The kind of participation Government of India has in Healthcare is clear from their budgets for Healthcare compared to developed/developing countries, especially the European ones. With the rocketing trend of Healthcare expenditure, there are only 2 ways you can save yourself from any Health related expenditure killing your savings in India. 1) Ensure your family lives a healthy lifestyle and pray, that you get no disease 2) Get a Health Insurance.
Health Insurance, worldwide is the best system having the capability to empower the common man to use best of quality healthcare at most affordable prices. While, the healthcare industry in western countries being more organized abroad has resulted in more comprehensive products out there, the core Health Insurance products in India, in their current form, can actually be called Hospitalization Insurance Plans. The plans cover expenses related to only Hospitalization. These hospital costs could be for accidents as well as sickness, of course subject to a long list of terms and conditions.
OK, let's get to the point. We are here to unravel the best path to finding the most suitable product in the market. With more than 25 General Insurance Companies marketing and selling more than 50 Health Insurance products, with exponentially higher terms to compare this looks like a tedious task. Let's give it shot. Here we go:
#1. Cut out the frills. Go Basic:
Most frilled products in India are not cost effective. A product which takes almost double the median premium, and offers unnecessary frills, which you dont actually need, is a strict no no. We have all traditionally lived with routine medical expenses like Consultation expenses, Dentists bills, Medicine bills, and such costs are therefore manageable by most of us, unlike a huge hospitalization bill which could eat way more than a couple of months’ salary or savings.
Bottomline: You should first look at covering ALL members of your family for the larger “unmanageable” costs, which could burn a hole in your overall financial planning before signing for any fancy product.
#2. Don’t Compare Premiums:
While comparing health insurance policies in india, never start by comparing premiums. Health Insurance is more than a Mumbai-Delhi Air Ticket, which you can compare and buy from comparison/aggregator websites. Health Insurance is a long term complex contract coupled with complex services. This requires insights into the overall insurance contract (called policy wordings) over and above price comparison. Either you need to yourself get into comparing the features in detail, or take help of an unbiased health insurance advisor.
Bottomline: Understanding the benefits and terms is more important than the cost you are paying.
#3. Look for Maximum Renewal Age:
Maximum Renewal age is the age on which the coverage on your health insurance would be discontinued.
This could be for all members or for a specific proposer/member, depending on product to product. Remember, your core goal, when you buy Health Insurance is to save yourself from mounting healthcare costs right through your life. A product, which ceases renewal, while you are still alive and need it more than any time before, is a BAD product. Sift through all products and find out the maximum renewal age. Better, look for Lifetime products. Rule out all products, say, which do not cover your family members for a reasonable lifetime. As medical science progresses and becomes more accessible to the common man, Life expectancy in India will move higher from the current average of around 70. A product with a lower renewal ceasing age than 70 years is a complete no no.
Bottomline: An insurance product which does not work, when you most need it, is not insurance.
#4. Look for Treatment wise limits & Copay:
Look for treatment wise limits in the products. Treatment wise limits basically cap the amount you can claim for a particular surgery under the policy. Say, there could be limits for Cardiac treatments of Rs. 1.50 Lakhs or for Cataract for Rs. 20000 per eye. Such limits would cap your claim, even n when you have a large sum insured under the policy. You need to weigh this in, before you sign up. Some products I remember are United India’s Family Medicare, Star Health’s Red Carpet have such limits. Bajaj Allianz General and ICICI Lombard have a limit only for Cataract.
Another condition, is the COPAY. Copay is basically is the share of admissable claim that the customer would have to pay from her own pocket. For instance, if the claim is of Rs. 50000, and the admissable claim is Rs. 48000. If the copay is 10%, the copay amount would be Rs. 4800. The Total amount you would have to pay is Rs. 6800/- (Rs. 2000 deduction in the policy + Rs. 4800 of Copay)
Copay is currently in
- Oriental Happy Family Floater at 10% of the Sum Insured upto Rs. 5 Lakhs Sum Insured.
- Bajaj Allianz has a copay of 10% for treatment at Non-Network Hospitals in their Health Guard products, and 20% in Silver Health.
- Star Senior Citizen Red Carpet has a copay of 30%. For Pre-existing the copay is 50%.
Bottomline: Know what you will not get paid.
#5. Understand Day wise Cash limit Health Products:
There are some products marketed and sold as Health Insurance (Aegon Religare Life, Tata AIG General are the popular ones) which provide a daily cash benefit for the no. of days one is hospitalization. Most surgeries require an average of 6-10 days, so at the Rs. 5000 per day limit multiplied by 10 Days would pay Rs. 50000 per hospitalization, irrespective of the actual charges incurred. An Angiop lasty in this will unknowingly burn a big hole in your pocket. Please avoid this product for your core healthcare expenditure risks or as an alternative to a Standard Health Insurance product.
This product is more like an add on cover.
Important Note: Do not confuse the above with products that have specific limits on Room Rent. Room Rent Limits, to an extent, make sense both for the customer, as well as the Insurance Company, as they categorize people paying a higher premium in the higher eligibility bracket. This has been further discussed in detail below in this article.
Bottomline: All plans which are called Health Insurance, may not be what you are looking for.
#6. Zero in on a Coverage amount/Sum Insured:
Sum Insured is the total annual liability under the policy. Since this is a long term product, you should look at the maximum available cover you can afford. Remember, a sum insured of Rs. 2 to 3 Lakhs will have no value, by the time you start using it. As per a very recent report on Healthcare in India by Tower Watson, the medical inflation in India is rocketing anywhere between 17 to 20% annual.
Option of Upgrading Sum Insured: The option of upgrading the cover at a later stage when you are older is dicey and complicated. There could be a requirement for a medical test. Moreover, if you or any of the family members contract a new disease in the interim, the ailment would excluded for the upgraded amount. Upgrade would be almost like taking a new policy at that age, which I would not recommend.
Bottomline: Look for the highest cover affordable. An I-will-upgrade-it-later option may not work.
#7. Premiums change, know how?
Premium in Health Insurance increases as per increase in your age, but, there’s something about the no. 45. Insurance Companies dislike this no. Have a look at the rate charts, and you will be surprised to see good jump in premiums after one crosses the age of 45 yrs. In some cases, the increase in premium is as high as 50%. You need to factor this, before you sign up
Ensure premium remains affordable in your retirement days, and does not kill your hard earned retirement savings.
Note: you need to factor in that these premium charts can change even tomorrow, like they have changed earlier, but looking at the current charts for older brackets would get you a flavor of the company’s pricing philosophy for older age bands.
Note, the average premium in the chart is the average of premium paid by a person between the age of 30 and 65. The values being compared are only indicative. Future rise in premium due to loading, change in premium charts have not been taken to consideration.
Bottomline: Know how the premiums change in the long run.
#8. Credibility, Check.
Look at the history of the company. If it is a new company, you could look at the history of the promoters and their businesses. Generally, a company or set of promoters known for their ethics and excellent governance, venturing out into Insurance would be a decent bet. Get information from your health Insurance advisor, on the overall claims experience, on responsiveness, about changes and number of changes in the product, since it was launched. Too many or too large changes, indicates there could be more tomorrow.
Bottomline: History in the best teacher.
#9. Products for older age/Senior Citizen family members.
Most Insurers, including the ones ‘specialized’ in Health Insurance resist covering members above 45 years. Remember, you need to somewhere take responsibility of not covering your parents, earlier in their life, and not completely blame Insurance Companies for not covering them, now.
There is no perfect product available for Senior Citizens. All products for senior citizens are restrictive. You need to settle for a product, best affordable to you, even if it has co-pay, exclusions and other restrictions. Again, if your parents have existing ailments, then this becomes more complicated.
Bottomline: There is no Perfect Product. Definitely not for a Senior Citizen.
#10. Finally, Ensure you have a Good Advisor:
I have always said this, ensure you spend good time in deciding, who is your intermediary. Once you have taken pain to finalize a good advisor, you are more than half way done.
A Good advisor is one who would provide:
- Unbiased advice, without any special affiliation to any health Insurance Company.
- Provides Routine services like Pickups, Renewals etc.
- Assists and Guides you at the time of Claims.
Health Insurance industry is witnessing huge changes both in products, price as well as processes, being an insider, it is sensible to have an expert on your side, who updates you on changes, their impact on your coverage and suggest change in course, in case necessary.
Bottomline: Insurance Company have their own vested interests. Have someone on your side.
Note: There are other terms & benefits comparable like Pre and Post Hospitalization, Benefits like No Claim Bonus/Discount, Loading on Premium due to Claims History, 1-2 or 4 year waiting Period for Specified Ailments, Pre-Existing Waiting Period. These have not been considered as they do not make a very big impact on the decision to purchase a long term Health Insurance product in India.
About the Author:
Mahavir Chopra is the Head - Personal Lines & eBusiness at Medimanage.com, a specialist health insurance advisory service for Individuals, Families and Corporates. Know more about Medimanage's free advisory services here:
If you want to speak to Mahavir's team of expert advisors for a one-to-one discussion on your requirements, post your inquiry here.