How to choose the best Health Insurance policy?

Health Insurance policy is the most important and also the most neglected tool in India. Most of us look at a health insurance policy only as a tax saving instrument. This is what makes the approach to buying a health insurance not so good. There are a few simple and effective factors to consider before shortlisting the policies. This article intends to take you through all the important aspects on an Ideal Health Insurance policy.

Today, the process of buying a Health Insurance has become very easy. There are multiple online platforms like policy bazaar which work as a market place and you can compare all the plans to choose the best one that fits you.

Pro tip 1: Take different health insurance policies for your family and for your parents. The premium of the policy will depend on the age of the eldest member of the group so you would be paying a much higher premium for yourselves if you are including your parents in the plan.

Pro tip 2: If you are a corporate slave and you already have a group health insurance given by the company, please have an independent health insurance other than the group because your group policy will get lapsed when you resign the company and you would not enjoy the benefits of no claim bonus.

When is the right time to take the policy?

Most of us think that it is useless to take a health insurance policy when you are young but that is wrong because of 2 reasons.

1. Less premium

2. No claim bonus

The premium of policy will be much higher when you are older so always go for the health insurance policy when you are young.

No claim bonus is another reason why you should go for the policy early. This just means the number of years you do not claim the policy, the total cover for the policy keeps increasing. So you are paying the same premium for the higher cover.

How much cover you should go for?

Ideally speaking, a cover of 2.5 L should be good to go amount for one person per year. But the expenses change according to the city or place you live in. For example, if you live in Bangalore, expense would come to 15000-20000 INR per day and if you live in a small town then it might come down to 5000-10000 INR per day.

So you can go as per the number of days you will be hospitalized in a year and then calculate the cover. If you are age is above 40 years, then you can consider 30 days of hospitalization and if you are younger than 40, then 15 days of hospitalization in an year.

Example - I live in Bangalore and my age is 35. I consider 15 days to be my hospitalization days and 20000 to be daily expense in an hospital. So the cover should be (20000*15 = 300000) 3 Lakh.

If you are choosing a family floater plan which covers your entire family - you, your spouse, your children and your parents, then a cover of 7-10 Lakhs should be good to go. This just means you have a 7 Lakh cover for all of your family members in an year.

Lets just say you get hospitalized and you use 2 lakhs and then the rest of your family members will have 5 lakhs for that year.

Pre-Existing diseases and the waiting period

If you have any pre existing diseases before taking the health insurance, then please check the waiting period for the same. Waiting period needs to be as less as possible. Some policies will have a waiting period less than a year and others have as high as 3 years.

Some policies might not even cover the pre existing diseases so this should be a key factor while choosing the policy.

Room Rent and the Restoration policy

Lot of insurance policies will have a cap for the room rent. Like if you are admitted for less than 7 days in a hospital then 0.5% of total cover is what you get as a reimbursement and more than 7 days then 1.5% of total cover and if you are admitted in ICU then 1% of total cover irrespective of the number of days.

Assume your cover is 10 lakhs then

1. If you are admitted for 2 days in hospital, you get 5000 rs (0.5% of 10 L) as room rent per day

2. If you are admitted for 9 days in hospital, you get 15000 rs (1.5% of 10 L) as room rent per day

3. If you are admitted in ICU in hospital, you get 10000 rs (1% of 10 L) as room rent per day

If it is costing you 20000 per room per day then rest of the amount you should be paying from your pocket. So choose a policy which has no limitations on the room rent.

Restoration policy

Some policies let you claim only once in an year. Now what if you are admitted multiple times in an year? So choose a policy that has unlimited claims.

Now, Lets say it costs you 2 lakhs when you are admitted the first time and the cover is of 5 Lakhs. So you still have 3 more lakhs to utilize in the given year. If the policy has unlimited restoration of total cover then the cover becomes 5 lakhs every time you claim in the given year.

For example, cover of 5 lakhs.

1. Admitted the first time and claims 2 lakhs

2. Admitted the second time in the same year and claims 3 lakhs

3. Admitted the third time in the same year and will be able to claim 5 lakhs (Thanks to restoration policy)

Last tips:

1. Ensure there are cashless hospitals that are near you. Having Cashless hospitals is very important as the money transaction directly happens between the hospital and the Insurance company.

2. Check if your policy covers OPD and Health check ups every year. Few policies even give the Dental and Ophthalmic services covered too.

3. Most important, check the claim settlement ratio. Higher the ratio, better the policy. Make sure the claim settlement ratio is about 98% minimum.

4. Most of the policies will have copayment as a clause which means only part of the bill will be payed by the Insurance company and you have to bare the rest of the bill. So Ensure there is no copayment clause included in the policy.

5. Domiciliary clause is another important factor. Not every time you get admitted in the hospital. Sometimes you get home admitted too. Policy should cover those expenses also.

This covers almost all of the important dimensions to look at while choosing a Health Insurance policy. Hope this has given a clear picture and any questions please feel free to comment below.

VV Tales