HEALTH INSURANCE: Building the Blocks

'Even before one starts investing towards one’s goals, getting adequate health insurance for self and family marks the beginning of financial planning.'

The need for adequate health insurance has become increasingly important, as it is not just to compensate for illness or diseases but also act as a financial support during accidents, which can happen at any time with anyone. Also, an insurance policy at an early age, unclaimed, without any ailments being renewed may help to make a better claim at later stages.

It is also important to make the right decision regarding which insurance plan to choose after comparing all of them in terms of premium required to be paid and the terms or restrictions for each of them. The decision should not be based on the least premium but a policy with adequate as well as least restrictions should be chosen for self, family and children.

What kind of health insurance are available?

With COVID insurance plans being introduced by various insurers, health insurance plans are basically categorized as Indemnity plans and defined-benefit plans. While indemnity plans reimburse the hospital expenses, defined-benefit plans pay a lump sum amount irrespective of the actual hospital expense. It is advisable to top up the indemnity plan with defined benefit plans.

Also, you can go either for an individual health insurance or a family floater policy where all the members might be covered under an umbrella with a single premium based on the assumption that all the family members will not be deceased at the same time. However, it is always advised to have an individual insurance policy for each member as FFPs may not provide adequate amounts to other individuals if an excess amount is claimed by a member of the family.

How to claim multiple health policies?

A policyholder can even take multiple policies with different insurers. However, multiple indemnity policies having identical coverage does not benefit the policyholder. Ideally, coverage in multiple policies should be mutually exclusive as quoted by Parag Gupta, Chief Underwriting Officer, Bharti AXA General Insurance.

If a policyholder is holding more than one policy from different insurers, a claim can be made from anyone of them in case of indemnity plans, keeping the terms in consideration. The total hospital expenses need not be contributed towards, by all the insurers in the policy amount ratio as the contribution clause has been done away with.

However, in case the sum assured stands exhausted or the entire policy amount is not contributed by the insurer, then the policyholder may approach another insurer. But, the most important term is transparency and disclosure when multiple policies are taken or claimed, the same should be disclosed to the other insurer, failing which the claims may not be addressed.

Also, in case of multiple policies taken, one should choose a policy with minimum impact on the No-claim bonus and waiting period terms. No-claim bonus offers additional coverage for not making any claims during a policy year. For example, with individual and group policies in hand, one should choose a group insurance policy for exhaustion first as there are no accrued benefits like NCB, no claim health checkup, etc in it. Also, group policies would generally have wider coverage than a retail policy, especially related to waiting periods.

Fixed Benefit health insurance plans

Fixed benefit plans such as critical illness plans, either come with life insurance policies or as a standalone policy, includes terms which state that all claims under this coverage have to be honored by all insurers immediately at the time of occurrence of the illness covered under the policy without any need of submission of hospital bills.

It is essential to look at several other parameters such as co-payment terms (specially for senior citizens), check sub-limits for the insurance cover taken like room rent limit generally expressed as a percentage of sum assured, coverage of pre-existing ailments and deciding upon the amount of insurance cover depending upon the city you live in, medical illness history, and other requirements of policyholder.

With a plethora of health insurance policies, both online and offline, it is essential to compare the policies before investing the premium amount taking into consideration the points mentioned above.

“Health insurance should be a given for every citizen”

- Jesse Ventura, Former Governor of Minnesota