technical term that insurance providers use for this. 

Among the benefits that health insurance policies offer are a free annual check-up, add-ons that can cover the costs of everything from day care treatments (those that take less than 24 hours in hospital), diagnostic treatments done before hospitalisation, and rehabilitation treatments given after a discharge within a particular time period. 

Are there any negatives?

No, there aren’t. Health insurance sometimes gets a bad reputation simply because many consumers do not take the time to understand what exactly they are purchasing. A simple example is the lowering of the premium; this can be done by using the co-payment or compulsory deductible methods. The former means that the claimant bears a percentage of the cost – the higher this percentage, the lower the premium. 

The compulsory deductible is a basic amount that the claimant agrees to pay per claim, beyond which the insurance company will bear the expenses. Again, increasing this amount will lower the premium while keeping the total insured sum high, which gives the false impression of having to pay low premiums for a large insurance amount. 

If the customer understands how these things work and why the premium has dropped before subscribing to the policy, they will not be disappointed at the time of a making a claim. The IRDAI even offers consumers a 15-day grace period in which a customer can choose to opt out of the policy and get a refund of the premium paid.

Other important advice

An important  factor to consider while doing research on insurance policies is the claim settlement ratio of the insurance company. That is, the higher this percentage, the more the company tends to honour claims presented to it.

For women, a health insurance policy that offers maternity benefits can be a bonus if they are planning to have a child in the near future. Insurance policies geared towards maternity will also offer add-ons that cover related costs, such as the child’s immunisation.

If you’re a salaried employee, ask your HR department if your employer has a tie-up with an insurance service provider. Most employers offer medical insurance to employees that earn more than Rs 21,000 per month. This insurance usually covers the employee's dependents as well. After the lockdown, employers that resume functioning will offer a group health insurance policy for all employees as part of a mandate. Don’t forget to have a conversation with the relevant representative to discuss any add-ons that will be beneficial to you. It will be well worth your time to find out what these add-ons are, before you choose a policy and tailor it to your requirements.

Health insurance policies offer benefits if you don't make a claim, not unlike the 'no claim bonus' that one gets with automotive insurance. Unlike auto insurance's discount on the purchase price, however, health insurance rewards a claim-free year with a larger sum insured during the renewal. 

Health insurance policies have a number of terms and conditions in them, and it is important to understand them before subscribing to the policy. Some things to pay attention to are:

- the ability to upgrade a plan, either at renewal or during the year, with a 'top-up', should you use up all the available insured sum

- will the plan offer automatic coverage in case of an epidemic/pandemic

- if there are there any limits on certain components like room rent, surgery expenses, etc, either as a hard cap or as a percentage of the total sum insured. 

Last words

Health insurance offers many benefits when you most need help, and insurance providers are continuously evolving their products to offer maximum benefit to consumers. If you put in a little effort and do some research, you might be able to save yourself a lot of money in exchange for the payment of a small fixed amount every year. Here are some quick tips to make the right health insurance choice.


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