The healthcare cost is escalating more than the overall retail inflation rate in India.
Not having an adequate health insurance cover can wipe off years of your savings even in a single hospitalization.
Therefore, selecting the right insurance plan hedges your medical treatment cost against the rising healthcare prices.
There are many insurance players in the market and choosing the right health insurance plan can be a tedious job.
If you keep in mind the following points, the selection process will become easier and streamlined.
Individual or Floater Plan
The first thing you should decide is the type of insurance plan.
Whether you want an Individual Health Policy where the sum insured is kept only for you
A Floater Plan, in which the sum insured floats or can be shared among your family members (You, your spouse and your children) in the case of hospitalization.
Choosing the adequate Sum Insured
The sum insured is the total money the insurance company is liable to pay to the insured person.
For example, health insurance with a sum insured of Rs. 8,00,000, it means the company is liable to pay a maximum of Rs. 8,00,000 to the medical expenses on hospitalization.
If the hospitalization expenses exceed the sum insured, you would pay the differential amount.
Therefore, selecting the adequate sum insured protects you from paying out of your pockets in the case of hospitalization.
The premium rises with the increase in the sum insured.
This rise is very less than the differential amount you would pay to the hospital for the treatment in case you chose the inadequate sum insured.
Pre and Post Hospitalization
When someone plans a hospitalization or an emergency, the medical expenses are not limited till a person is in the hospital.
The expenses are spread before and after hospitalization such as tests and medicines after an operation and many more.
Choosing health insurance that covers your pre and post hospitalization expenses is the right choice.
Most companies cover pre-hospitalization expenses for 30 days and cover 60 days post-hospitalization medical expenses.
The longer is the period, the better is your health cover.
All health insurance companies have a waiting period for specific illnesses and the pre-existing diseases.
The term waiting period is the time for which you have to wait to cover your existing health conditions.
For example, a person takes a health insurance policy today and is suffering from varicose veins.
The insurer will cover his illness after 24 months of taking the policy.
This waiting period applies to pre-existing diseases such as Diabetes, Asthma, Arthritis, hypertension, and more
This waiting period varies from 2 to 4 years in most cases.
Facility of Cashless Treatment
All health insurance companies offer cashless treatment upon hospitalization.
Under cashless treatment, the health insurance company pays all the medical expenses to the hospital and the insurer need not pay any money out of her/his pockets.
But the cashless facility cannot be availed in all hospitals. The insurance company will provide this facility when the insurer gets the treatment under the network hospitals of the health insurance company.
Getting treatment out of the network hospitals the cashless facility is denied.
The best way to avail this facility, look out for the health insurance company that has most of the hospitals that comes under its network.
No Claim bonus (NCB)
Most health insurance companies offer a No Claim Bonus to the insured.
It is the increase in the sum insured for every claim-free year.
For example, a No Claim Bonus of 10% on the sum insured of Rs. 5,00,000 (Five Lakhs) means that the insured will get an additional sum of Rs. 50,000 (Fifty Thousand) 10% of 5,00,000 in case the year passes claim-free.
In this case, the total sum insured for the next year will become Rs. 5,00,000 + Rs. 50,000 = Rs. 5,50,000 (Five Lakhs Fifty Thousand).
Look for the health insurance plan that offers a maximum No Claim Bonus for every claim-free year.
Limits and sub-limits
Some health insurance companies set limits for different health procedures and other facilities.
For example, a health insurance company may put per day limit of 2% of the sum insured for ICU
Rs. 8,000 per day room rent
Rs. 50,000 for cataracts and many similar limits.
If your actual expenses exceed those limits, you need to pay out of your pockets.
To get hassle-free medical treatment, look for a health insurance plan that has no limits and sub-limits.
Claim settlement ratio
The claim settlement ratio indicates the claim resolving capability of the Insurance company.
The higher claim settlement ratio shows the effectiveness of the insurer.
It is the ratio of the total claims settled by the total claims received in that financial year.
For example, a health insurance company receives 100 claims in a financial year and it settled 91 claims.
The claim settlement ratio in this case is (91/100) x 100% = 91%
A claim settlement ratio > 85 is considered good.
Look for a high claim settlement ratio when choosing a health insurance company.
The co-payment clause is a kind of agreement in which the insured is agreed to pay a certain fixed percentage of the medical expenses by own and the remaining by the insurance company.
For example, a health insurance plan with a co-pay clause of 10%, with a hospitalization bill of 5 lakhs, the insured would pay Rs. 1,00,000 (10% of 5,00,000) from her/his own pockets.
And the insurance company will bear Rs. 4,00,000.
If you ignore this clause while taking the insurance plan, you would pay a certain percentage of medical expenses from your pocket at the time of billing.
Look for a health insurance plan that has no co-pay clause.
The premium in case of no co-pay clause is higher than the one with a co-payment clause.
The above tips will help you choose the right health insurance plan.
It is better to take a health insurance policy at a young age because we are healthy and the insurance premium is less.
After few years all the pre-existing diseases and other specific illnesses will be covered by the insurer.
In later years of life, you can avail all the benefits of a health insurance policy with any waiting period.