With healthcare costs outpacing general inflation, health insurance becomes essential. It’s not only a safeguard for your savings and emergency funds should a health crisis arise for yourself or loved ones, but it’s also a critical strategy for managing soaring medical expenses.
Industry professionals argue that health insurance should be integrated into your financial strategy, emphasizing the benefits of obtaining coverage early in life. Young adults are poised to benefit from health insurance, with advantages like more comprehensive coverage, lower premiums, and potentially bypassing medical exams.
Below is a breakdown of health insurance policies, the dynamics influencing premiums, the array of available plans, and more.
What Is Health Insurance: Understanding Health Insurance
A health insurance policy is a form of financial assurance against medical emergencies. It’s an agreement between the insurer and the insured, covering medical expenses due to sickness, injury, or accidents. When surrounded by health insurance, the insurance company shoulders either part or all of these medical costs in exchange for a premium paid by the insured.
Insurance companies provide two methods of covering medical expenses:
Cashless Treatment: In this arrangement, the insured doesn’t pay out-of-pocket to the network hospital; the insurer settles the bills directly.
Reimbursement: Here, the insured pays for their medical costs upfront and later files for reimbursement from the insurance company.
The Importance of Having a Health Insurance Policy?
Often, the value of health insurance is noticed once its benefits become apparent. Acknowledging the advantages is crucial since medical emergencies can occur unexpectedly and financially draining. Securing a health insurance policy early can offer comprehensive coverage at a lower cost and yield tax benefits for the premiums paid.
Key reasons for purchasing health insurance include:
- Access to quality medical care without the stress of high expenses.
- Tailored coverage for severe illnesses.
- Ambulance cover for road emergencies.
- Younger individuals benefit from lower premiums.
- Cashless claims relieve the worry of large medical bills.
- Protection for your savings in times of medical crises.
- Tax deductions under Section 80D.
- Ensuring financial safety for you and your family.
Types of Health Insurance Policies
Mainly, there are individual plans and family floater policies:
Individual health insurance plan: This plan is specific to an individual, with benefits and coverage that are applicable only to the insured person. It is designed to provide financial assistance during personal medical emergencies.
Family Floater Health Insurance Plan: This single policy provides coverage to the insured’s family members, including spouse, dependent children and prospective parents or in-laws. Unlike individual plans for each family member, a family floater serves as a collective coverage, wherein the sum assured is shared among all the enrolled members.
It is generally recommended to obtain separate coverage for elderly parents or family members with extensive medical histories due to cost-effectiveness and the need for tailored coverage.
Choosing the right plan should depend on various factors, such as your age, family health background, age of children, personal medical history and financial capacity.
Also Read: Discovering the Best Health Insurance for Young Adults
Factors to Evaluate When Choosing a Health Insurance Provider
Step 1: Selecting the Right Insurance Company
When searching for the right health insurance provider, consider the following elements:
- Variety of Insurance Plans
Examine the spectrum of policies that insurers offer, including unique selling points (USPs). Choose a company with a wide selection of plans, which increases the likelihood of finding a company that matches your needs.
- Hospital Network
Insurer network extent of hospitals is crucial for cashless claim services. A wide network is preferable, enabling you to easily access the nearest cashless facility.
- Claim Settlement Ratio
This ratio indicates the proportion of claims settled by the company in a financial year. A high percentage indicates that the insurer is reliable in handling claims settlement, which is a positive sign.
- Claim-Based Loading
Beware of insurance companies that increase renewal premiums if you have made claims in the past, as this can increase premium costs over time. It is best to stay away from such practices.
- Premium Rates
Evaluate the insurer’s premium rates by comparing them with other insurance companies, especially for similar plans. For instance, Arogya Sanjeev’s policy, which offers uniform coverage to all insurance companies, varies in premium based on the insurer’s pricing strategy. Choose an insurer with competitive pricing, which features reasonable rates in their plans.
- Claim Settlement Process
Insurance companies are making claims processes more efficient:
- AI for claims processing
- WhatsApp for claim notifications
- Digital submission of documents
- Fast approval time
- Mobile applications for claim filing and tracking etc.
This advancement makes the claim process faster and easier. Thus, insurers with such innovative features should be preferred for a smooth claim experience.
- Customer Feedback
Finally, customer reviews are recorded. Insurers usually display customer feedback on their website. This can provide valuable insights. You can also ask colleagues and family about their insurance experiences, especially with claims, to gauge which companies maintain best practices.
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Step 2: Choosing the Ideal Health Insurance Policy
After settling on a reliable insurance provider, the next crucial step is to choose the right policy. With various plans available from different insurance companies, making the right choice is crucial.
Here’s how you can streamline your selection process:
- Scope of Coverage
First, examine the coverage offered by the various policies. In addition to basic coverage, look for plans that offer additional unique benefits.
Start by identifying your insurance needs, then find plans that meet those needs. For example, if you are expecting a baby, look for plans with maternity benefits. Conversely, if this does not apply to you, you can bypass such plans.
Next, consider plans that extend coverage through features like sum assured restoration, generous no claim bonuses, additional benefits and annual health check-ups.
A plan with comprehensive coverage can significantly reduce your out-of-pocket expenses during claims, ensuring better financial security.
- Flexibility of the plan
Find policies that allow you to tailor coverage through various add-ons, providing the flexibility to expand and customize coverage to suit your needs.
- Cost of premium
The premium is undoubtedly significant. Evaluate the premium relative to the coverage benefits offered. For an informed decision, compare the premiums of different plans from different insurance companies with comparable coverage. Choose a plan with competitive premiums that don’t compromise on coverage.
- Policy sub-limits
Many health plans impose sub-limits on certain expenses, such as room rent or certain treatments. This can restrict coverage and potentially lead to additional personal costs. Choose a policy without sub-limits to maximize your coverage benefits.
- Terms of co-payment
Watch out for policies with co-payment terms, which require you to pay a portion of the claim. For example, a 10% co-payment means you will be responsible for 10% of each claim. Look for policies with no or minimal co-payment obligations, which are especially important for plans targeting senior citizens.
- Waiting period
A waiting period restricts coverage for certain conditions until the time has passed. Policies may have different waiting times for different conditions or treatments.
While some waiting periods are standard, such as the initial 30 to 60 days for accident-related claims, others, such as those for pre-existing conditions or certain surgeries, may vary. Look for plans with shorter waiting periods to get faster access to full benefits, especially if you have pre-existing conditions or want maternity coverage.
- Availability of Discounts
Many health plans offer discounts to attract customers. These may include reductions for multi-year policies, covering multiple family members, online purchases, lump sum premium payments or maintaining a healthy lifestyle. Some plans may offer discounts for in-network hospital treatment or for not making a claim in the previous year.
Explore the discounts offered and choose a plan that provides significant savings while meeting your insurance needs.
Even after identifying the best insurer and plan, choosing the right sum assured is another important aspect. It is important to ensure that the amount of coverage is adequate for your needs.
Additional Reading: The Ultimate Guide to Healthy Food Choices
Step 3: How To Find the Right Coverage Amount?
Having the right sum assured is important to make your health insurance effective. If the sum assured is too low, you run the risk of not getting enough coverage, which is a significant concern when purchasing health insurance.
Here is a simple approach to find the right sum insured:
- Consider the number of people covered in the policy.
- Consider any existing health conditions of any policy members.
- Reflect on the basic costs of hospital stays and medical services.
- Factor in medical cost inflation.
Insurance providers usually offer tools to help you calculate an appropriate sum insured, considering your income, financial obligations, existing coverage, and the number of dependents. A primary method to estimate it is as follows:
Appropriate Sum Insured = Half of your annual earnings + the sum of hospital bills over the past three years.
For example, if your yearly income is INR 15 lakhs and you’ve had hospital expenses totaling INR 5 lakhs in the past three years, your calculation would be:
Half of INR 15 lakhs + INR 5 lakhs = INR 12.5 lakhs
Step 4: Making Health Insurance Premiums Manageable
Health insurance premiums are structured to be manageable. Insurers provide the option to pay premiums in installments—monthly, quarterly, or semi-annually—easing the payment burden.
If securing a large sum insured seems financially daunting, consider super top-up health plans. These plans offer an affordable way to extend your coverage. For example, if you need a INR 15 lakh cover but find the premium too steep, you can take a base policy for INR 5 lakh or INR 10 lakh and supplement it with a super top-up plan of INR 10 lakh or INR 5 lakh, respectively.
This strategy allows you to attain an INR 15 lakh coverage at a more economical combined premium than a single plan of the same amount.
How To Buy A Health Insurance Policy Online?
Purchasing a health insurance plan online is straightforward and swift, requiring no paperwork or physical signatures.
Here’s what you need to do:
- Gather detailed information on various health insurance policies that align with your needs.
- Evaluate the top health insurance options, comparing their features, benefits, and premiums online.
- After choosing the most suitable policy, thoroughly review the policy terms and complete the documentation process online.
- Upload the necessary documents and proceed to payment using a credit card, debit card, or net banking.
Typically, insurance companies process your application and issue your policy documents within seven to ten days after payment.
What Not to Do When Acquiring Health Insurance
Avoid Hasty Decisions: Take your time when selecting a health insurance plan. Conduct thorough research and compare premiums online to ensure you choose the most suitable plan for yourself or your family.
Don’t Skimp on Coverage: While keeping an eye on premiums is important, never compromise on the extent of your coverage to save money. Opt for a plan that provides ample coverage, considering your family size, medical history, and financial circumstances.
Be Transparent About Your Health: Always be forthcoming about your health and medical history, including any pre-existing conditions and lifestyle habits when applying for health insurance. Concealing this information can backfire as any claims you make can be denied due to nondisclosure.
Secure Your Own Policy: Relying solely on your employer’s health insurance can be risky due to its limited scope and the fact that it ends when your employment does. It’s important to have your own health insurance policy with a wider range of coverage that remains unaffected by employment changes.
Read the Fine Print: Pay attention to the terms and conditions of your insurance policy document. Understand every detail, from coverage to premiums, renewal terms, discounts, sub-limits, grace periods, waiting times, co-payment terms, and deductibles. If anything is unclear, contact the insurance company for clarification.
Insurance Beyond Tax Savings: While saving on taxes is a benefit of paying health insurance premiums, it should not be the sole reason for purchasing a policy. The primary goal of health insurance is to provide substantial financial support during health emergencies.
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Frequently Asked Questions (FAQs)
1. What is the waiting period in health insurance?
The waiting period is a very important factor for buying a health insurance policy. It refers to the period in which the insured has to wait to claim the insurance benefits. It varies from one health policy to another.
2. How long is health insurance valid for?
Health insurance policies come with policy tenures like one year, two years or three years. Once the policy expires, it has to be renewed to get those continuation benefits. Your policy will be valid till the end of the policy term, it is advisable to renew the policy before it expires.
3. What happens if you forget to pay your health insurance premium?
You will always get premium payment reminders from insurance companies on your email and registered mobile number. But if you don’t pay your premium and don’t complete the grace period, you may lose your insurance coverage. However, premium payment terms vary for different health insurance companies.
4. Can I take multiple health insurance policies?
Yes, you can definitely take more than one health insurance policy.
5. Can we add a family member to existing health insurance?
You can add your family members to your policy while purchasing it or at the time of renewal.
6. What is the best age to buy health insurance in India?
You can buy a health insurance policy as soon as you turn 18 years of age. Before this age, you may be covered as a dependent under the Family Floater Plan.
