Should I renew my health insurance policy?

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Why the *#$! <insert your favourite cuss word> did I buy this health insurance policy at all? I just want to trash it.

If this is you, please spend 5 minutes on this article. No I am not again selling you the policy. The article simply puts light on what you lose and what are the options you have, going forward. Like all our articles, blogs, it only powers you with information. You take the decision.

So you have second thoughts. All of us have second thoughts, on our decisions. These are many a time, based on friendly information we get, immediately after we buy something, anything. It recently happened with me for my laptop. Here I was asking every friend which laptop they recommend. No one gave me a straight answer. Now when I bought it, I am getting advice. “Oh! You bought the Doll laptop, you should have bought the Tomsung laptop, it has better battery life. I am feeling sorry about it now. Are you?

First, Let's come on the same page: Health Insurance is a part of long term financial planning. Yeah, that’s a serious jargon, I used. What I meant to say is that all the money you invest does not reap benefits immediately. Some will give you returns in the long run. Health Insurance is such an investment.  In short, it’s not like buying a movie ticket, where you make the payment at the box office, and there you are rushing in the dark hall, to enjoy the movie, which just started. It’s more like a relationship, or say friendship, you don’t know when you would need to dip into it, or you would ever need it, but you still invest your time into it. Friendship always works. Health Insurance too…works, but only in the long term.

Anyways…so let's go to the reason you want to dump your investment in Health Insurance?

The reasons we primarily know are:

<!--[if !supportLists]-->1.     Not finding value in the investment. “I spent Rs. 6000 what did I get?”

What you are paying today is a small premium, to cover a large surgery for an ailment not foreseen today, maybe, in your old age. Many financial wizards have said “You need to buy a health insurance policy, when you don’t need it at all”.  Insurance does not pay for existing ailments, without a waiting period. Hence, you cannot wait for the ailment to happen one not-so-fine day, for you to get the cover and get the claim paid, as Insurance does not pay for existing ailments. Think like this, even if you pay Rs. 10000 for next 20 years, you pay Rs. 2 Lakhs – what are the chances that you would need more than 2 Lakhs in the next 20 years on hospitalization. This is anyone’s guess.

<!--[if !supportLists]-->2.   My claim was rejected last year, due to waiting periods or due to pre-existing ailments. “What is the point of Health Insurance, if it does not pay claims”

Insurance is a long term investment, and hence, it is part of the policy design that discourages claims for some treatments in the short term. All health insurance policies in India have waiting periods for specified ailments. These treatments have waiting periods, as Insurance Companies had found many people supress information before buying the policy, and immediately claim for such ailments. Which is not the point of Insurance. If everyone wants to pay Rs. 5000 and get a claim of Rs. 50000, how will the Insurance Company survive to pay your claims in your old age? If any plan is ready to pay such amounts, you be ready to pay through your nose in the coming years, or worse, the plan would be disbanded completely. It’s just not viable, in the short term to pay for everything without limits, or waiting periods. Health Insurance is a cover that opens up gradually in 3-4 years, which flies with time. Soon you will realize what an excellent investment you have. Speak to someone who is above 60 and has a cover from his young age, and he will say that such a cover is more valuable than gold. You will not find one individual who will regret his investment in Health Insurance at young age.

If you have invested premium for some years, its matter of time, your cover will be wide enough to cover most hospitalizations.  If you stop renewing your policy, and you lose on the grace period, you will have to go through the waiting periods all-over-again, when you again decide to go for your own personal policy.

<!--[if !supportLists]-->3.     Not Happy with the plan. There are better plans I have heard of.

You are unhappy with the experience, or you have found a better product. This is the most simple of the issues. With IRDA introducing portability, if your family is young and healthy, you can port with the credits of waiting periods you have gone through, instantly. It’s not like me, where I am stuck with my laptop. Discuss with us portability options, for your family.

Still not convinced?

So, let’s say you don’t renew your policy, and then what are the options:-

Options after you have lapsed your health insurance policy:

<!--[if !supportLists]-->1.     Keeping the members uninsured and keep looking for “that better option”

Going by our experience, this is by far the most daring option. We are all busy people, busy with our work life, busy with our families. You wouldn’t know when Health Insurance pops out of your agenda and priorities. And one fine day, you will realize you/your family is too old, or unhealthy to get health insurance. Or worse, you have been charged massive unaffordable loading and some unreasonable exclusion on the policy for your family members.

The implications: 

<!--[if !supportLists]-->1.      <!--[endif]-->You will lost all the continuity, and go through all the waiting periods all over again. 

<!--[if !supportLists]-->2.      <!--[endif]-->You will have to submit a fresh proposal, and go through the process all over again.

<!--[if !supportLists]-->3.      <!--[endif]-->Any ailment contracted during the break will be considered pre-existing ailments and would be excluded for a minimum of 4 years.  Premium loading 

<!--[if !supportLists]-->4.      <!--[endif]-->Even lifestyle conditions like being overweight or underweight after you have bought the policy will impact your premium, due to additional premium loading. 

<!--[if !supportLists]-->2.      <!--[endif]-->Will look for a cover when required. I am healthy right now.

You think you are healthy. But are you? What about your family members? Are they healthy? How many times did you exercise last week? When was the last time you ate junk food. Most of us are so busy with achieving something, that we have time and again compromised on our health. And then our lifestyle, its more and more lethargic and sedentary. Even for ones who haven’t an accident or an ailment could still happen. Who knew the dashing young, Yuvraj Singh would be affected with Cancer, and lose out on his young years, with the highest potential.

"Earlier I would ask people over 40 years of age to undergo yearly cardiac checks, but I now ask people over 30 years of age to be careful," says senior heart surgeon Ramakanta Panda and founder of Asian Heart Hospital, in the Times of India. Read the entire article here.  

<!--[if !supportLists]-->3.     Covering them in the Corporate Employer’s Policy.

Believe us. Cheap Corporate cover with all inclusive covers, and no limits, is a party, which will get over sooner-or-later.  Newspapers all over are writing how group health insurance covers are being curtailed, premiums rising by more than 50% every year, parents being left out to be covered, co-pays being applied on covers. Parents above 80 being left out from the coverage etc. It’s becoming more and riskier to depend on your employer for your insurance. The priority of your employer is your health, but equally managing the ever growing costs and spilled budgets.

What’s more you may quit this job and your next employer may not offer cover for your family members, and offer a measly cover for you. You would then have to start all over again, looking for a Retail/Individual Policy.

By when can you save your Expiring Policy?

Most of the Health Insurance policies in India are annual policies. Such policies need to be renewed every year, before the expiry date. As per IRDA, every health insurance policy has a grace period of 15 days, which means that you can make a premium payment upto 15 days after the date of expiry. Beyond 15 days, the Insurance Company will not renew the policy, and will ask you to apply afresh.  

Still have some questions. Pheww....Write to us in our comments section, and we will respond back :)

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