These cases will definitely make you buy health insurance

A large number of the population does not have health insurance in India. Considering the increasing life expectancy, increasing healthcare expenditure, and rising lifestyle diseases, shouldn’t the number of those with health insurance be more? Why do most people not care about buying health insurance?

The reasons could be many: a general lack of awareness and importance about health insurance, a belief that health insurance is a useless expense, or a belief that it is expensive and only for those who can afford it.

Whatever be the reason that made you avoid buying health insurance, after reading these cases, you will definitely want to buy the best health insurance plan for yourself and your loved ones. Read on.

Case 1

Top-up, family floater or individual health insurance plans – what is best?

Kalpit is insured by a group health insurance provided by his employer. The policy with sum insured of Rs 5 lakh also includes his wife, two children and parents. But he doesn’t think Rs 5 lakh would be adequate. He is considering a few options:

•     Buy separate health insurance plans for each of the family members
•     Buy a family floater plan
•     Buy a top-up plan

What should Kalpit do?

Buying separate health insurance policies for each individual family member would turn out to be quite expensive for him. For e.g. if he buys an individual health insurance plan of Rs 3 lakh for each of the five family members, he would have to pay a premium for total Rs 15 lakh sum insured. If the average premium for each policy is Rs 15000, he would have to pay Rs 75,000 towards premium.

A family floater plan would be more affordable. E.g. a family plan for Rs 7 lakh can adequately provide coverage to all or any of the members. But it would still turn out to be more expensive. 

Kalpit chose to go with a top-up plan. A top-up health insurance plan provides additional coverage to the existing health insurance at an affordable price. The cost of top-up plans is usually linked to the deductible. A deductible is a pre specified limit and only when the deductible is utilized towards a hospitalization, can the top-up be utilized. Therefore, the higher the deductible, the more affordable the policy. 

Here is how a Top-up health insurance plan works:

For instance, suppose a policyholder purchases a top-up plan with Rs. 8 lakh cover to upgrade their health insurance worth Rs 3 lakh purchased earlier. The total sum assured now comes to Rs. 11 lakh. Now, assuming the insured person gets hospitalized, he then raises a claim amount worth Rs 3 lakh. In this scenario, the amount (also known as the deductible) will be reimbursed from his basic health insurance.

But, in the second case where the claims are above the limit of Rs. 3 lakh, payment will be made from the top-up plan used to enhance the cover of the basic health insurance. When buying top-up health insurance plans, remember that the top-up plan will only come into the picture only when the deductible limit is reached.

Case 2

To buy a new health insurance plan or enhance the existing policy?

Mr Manoj is a retired consultant. He has a family floater health insurance plan with his wife for a sum insured of Rs 4 lakh. Their ages are: Mr Manoj is 65 years old and his wife is 63 years old.

However, his current health insurance company has been increasing the premium owing to the increase in sum insured with a top-up plan. The current premium is Rs 20,000.

Mr Manoj is not sure if he should continue with the existing health insurance policy as it is quite expensive, or if he should buy a new policy. Both Mr and Mrs Manoj would need to undergo a cataract surgery in the coming few months. What should Mr Manoj do?

If he gives up the policy now, he would not be able to claim any amount for the cataract operations. Even if he immediately buys a new health insurance policy, it may have a waiting period clause and may not provide coverage until a few months to a year.

Although, he would be able to get a sum insured higher than Rs 4 lakh for a premium of Rs 20,000. 

At this point, his best option would be to continue with the existing plan, complete the cataract surgery procedures, claim the expenses for the operations and then switch to a new health insurance plan. 

Mr Manoj should also include a higher co-pay amount in the new policy so that the premium amount can be reduced. 

Another option for Mr. Manoj would be to buy an individual top-up plan, which would ensure continuity of coverage during the waiting period of the new policy. Take a look at some of the lucreative benefits of purchasing an individual-top-up plan that make it a great option:

• Top up plans are much more economical compared to general health insurance policies if the deductible is higher.
• Purchasing a top-up insurance plan is a better option than extending a basic health cover at a nominal cost
• Top-up insurance plans can be bought from any insurer without restrictions since they are very flexible and easy to purchase. The basic health insurance policy and a top-up plan can be from two different insurance providers.
• Top up plans are available for both family floater policies and individual plans.
• These plans offer tax benefits on premiums under section 80D.

Premiums for health insurance plans keep increasing with the age of the policyholders. It is advisable to increase the sum insured with age as healthcare needs increase with age. Reducing the sum insured should be avoided. 

 

Case 3

Family floater or separate senior citizens plan?

Rohan has a wife and a 1-year old son. He is planning on buying a family floater health insurance plan of Rs 10 lakh. He just got the news that his father is going to retire next year and would be provided with a government health insurance scheme of Rs 4 lakh. However, that scheme does not have any network hospitals in the town that they live in. This means, if his father ever has a health emergency, they would have to hospitalize him in another town.

What should Rohan do? Should he include his father in the family floater plan? Or should he buy a separate health insurance plan for senior citizens for his father?

Rohan should buy a family floater plan for his family and a separate plan for his father, as he is senior and his healthcare needs would be more compared to the rest of the family that is young.

Benefits of Buying a Separate Senior Citizen Policy

There are several benefits of buying a separate senior citizen policy for your parents and covering the rest of your family including self under a family floater policy:

Extensive Coverage for Medical Treatment

Long-term medical treatment can lead to a significant loss of years of financial savings. This especially becomes the case when someone in the family is struck with a serious medical condition. The towering healthcare costs in India increasing day by day and the future doesn’t seem any less exorbitant. This calls for extensive medical coverage that provides financial protection to you and your family. 

Keeping this in view, your existing family floater policy may prove inadequate if you add your parents under the policy too. It is better to buy separate Health Insurance for Senior Citizens. It would offer a high sum insured that will be available for your senior citizen parents only while other dependants are covered under your family floater policy. This ensures that each family member gets adequate medical coverage.

Additional Benefits

Senior citizen health insurance offers various beneficial features such as annual health check-ups, automatic recharge of sum insured, and no claim bonus. These additional benefits are specifically designed to provide the best coverage and benefits to senior citizens. Many elderly individuals also believe in the competence of alternative medicine. A health plan for senior citizens also offers alternative treatment cover. With customized medical coverage, senior citizens can rest assured that their healthcare expenses are not a financial burden on their children.

A thing to note here is that if Rohan includes coverage for his parents in the existing family floater policy, the chances of availing benefits like a no-claim bonus or free medical check-ups for a claim-free year are reduced significantly. With a separate senior citizen policy for parents, there is a good chance that there won’t be any claims made on Rohan’s family floater plan, which means he can avail of no-claim bonus and gradually increase the sum insured. 

Case 4

Maternity coverage and postnatal expenditure

Rajeev and his wife have a joint health insurance policy. The policy does not have maternity insurance. Rajeev’s wife is pregnant and he’s hoping to buy maternity insurance. However, the health insurance plan that they have has a waiting period of two years for claiming maternity expenses. This means buying maternity coverage at this point is going to be pointless for them. 

They are left with no choice but to spend out-of-pocket for the maternity and postnatal expenses. However, if they had planned in advance and bought a maternity health insurance plan much in advance, they would not have to face this challenge. The learning: buy health insurance much in advance of the time that you may anticipate its requirement. Another major takeaway from this case is that you must know the general terms and conditions of the health insurance product or medical coverage that you are going to need in the future. Here are a few things to keep in mind about maternity coverage:

Maternity Expenses

IRDAI’s Circular on Standardized Definitions issued in 2013 clearly defines maternity expense which is followed by all insurance providers uniformly. Any hospitalization traceable to childbirth and medical termination of pregnancy and pre/post-natal expenses essentially comes under the definition of maternity expenses. Hence, the following expenses are included under maternity coverage:

• Hospitalization: Hospitalization expenses related to maternity.  Pre-hospitalization expenses up to 30 days prior to delivery and Post-hospitalization expenses up to 60 days after the delivery are also covered.
• Delivery including Pre and Post-natal expenses: Maternity insurance covers expenses related to both caesarian and normal delivery. It also covers expenses related to post-delivery complications for the mother. 
•  Hospitalization Costs: Room charges, nurse and surgeon charges, anesthetist consultation charges, medical practitioner fees, and emergency ambulance charges are covered under maternity coverage.
• New Born Baby Cover (First 3 Months): Coverage is also extended to newborns if they are diagnosed with a serious medical condition or a congenital disorder.

Waiting Period and Sub Limits

The waiting period for a benefit is the amount of time you’ll have to wait until the insurance provider will start covering the expenses for that benefit. This is the biggest impediment in the way of someone looking to buy an individual health insurance with maternity benefits in mind. The waiting period for maternity benefit can be anywhere near 2 to 4 years, with some policies stretching up to 6 years. 

This is why, it is better to buy a maternity cover, even if you don’t plan to hve a baby soon. However, in the case of group health plans the the waiting period could be up to nine months. There are also some policies which are specifically designed for maternity-related insurance needs like Religare General’s JOY that offers a waiting period of nine months.

Health insurance policies with maternity coverage come with an in-built sub-limit clause. This means that while your total sum insured may be 3 lakh, coverage for maternity expenses will be limited to a much lower sum. Typically, it ranges from Rs. 15,000 to Rs. 25,000 for normal deliveries whereas caesarean deliveries are generally covered to the extent of Rs. 25,000 to Rs. 50,000. The way around sub limits on maternity coverage is to get a high enough sum insured. Opting for certain high-value policies with a sum assured of over 10 lakh will help you get a maternity coverage with the upper limit of 1 lakh. Under group covers, the sum insured for pregnancy-related expenses could be a little higher.

Exclusions

Although  some group and individual policies include pre- and post-natal expenses in the scope of coverage. But this features as a key exclusion in the case of many other maternity coverages. Pre- and post-natal expenses would mean costs related to ultrasound, regular checkups, doctor’s consultation fee, medicines and so on. These are similar to pre- and post-hospitalisation expenses that are covered under a standard health insurance policy. Similarly, not every policy with maternity coverage covers expenses related to new-born babies. You should take all these factors into account at the time of making a comparison before buying an independent health plan.

To sum it up

To see more about buying insurance plans online, check out this infographic.

Health insurance is a necessity. And as seen above, there are a lot of details to be considered, when buying a health plan or planning the family’s health insurance portfolio. If there’s one thing that the above cases teach, it is that health insurance, when chosen with care and consideration, can reap a lot of benefits in future, apart from providing financial protection. Have you decided what kind of health insurance plan you would buy?