22 May 2017 15:59 IST

Insure your health, as a policy

Does your heart skip a beat when you look at the medical bills you incur?

Many of you may have a life insurance policy that was signed at the insistence of a nagging insurance agent neighbour. But what about insuring one’s health? Given the times we live in, it is important to go in for a health insurance policy that will pay the medical bills that you are likely to run up.

A health insurance policy will ensure that your financial planning doesn’t collapse when you suffer an illness. The current costs of a few medical procedures underscore the need for health insurance: Cardiovascular procedures cost upwards of ₹1.5 lakh. The cost of treating cancer in initial stages is ₹1-3 lakh and for nervous disorders you might have to pay ₹80,000-90,000. Procedures to treat fracture or any accidental injury can cost up to ₹1 lakh.

If you are not insured for health, you will have to dip into your savings to pay for medical expenses. This will shatter your dream of a happy retired life.

Unlike a few years ago, today you get comprehensive insurance policies in the market that cover medical expenses incurred on hospitalisation. You can choose from an array of options — with/without sub-limits (caps on charges including room rent, ICU, ambulance and other charges) and co-pay (paying a portion of the medical bill from your pocket), 2/3/4 years of waiting period before claims are serviced, option to get alternative medication (Unani, Siddha, Homeopathy) covered, and benefits such as restoration of sum insured and no-claim bonus.

But these options make shopping for health insurance a daunting task. We try to make the task a little easier for you by suggesting what people of different age groups should look for when buying health insurance.

The four categories of people considered here are — a) a young individual in the thirties b) a young family — a 30-plus male with spouse and two kids, c) An older family — a 40-plus male with spouse and grown-up children and d) a senior citizen.

The analysis here is for indemnity plans (also called medi-claim policies). Data for private insurers was taken from policybazaar.com and verified.

Young individual (25-30 years, single)

When you are young, you may be tempted to buy the cheapest insurance policy. But, mind you, as you get into your mid-30s, the chances of your claiming on the policy increase. If your policy is not good enough, then the medical expenses will burn a hole in your pocket. Do not think that the group medical cover of your employer will always be there for a back-up. Group covers come with a lot of ‘ifs and buts’ and given the rate at which jobs are getting axed today, it is better that you have a personal health policy.

If you are in your 30s, take a plain-vanilla health insurance policy. You need not look for ‘sum insured restoration’ benefit or a policy with high NCB (no-claim bonus) promise.

If you have no chronic health complaint, go for a four-year pre-existing disease waiting period which can help you save some premium (there is option of 3/2 years too). But, do not settle for a policy with sub-limits or co-pay clause. The premium you save may not be significant compared to what you will end up paying if you are hospitalised.

You can consider Religare Health’s Care, Royal Sundaram’s Lifeline Supreme, or Max Bupa’s Health Companion. There is no sub-limit on room rent or other charges in all these policies. For a SI (sum insured) of ₹5 lakh, the premium works out to ₹5,500-6,500 per annum.

Young family (30+, with kids)

If you are in the 30-40 age bracket and looking for a floater (a single policy that covers all members of the family) policy to cover yourself, your spouse and kids, there are a few things you need to keep in mind.

First, look for a policy where there are no sub-limits. These are caps on claim that you can make under various charges of a hospital. Health insurance policies from public insurers are cheap on premium, but have caps on charges, including room rent, ICU and sometimes on ambulance too.

For instance, New India Assurance’s Floater Mediclaim Policy has a sub-limit of 1 per cent on sum insured for room rent and 2 per cent on sum insured for ICU charges. Say, you have a ₹2 lakh policy, you will be allowed to choose a room of ₹4,000. In case the room rent is higher, say ₹8,000, the balance ₹4,000 has to be borne by you. The few thousands that you pay here may not pinch you. But note that since you exceeded the limit on room rent, the insurer will make only a partial settlement on the total claim (under the proportionate reduction clause). If your total claim for hospitalisation is ₹2 lakh, the insurer will settle only ₹1 lakh!

Today, most private health insurers offer at least one plan where there is no limit on room rentals or ICU charges. Religare Health’s Care, Apollo Munich’s Optima Restore and Max Bupa’s Health Companion are some policies where there are no sub-limits on room rent.

Second, look for the right ‘no-claim bonus’ (NCB) feature. This is necessary to take care of the medical cost inflation which is rising at about 10-12 per cent a year. All health policies in the market offer NCB benefit but there are variations.

The common NCB feature works thus: For every no-claim year, the sum insured will increase by a fixed percentage — usually 10 per cent. This will continue till the cumulative bonus reaches the cap specified under the policy — usually 50 per cent of SI.

However, note that after the first year of claim, the NCB will start to reduce at the same rate it increased. In Religare Heath’s Care, for instance, NCB is 10 per cent of SI, with a maximum benefit allowed of 50 per cent of SI. So, in a ₹5-lakh policy, for every no-claim year, the SI will increase by ₹50,000. After five years of no-claim, the SI will be ₹7.5 lakh. But, if there is a claim in any year, the cover will start to reduce — it will drop by ₹50,000 every time.

There are policies in the market where the NCB benefit is higher.

Religare Health itself offers ‘No Claim Bonus Super,’ an add-on feature. Here, one gets 50 per cent increase in base SI for every claim-free year to a maximum of 100 per cent.

With the already existing NCB benefit (where NCB increases by 10 per cent every year to a maximum of 50 per cent), and this add-on, the SI at the end of five no-claim years in the Religare Health policy will be 150 per cent of the original cover.

In Royal Sundaram’s Lifeline Supreme and Max Bupa’s Health Companion, NCB is given as 20 per cent increase in SI for every no-claim year. So, here, the SI doubles only in five years. But, what you have to note is that in both these policies, the NCB doesn’t reduce after a claim.

In Apollo Munich’s Optima Restore, the NCB given is 50 per cent each year and it increases to a maximum of 100 per cent. This means, the SI doubles after two no-claim years. But, after the first year of claim, the SI drops by 50 per cent.

Older family (40+ with two grown-up kids)

If you are in your mid-40s and your spouse is in her 40s too, you have to make sure you have adequate SI on your floater health policy. It is ideal that you look for policies with ‘restoration’ benefit for SI so that even if one person uses up the entire cover of the policy, the other person can still file a claim.

Usually when it is a family of four, people opt for a SI of only ₹5 lakh. This will not be enough, especially when two members fall ill at the same time.

If you can’t afford the premium for a high SI cover, or to buy two separate policies for you and your spouse, look for a floater policy with ‘restore’ feature. In policies with the ‘restore’ feature, if you exhaust the SI and the no-claim bonus, the base SI will be restored back. The condition, though, is that the new claim is for a different illness or for the same illness of a different member of the family.

Apollo Munich’s Optima Restore comes with the SI restoration benefit. Religare Health’s Care, Cigna TTK’s Pro Health Plus, Max Bupa’s Health Companion and Royal Sundaram’s Lifeline Supreme are some policies that also have the restoration benefit. The premium for a 40-year male with a 35-year-old spouse and two kids costs ₹20,000-24,000 a year. Policies without ‘restore’ feature may be just about ₹1,000-2,000 lower on premium if it is a ₹10-lakh policy.

As you are in your 40s already and may have hypertension and related ailments, ensure that you do not buy a health insurance cover with a long waiting period for pre-existing diseases. Non-disclosure of the existing illnesses is not going to help, as the medical report at the time of claim will clearly show that it is not the first time you are having troubles from the said ailment. In such a case, the insurance company may cancel your policy.

Generally, for pre-existing diseases, most insurers have a waiting period of four years. But there are also policies in the market where the waiting period is three or two years too. Apollo Munich’s Optima Restore, Royal Sundaram’s Lifeline Supreme and Cigna TTK’s Pro Health Plus have a three-year waiting period for pre-existing diseases. Max Bupa’s Heart Beat (Platinum and Gold plans) has a two-year waiting period. These policies have a tad higher premium than policies that come with a four-year waiting period.

If you are someone who wants to use Ayurveda or other forms of alternative medicine, then you have to look for policies that cover such treatments. Max Bupa’s Health Companion covers alternative treatments up to SI. Royal Sundaram’s Lifeline Supreme covers alternative treatments taken in government hospitals up to SI.

Senior Citizen (60 and above)

If you are in reasonably good health, you will still be able to get a regular health insurance cover. With most insurers today, while the minimum age at entry is specified, there is no bar for the maximum age for buying health insurance. By regulation, health insurers have to give policy to first-time buyers at least till 65 years. No insurer can refuse renewal and they have do it lifelong if the policyholder continues to pay premium.

The advantage of going with regular health insurance plans is that these policies may have no sub-limits or ‘co-pay’ requirements. ‘Co-pay’ is asking the policy holder to share a portion of the hospital bill.

If you go looking for senior citizen plans specifically, the premium may be lower, but these will come with mandatory co-pay requirement of 10-30 per cent. For pre-existing illnesses, the co-pay may be as high as 50 per cent. Star Health’s Senior Citizen Red Carpet comes with a sub limit of 1 per cent on room rent and 2 per cent on ICU charges. There is 50 per cent co-pay for all pre-existing diseases and 30 per cent for the rest. There is no NCB benefit. For a 65-year male, for a sum insured of ₹5 lakh, the premium will be ₹20,699.

Most public insurers too offer senior citizen plans. But all of them have limited sum insured available and come with sub-limits and co-pay.

If you are healthy and can get a policy with no ‘co-pay’, you should consider a regular policy itself. Royal Sundaram’s Lifeline Supreme, Max Bupa’s Health Companion and Apollo Munich’s Optima Restore, which do not have ‘co-pay’ requirements, are options. For a male of 65 years, the annual premium here will be ₹29,000-30,000.

(The article first appeared in The Hindu BusinessLine.)

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