I joined an online insurance brokerage firm, called Coverfox recently and realised how complicated insurance policies are to understand. Choosing the right health insurance policy is a daunting task but it is very important to choose the right one. It can literally destroy your economic health along with physical health if you choose the wrong one for yourself. To choose wisely and reduce surprised, you must understand a few basic things which differentiates these policies.
Here we go:
1. Room rent charges - Room rates are generally fixed at nearly 1% of the Sum Insured (SI). This means if your SI is 5 lakh, the insurer won't pay more than 5k/day. This is a problem if you are in Mumbai as the average room rent for a single room is around INR8-10k/day in all major cities. ICU room charges are generally capped to 2% of SI; which means if your SI is 5 lakh, the insurer will not pay more than 10k/day. Most of the time, ICU charges are more than INR10K/day
Solution: Look for policies which do not have room rent limit or increase the SI according to the city you live in.
2. Proportionate charges - This means that most of the other charges which are not room rent would be charged according to room rent limit above. Imagine if the surgeon cost was 20K and room cost was 7K while your policy covers only up to 5K for room rent. In this case, surgeon charge would also be proportionately covered i.e. you would need to pay 5/7th of the surgeon and other costs! This means instead of covering the full 20K of the surgeon cost, it would only cover INR14,285/- of the surgeon cost. In other words, the whole bill gets adjusted proportionately basis the above room charge adjustment!
Solution: Higher room rent plans also saves one from proportionate charges. Since sometimes hospitals anchor some expenses according to the room chosen, it is important to choose room rent limit wisely! We also published a video to understand this better
3. Co-Pay - Co-Pay is a cost sharing model. If your admissible claim amount is say 2 lakh, for a Co-pay of 20%, then you have to put up 40k of this amount. This reduces the liability for the insurance company with a sharing of cost model. If SI is 5L, and Co-pay is 10% then be ready to pay INR50K in case the bill goes above that limit.
Solution: Choosing co-pay reduced the cost but also increases the liability. Understand and buy.
4. Waiting period - Waiting period means that many diseases which is pre existing cannot be covered as expenses unless the policy has been in effect for X number of years. Generally waiting period of pre-existing diseases ranges from 3-5 years. Though there are policies which have less waiting period. Therefore make sure to buy less waiting period (2 years) policy and do NOT stop paying the premium in between.
Solution: Choose policies with lower waiting period
5. Most Group medical policy doesn't adequately cover risks - Employer insurance policy is called Group Insurance. Group Insurance policies are structured differently than Individual retail medical insurances and in most cases cover less than what your own individual policy covers. This is why one must always have a retail policy along with company medical insurance.
Solution: Buy a retail health policy for yourself irrespective of whether you have a medical cover from office or not
6. Quitting your job to startup ? Port out - One very important thing to understand for people who are quitting their jobs to startup: When and if you are quitting your job after working there for 3-4 years, your waiting period gets reset even if you buy a new policy immediately. Raise a request with the group policy TPA to port (migrate) your existing Group Insurance policy to an Individual one BEFORE YOU QUIT. Solution: Port your policy before you quit your job to a retail health policy to save waiting period gap
7. Family floaters policies - A family floater is a single policy that covers multiple members of the same family. So say for a family of 3 (1 kid, husband and wife), the total SI could be 5 lakh, which can be claimed by any of the 3 members. The eldest person in the policy is the primary policyholder by design On demise of the primary policyholder, the policy ceases to exist for all other members, and they have to buy a new policy at the existing market rates. Therefore, it would be prudent to buy a separate retail policy for yourself as parent and one policy with spouse and children. In the unfortunate and sad event of demise of one parent, children can still be covered under other policy.
Solution: Buy separate policy for dependents when going for family floater
8. Cumulative Bonus(CB) - Sum Insured increases by some amount for every claim less year, that is, you are rewarded for being healthy. Many Insurers reward you a 5% CB for every claim free year though I did see policies going as high as 20-25% CB. It is important to buy a cover with higher CB as it gives progressively higher cover every year as costs and risks increase.
Solution: Buy higher CB policies (20-25%)
9. Buy a Top-up - Top-Up is a great little gem. Top-up cover means that once the bill of hospital goes over the cover limit, top-up kicks in and covers the rest! Imagine that one has a retail health insurance with cover of INR 5 lakh. Now that person gets hospitalised for a medical emergency, and total expense comes to around 8 lakh. This person would have to cough up this remaining INR3 lakh out of their own pocket. If this person buys a top-up cover (of say 20 lakh with deductible of 5L) then the remaining amount would get covered by this top up plan. This deductible top-up means that whatever expense on incurs above this deductible limit, in the hospital, would get covered by top-up. Only limit of top-up is that it can be only used once. However these are very small in amount typically between 500-1500 per annum. Solution: The advantage of top-up is that it increases your cover at a very lower cost.
10. Cashless hospitals network - Ensure that all major and preferred, (by you) hospitals around you are covered under your policy's network. If the hospital isn't a part of cashless hospitals, it means you can't avail the "cashless" mode- that is, the Insurer directly settles your medical bills with the Hospital. In absence of this facility, one would need to pay out of their own pocket and then go for claim reimbursement.
Solution: Always go for policies that have cashless mode and check for hospitals around you that are included in that network.
So go ahead and choose the right insurance policy. Goes without saying that, Coverfox insurance can help you with the same.
