Manage Multiple Insurance Plans in India

When it comes to financial planning, diversification is the key to a healthy plan. By diversifying, one can neutralize some risks by spreading your investment options. But that logic apply to insurance buying also? Should you also diversify your insurance cover across different insurance companies and plans? Can we apply the same strategy for insurance?

Quite often, individuals are happy with just one health insurance plan. Either this health insurance plan is provided by their employers or is self-purchased. But is it going to be enough to cover all your healthcare needs? Most probably not!

In this blog, we’ll take you through the nitty-gritty of having more than one insurance plan.

•     Benefits of having multiple health insurance plans
•     How to make claims with multiple health insurance plans
•     When and who should buy multiple health insurance plans
•     Claim process for multiple health insurance plans

Related article: A Layman’s Guide to How Health Insurance Works

Benefits of having multiple health insurance plans

Small sum insured, low premium

By having multiple health insurance plans, one can invest in several different types of plans of small sum insured. Instead of buying one insurance plan with a high sum insured and a high premium, multiple plans can turn out cheaper as the premium of low sum insured is generally lower as the concomitant risk is also lower.

Low risk of claim rejection

By having multiple health insurance plans, the insured has a backup. If one insurance company rejects a claim due to some reason, the policyholder can utilize the claim from another plan. That way, the insured is sure of always being covered.

Wider coverage

Multiple health insurance plans that provide different kinds of coverage can ensure financial security for all kinds of medical treatments and illnesses. E.g., if one person buys three insurance policies – one Mediclaim policy, one that provides comprehensive health insurance coverage and one that is for specific illnesses. Now this becomes more granular as you can make claims based on the policy that is applicable to the specific kind of medical need.

An infographic on multiple health insurance plans.

How to make claims with multiple health insurance plans – different case scenarios

Case scenario 1

Rahul has two health insurance policies – one for sum insured of Rs 1 lakh and the other for sum insured of Rs 2 lakh. Recently, he was hospitalized. His medical bills amounted to Rs 1.5 lakh. What should Rahul do in this situation?

The first thing Rahul should do is, inform both the insurance companies about the medical bills and that he would be making claims with both or either one of the insurance companies. It is essential that you keep both the insurance companies informed and document the sharing of information with them.

In fact, the information about the number of insurance plans that a policyholder has must be truthfully submitted at the time of buying a new insurance policy. One reason for this is the Contribution Clause, wherein some policies may have a clause under which, in case a policyholder has multiple policies, the claim will be settled by each policy equally. 

In 2013, the Insurance Regulatory and Development Authority of India (IRDAI) made amendments to the contribution clause. If the claim amount is within the sum insured, the contribution clause is not applicable. 

In Rahul’s case scenario, the claims will be paid according to the contribution clauses of both the insurance policies. He can choose to make the claim with either both or just one insurance company or would have to follow the contribution clause. It is advisable that one understands the contribution clause at the time of purchasing a policy. This is part of the fine print of the contract and you must familiarize yourself with these details.

Case scenario 2

Renuka has three health insurance policies from three different insurance companies of Rs 1 lakh each. Now take for example, she gets hospitalized and the bill amounts to Rs 2 lakh. Renuka can either claim Rs 1 lakh each from two policies or divide it between the three and claim Rs 66,700 from each. Here again, it would depend on the contribution clause in the agreement with the insurance company.

One thing Renuka must definitely do is, declare the policies in the claim forms. Insurance companies usually provide a settlement certificate for the policyholder to make claims from the other existing policies.

Case scenario 3

Paresh has two health insurance plans – one is a hospital cash policy and the other is a critical illness policy. If Paresh gets hospitalized due to an illness, he can make a claim from the hospital cash policy, not the critical illness policy, because the critical illness plan will only be applicable upon the diagnosis of a critical illness.

When and who should buy multiple health insurance plans

With the rising costs of healthcare and increasing incidents of contracting diseases and lifestyle ailments, having more than one insurance policy is not uncommon. In fact, experts say it is a wise solution to ensuring quality and timely healthcare and medical treatment.

Let’s look at when and who should definitely buy multiple insurance plans. 

If you have health insurance coverage from your employer

Typically, corporate employees receive health insurance coverage under group health plans from their companies. These health plans have benefits and limitations, too. Some of the limitations are:

•     It does not provide flexibility, meaning, the insured cannot change the sum insured, port the policy or add another member to the policy. In short, group health plans provided by employers cannot be customized.
•     It does not provide any tax benefits to the insured. 
•     Moreover, group health insurance will cease to be once the insured leaves the company. 

Thus, individuals who have only one insurance plan, provided by their employers, should consider buying a personal or family floater insurance policy in order to ensure adequate coverage and avail of benefits that come with personal health plans. 

If you have dependents

Individuals who have dependents – parents, spouse, and children – must buy different health insurance plans according to the needs of each family member. E.g. if the parents are above the age of 60 years or have specific illnesses, it is advisable to buy separate personal health insurance plans for them. 

If an individual is married and planning on starting a family, it is important to either include the wife and the newborn baby in a family plan or buy individual health plans for them. 

Every family member’s healthcare needs would be different according to age and personal health conditions; hence it is beneficial to buy multiple health plans. In certain cases, a family floater plan may not be sufficient as a single family member’s healthcare needs might be higher. In such cases, it is important to buy a separate health plan.

If your health insurance plan is of a low sum insured

If the sum insured of your existing insurance policy – even if it is a self-bought personal health plan – is low, it is advisable to go for another health insurance plan. This health plan should either have a high sum insured or it should be a special plan dedicated to your specific healthcare needs, if any. That way, you can ensure sufficient coverage for yourself. 

Claim process for multiple health insurance plans

It is extremely important to understand the claim process in the case of multiple health insurance plans as it is different from having just one single plan. Let’s break down the claim process for different types of claims:

Cashless claim

In the case of a cashless claim, the policyholder can make a claim with one insurance company, obtain the claim settlement certificate and then approach the second insurance company for the settlement of the balance amount. Make sure you declare and share all the information about multiple plans in the claim forms. For simplicity, don’t spread your health cover across more than two insurers as that will ensure that the compensation process is not too cumbersome.

Reimbursement claim

In the reimbursement claim method, the policyholder will have to submit original bills and documents, hospital certificates and all the required documents to both the insurance companies. 

E.g. If you have two health plans of Rs 2 lakh each and your hospitalization bill amounts to Rs 3 lakh, you can choose to claim Rs 1.5 lakh from both the policies or Rs 2 lakh from one insurer and the remaining Rs 1 lakh from the other insurer. However, you will have to submit the required documents and claim settlement certificate.  

If you’re already selecting health insurance plans to diversify your health insurance portfolio, well done! It’s a wise choice to make, given the high medical expenses and different needs. There is no harm in planning for your healthcare needs and ensuring a strong insurance plan.