Mistakes You May Make While Choosing Health Insurance

The whole COVID-19 situation has taught us lessons that we will and we should probably remember for the remainder of our lives. What is the biggest learning we can take away from year-2020? The immediate need for sticking to preventive measures and hygiene? Helping each other out in times of need? The importance of having liquid emergency funds? But amidst all these points, there is something that we simply cannot miss; The value of staying healthy! 

The primary focus is to do your best to stay healthy. You can do this by eating balanced diets, working out frequently, taking necessary precautions, and undergoing regular health check-ups. But simply doing your best and hoping for the best is not enough! You also need contingency measures if something was to go wrong with your health. This is where health insurance comes in handy.

So, you are financially prudent, conscious of future risks, and want to purchase a health insurance policy. What are the points you should keep in mind? Is buying just any health insurance policy sufficient? Or perhaps, buying the cheapest one? Here is how we can navigate through a few key pointers to keep in mind before making your insurance purchase. These are common mistakes people tend to make while choosing their health insurance. 

Not comparing policies before buying

It is common to immediately choose a policy that “seems to” satisfy your requirements. This is more so if the policy is issued by a reputed insurer and meets your budget. In doing so, you run the risk of missing out on alternate policies that may suit your needs better, offer more value for money, etc. 

Spending time researching policies and comparing their costs/benefits is smarter than settling for a policy that you like as quickly as you can. Even a small difference in premiums or slightly broad coverage can make a big difference in the long run. So, take your time and make a wise and informed choice! 

Over-insuring your risk

Another mistake to avoid is over-insuring you. When you are choosing your health insurance plan, it can be quite tempting to protect yourself and get coverage for “any possible” health issues. This can lead to adding on coverage to your policy and you will end up paying a hefty premium which you don’t need! 

A useful tip that can help you go around this problem is to get coverage for what is “probable”, instead of “possible”. Buy protection against the major costs (which you won’t be able to afford) and let the negligible expenses pass. Over-insuring just leads to overspending, which is uncalled for! 

Choosing the plan with the lowest premium 

It is indeed tempting to choose a health insurance policy that offers you the lowest premium. After all, you have health coverage at a cost that does not burn a hole in your pocket! But there’s no such thing as a free lunch. With the cheapest premium, comes only standard health coverage, which might be insufficient for you.

Most critical illnesses, post-hospitalization costs, diagnostic tests, etc might just be excluded from coverage under your plan. So, opting for a cheaper option right now might lead to you spending much more than you intended. It is like being penny wise and pound foolish Then just weigh the potential costs against the benefits offered by the policy before taking your pick! 

Buying multiple/additional policies 

Say you had purchased a standard health insurance policy 5 years back. You recently learned that you run a high risk of contracting cancer. But cancer is excluded from your policy, so you buy a new critical illness policy to accompany your existing policy. You are committing a mistake. Multiple policies just shrink your savings.

The best option in case you want to increase your coverage is to update your existing policy by purchasing add-ons instead of buying a whole new policy. Many such top-ups are available that can help you without costing a bomb. Your health insurance provider can help you choose or modify a policy in a way that is best suited to your needs. 

Not buying individual health insurance 

If you work in a corporate, you are most likely to be already covered under a group health insurance. Does this mean you need not get a personal health insurance cover? No! Group health insurance is a great cover to have, but it excludes many expenses. Having a personal insurance policy is important as it offers you coverage even after you quit your job. 

Moreover, personal insurance is tailor-made and handpicked to suit your personal needs, unlike a group policy, which is plain vanilla. Buying an individual health insurance plan is a good idea despite having group health insurance coverage. For example, if you resign from your job after 15 years of service, you lose the group insurance and also end up paying more for an individual cover.

Not researching on the insurance provider

If you think researching different policies and buying the best one for you is all, then you are mistaken. While reading up on policies, comparing them, and remember that reading the fine print is important. However, it is equally important to choose the right health insurance provider. 

Having a good policy on paper will not be sufficient if the provider defaults while paying you the benefit or delays inordinately. Thus, having a trustworthy and reputed insurer is always a safe option. Before making your final choice, read customer reviews, claim settlement ratios, hospitals in the insurers’ network, number of policy issues, and more. Get to know everything you can about the insurer because of buying health insurance. 

Not disclosing pre-existing illnesses 

It may look like a simple short cut, but it can expose you to grave risks at a later date. If you have a pre-existing illness that would require additional support to manage, it is best to opt for a Pre-existing Illness Health Insurance Policy. Quite a few health insurance buyers do not disclose pre-existing illnesses or lie about their medical backgrounds to avoid higher premiums.

This is not a good idea, because sooner or later, it is likely that your health insurance provider will figure out that you have an illness. It can result in the insurance company refusing coverage for any hospitalization caused due to that illness (Claim rejection). In such cases, the insurer can also refuse to renew your policy next year.

Besides, choosing a basic health insurance plan when you have a pre-existing illness isn’t the most prudent choice for you either. To keep away from this mess, be honest with your health insurance provider and buy a policy that fits your health needs as well as your budget. Most insurers are open to pre-existing problems, although it does come with strings attached.

Buying health insurance for tax benefits

Having health insurance proffers tax exemptions under Section 80D of the Income Tax Act, 1961. Your health insurance premiums up to a prescribed limit can be shown as a deduction from total taxable income. This is a great additional (and crucial) benefit of health insurance. But, the aim of a health insurance policy is not tax benefits alone.

The idea of health insurance is to help secure the future of your health. Keeping only tax benefits in mind while selecting your policy might lead to incorrect decisions. That is, you can have a health scare and realize while filing the claim that an important expense is not covered under it. The fact of the matter is to select a policy that is worthy in the face of a medical emergency because that is what health insurance is for! Tax benefits are just incidental.