Probably one of the most overlooked areas for optimization is in health insurance policy selection. This leads to under-insurance for many people and surprise invoices if a medical emergency does occur. Health Insurance is the most important of safety nets; hence, the variance between the right or wrong coverage could mean a huge variance in financial security and peace of mind.
In this blog post, we will be sharing something related to my personal health insurance policies. I have individual policies for my mother and father, besides a family floater policy covering me, my wife, and our 2-year-old daughter. I shall explain the reasons for opting for separate policies and highlight key features one looks for in any policy: auto-restoration benefits, pre-existing diseases, network hospitals, cashless treatment, and tax rebates under Section 80D.
Knowing these critical health insurance strategies will keep you on the right track to get better full coverage. The knowledge will eliminate some prevalent mistakes and maximize your health policy.
Individual vs. Family Floater Policies
Individual Policy for My Mother
Below is a screenshot of my mother’s policy:
- Sum Insured: 25 lakhs
- Premium: 20,500 per annum
- Pre-existing Disease: Hypertension (declared at the inception of the policy)
Salient Features:
- The policy is a policy depending on the requirement of an individual and with quite a high sum insured.
- Pre-existing diseases are declared, and thus the premium goes up because of the declaration.
- An ‘inbuilt’ No Claim Bonus, which increases the sum insured by 10 percent during renewal if no claims are made.
Family Floater Plan
This is the screenshot of the family floater policy covering self, wife, and daughter.
- Coverage: 50 Lakhs Cover for the whole family
- Sum Insured Allocation: to any family member as and when required.
Benefits:
- Economical: Undoubtedly, an inclusive family policy will always cost cheaper compared to a separate individual policy.
- Flexibility: The whole sum insured can be used by any member of the whole family. Thus, implies a practical solution for a family.
Salient Benefits of Health Insurance
Auto Restoration Benefits
Meaning:
- Auto restoration provides reinstatement of the sum insured within the same policy year, provided a claim has been made, but subject to some conditions.
Types:
- Full Restoration: The policy limit is fully restored.
- Partial Restoration: The restoration will be available only if some different illness or injury has been suffered.
Pre-Existing Diseases
Definition:
- Conditions existing before buying the policy are considered as pre-existing diseases.
Implications:
- Most of the policies have waiting periods under which the claims because of pre-existing diseases are covered.
- Full disclosure is to be done to avoid rejections of claims.
Network Hospitals and Cashless Treatment
Network Hospitals:
- Hospitals that have tie-ups with the insurance company for cashless treatment.
Cashless Treatment:
- The treatment gets directly settled between the insurance company and the hospital, thus ensuring minimal out-of-pocket expenses.
Tax Benefits under Section 80D
Benefit:
- Health insurance makes the provision for a tax deduction facility under Section 80D of the Income Tax Act.
- 25,000 INR for self, spouse, and children, and for senior citizen parents, there is an additional 50,000 INR.
Key Points to Consider While Buying Health Insurance
Claim Settlement Ratio
Meaning:
- Number of Claims Settled/ Total Number of Claims Filed.
Why to check:
- A high ratio reflects that the processing and settlement of the insurer are dependable.
- Capping on the amount of room expenditure that can be reimbursed, especially during a hospital stay.
Suggestion:
- Policies that do not cap the room rent provide better options to eliminate such hassles and keep an eye on increased cost-incurred from one’s pocket.
Super Top-up and Top-up Plans
Top-Up:
- An additional support, above the base sum insured in the policy, which can be taken once the base sum is exhausted.
Super Top-Up:
- Would take care of expenses over and above the base sum insured and would have benefits covering higher medical bills.
Take on it:
- While these plans can bring down the premiums, raising the basic sum insured may be a better solution for the longer term.
Portability
Definition:
- Ability to shift health insurance from one insurance company to another without waving off any accrued benefit with respect to pre-existing period of wait or time-bound exclusions once the policy has been continued with the previous insurer.
Advice:
- Avail insurance directly from insurance companies and not through banking tie-ups to ensure better control over the policies and continuity.
- Beware of the waiting period for pre-existing conditions and other medical issues.
Pre and Post-Hospitalization Coverage
Coverage:
- Expenses incurred before and after the hospitalization period, which include medication and consultations.
Advice:
- It is better to go for policies that have an extended pre and post-hospitalization coverage; this is preferable from the point of good financial protection.
It is pretty ideal if you are able to choose a health insurance policy that will be just right for you, ensuring financial health and comprehensive coverage for your family. Three features that you should understand in totality so as to make the right choice on which policy would meet your needs are auto restoration benefits, pre-existing disease clauses, and the implications of room rent-capping.
Ensure you are appropriately insured with health insurance—so your pocket is protected from all unforeseen medical expenses and so that bundles of money do not run out.
