A few months ago, I got a frantic call from a friend who wanted me to "quickly" recommend a good health insurance plan, as she wanted to urgently furnish tax deduction proofs to her employer. She didn't have the time to research and buy insurance, plus she found the products way too complicated. That got me thinking.
How can one quickly buy a health insurance plan on his own? Here's a quick guide for beginners.
There are three ground rules —Don't buy in a hurry; don't buy based on a friend's or agent's recommendation; and lastly, don't buy based on price (health insurance plans can restrict the quality of healthcare through room eligibility and network of hospitals). Let's look at the steps:
Step 1: The right amount
The primary purpose of health insurance is to provide financial support. Over the past few years, inflation in healthcare sector has seen a double-digit growth and increased lifestyle diseases, along with critical illnesses, has made it important to buy a relevant cover. Hospital bills now range from a minimum of Rs50,000 to Rs5 lakh. Factoring even a 5% inflation for 15 years, your family will need a cover of Rs15 lakh in 2033. For most of us in our 30s and 40s, it is necessary to have a cover of at least ₹10 lakh.
Step 2: Five parameters
Room eligibility: Insurers have a cap on room rent and type of room you occupy. If the room category is higher than the prescribed limit, you will be liable to not only pay the difference, but bear proportionate deductions on the entire hospital bill. It is advisable to choose a plan offering at least a single private room or the one that has no limit on room rent.
Co-payments and limits: For some health insurance plans, you have to pay a part of your bill, say 10% to 20% through the co-payment clause. This may also be applicable after reaching old age. Ensure you always check for the co-pay or limitation clause.
Day-care treatments: An ideal policy should cover all day-care treatments and not have a restrictive list.
Network hospitals coverage: Check whether the top hospitals you are likely to visit in case of an unfortunate hospitalisation are covered under the provider network of the insurance company you choose.
Relevant benefits: There are some features that could be relevant completely based on your own personal requirements. For instance, if you are a newly married couple, a maternity cover may be important to you, for a some worldwide hospitalisation coverage may be relevant. Keep your future requirements in mind.
Also, look at these three features:
Restoration benefits: If you are buying a floater plan, restoration benefit can be of great long-term value.
No claim bonus: Insurers reward their customers for having a claim-free year with an increase in their sum assured ranging from 5-50% at the same premium, which is known as the no claim bonus. This can be a useful buffer against healthcare inflation.
Free health check-up: Some insurers provide free health checkups, assessment of medical reports, health coaching and monetary rewards.
Step 3: Disclosures
Disclose complete details of your medical history and all health-related information and conditions without fail, because suppression or misrepresentation of facts can lead to claim rejection in the future. In the last several years, we have seen many well-meaning customers fret too much, over-compare and endlessly wait for their ideal health insurance plan to arrive. Finally, some of these people miss buying completely and end up footing heavy bills. A plan that matches 85-90% of your requirements is better than missing out on it.
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