How To Choose The Best Health Insurance Plan In India?

What is Health Insurance & Why You Should Care?

Health insurance is your financial instrument to fight against surging medical expenses that incur due to the treatment of an illness/injury.

These medical expenses generally cover

• Pre & post hospitalization cost
• Medicine cost
• Room(private/shared )cost
• Doctor fees
• treatment & Diagnosis charges
• Ambulance charges
• Health Check-ups

All these benefits may vary based on insurance type and service provider and premium also changes accordingly.

But why it is important to have health insurance is what we will try to understand going forward, so let’s get started

Why Health Insurance?

Everybody understands that keeping healthy is extremely important, but due to current lifestyle, environmental changes, eating habits, work-related pressures, and black swan events like the Covid pandemic, it is getting extremely difficult to keep up with good health, the body is taking a toll and getting badly affected both at the physical and mental level.

Many new diseases are being diagnosed and critical/Terminal illness is also on the rise even in the young millennials.

In India, the rate of medical inflation stands at 15% per annum compared to 6–7% overall inflation per year. The life insurance industry in the country is expected to grow 12–15% annually over the next three to five years, as the cost of healthcare is also increasing with time.

Healthcare cost is on the rise due to :

• The rising cost of medical equipment and advanced tech is being passed on to the patients
• Qualified Medical experts who are trained in advanced medical technologies are scarce and expensive
• Specialist doctors and surgeons are also less in numbers
• Medical infrastructure to support increasing healthcare issues is also not scaling as per demand and some major players are having the monopoly

These factors have largely put extra pressure on our pocket and handling any medical emergency expenses may not be affordable for many. So, considering the unprecedented climatic change, rising pollution, and the spike in the occurrence of health issues at a very young age, undeniably, health insurance is one of the most essential insurance policy expert financial advisors recommend.

• Health insurance is your true hedge against medical inflation and savior that mitigates the unexpected financial burden which may arise due to accidental hospitalization and illness.
• It ensures you peace of mind which is a real value as compared to that small premium that may pay for securing your family against health emergencies.
• In addition to the above reasons, Health insurance offers your tax rebate. premium paid towards health insurance premiums are also eligible for tax deductions under section 80D of the Indian Income Tax Act. But this should not be the main reason why one should take health insurance.

Now that you have understood why health insurance is critical let’s try to understand

What are the different types of health insurance plans in India?

Generally, there are two types of health insurance

• Indemnity plans
• Defined benefit plans

1. Indemnity Plans :

This plan works on the core principle of indemnity i.e.

In case of medical expenses incurred by a policyholder, the insurance company will reimburse these expenses, subject to a maximum sum insured limit

These plans provide coverage for pre-hospitalization expenses, in-patient treatment including doctor’s fees, ICU, room charges, diagnostic tests, surgery, medicines, as well as post-hospitalization expenses and daycare treatment

Indemnity Plan categories:

• Individual Coverage
• Family Floater
• Senior Citizen
• Unit Linked Health Plans
• Mediclaim insurance

Individual Coverage:

Individual health insurance covers the medical expenses up to the sum insured for the individual policyholder, but one can add other family members including spouses, children, parents, etc by paying an extra premium, each individual will then be covered up to the agreed sum insured.

For example, if you purchase an Individual health policy of 5 lakhs sum insured covering your spouse, kids, and yourself, then each person covered will have an individual sum insured of Rs 5 lakhs and the premium will be clubbed basis members details.

• Individual policy though charges extra premium but gives you the advantage of individual Sum insured limit for each of the members you want to cover
• The premium in this plan is charged as per every individual’s age, medical history, and respective sum insured.
• In this plan, if any, one person has taken a claim, it doesn’t affect the sum insured of the other insured member.

Family Floater:

Unlike an individual plan in a family floater plan, the sum insured is shared among all the family members and so the premium is at the lower side Usually, the premium is decided on the age of the eldest family member, the rest all is similar to an individual plan

One should consider this plan only if, they have family members who are not suffering from any critical illness, then only one can cover the expenses in the given sum insured

But if someone is seriously ill, and has an elder member, it is always wise to take an individual plan instead of a family floater plan. Because that members may end up consuming the maximum of the sum insured

Senior Citizen Plan:

This plan is specifically designed for people above 60 years of age. With age, the risk of health increases, and chances of catching critical /terminal illness also increase, so the treatment becomes expensive and needs special coverage. To cover the expenses associated with such illness for senior citizens, the premium is charged high.

But this plan is apt because of the adequate financial coverage it provides, post-retirement to the person who is no more earning any regular income. As the premium is on the higher side one can avail of the tax benefits under Section 80D on the premium paid.

Unit-linked health plans:

If you are looking for a health insurance plan which can earn you some money for your premium invested, apart from giving health protection, ULIP can be your friend.

In this plan, some portion of your premium gets invested in equity which works as your investment instrument, the rest is used for providing sum insured. The return on your premium depends upon the market performance and is not free from the market risk.

“Ideally this is not the right instrument if your only objective is to maximize sum insured for covering medical expenses. Always decouple investment from insurance and treat them separately .”

Defined benefit plans:

As the word Defined suggests, this plan has some pre-defined conditions like, detection of any critical illness, on the occurrence of which the total sum insured is paid as compensation. It doesn’t cover any expenses which incur during hospitalization.

One of the health plans which falls under the Defined benefits category is

• Critical illness plan
• Accidental plan
• Hospitalization Daily Cash (HospiCash)

Critical illness plan:

This plan is used to cover the treatment cost of a specific illness which may occur suddenly and needs special treatment.

For example;

• Cancer
• Organ transplant
• Heart attack/stroke
• Kidney failure
• Multiple sclerosis
• Paralysis, etc..

Under the Critical Illness plan, the sum insured is to be paid on diagnosis of any of the critical illnesses specified in the policy document. Irrespective of the actual expense incurred by the insured, the insurer has to pay the entire sum insured to the policyholder.

Hospital Daily Cash:

This is an additional insurance tool where the insured is given an extra daily cash allowance up to a certain limit, which is in addition to the hospitalization expense.

One can claim this benefit on the basis of no of days s/he is hospitalized & not on the actual expenses incurred.

For example:

if you have been hospitalized for 4 days and your total cost comes out to be 30,000, but your daily HospiCash plan only covers Rs 2000 per day as per the defined plan in the policy document, you will be able to raise a claim for only Rs 8000 only

Accidental Plan:

This plan covers the insured against any accident-related issues like permanent disability, death, etc. The pre-defines the sum insured is released on the occurrence of any accident-related issues which has been agreed upon in the policy document

How to choose the right health insurance plan?

1. Check What all is covered in the plan?

Always go for the health plan which can provide maximum coverage and health benefits that includes

• Pre and post hospitalization
• Daycare expenses,
• Transportation cost(ambulance)
• Illnesses that you may be at risk of due to your family’s medical history, etc.
• Sum insured which is adequate for each member of the family

2. High claim settlement ratio:

This is another important attribute which one should consider before finalizing the health policy. The key objective of buying health insurance is that one should be able to raise the claim for the sum insured and get his medical expenses when needed, so it imperative to know which insurance company has a better track record in settling the health claims over the years.

The claim settlement ratio is the number of claims settled by the insurance service provider over the total received claims.

So it is advisable to compare multiple health policy providers and choose the one with a legacy of higher successful claim settlement.

3. Policy should be affordable to purchase:

While buying a health plan you should see that it is value for money too, while it is required to cover all the required medical benefits it should be financially viable to manage. Though your first priority should be that it is adequate and apt for your medical needs, which may cost you a bit. but that premium should not become a burden.

It is recommended that one should start early, buy a reasonably priced plan which can cover the benefits that is essential to keep premiums down, but as the income rises and family member needs change, upgrade to higher premiums covering the additional medical needs.

4. Hospital Network Coverage:

Every health plans have the list of the hospital that they cover to provide the cashless medical treatment, one needs to see whether or not their preferred hospitals are in that list, also the locations where those hospitals are present needs to be thoroughly examined, it is advisable to select the health plan that has a large network of hospitals across the globe.

This ensures that no matter where you are, in case of any medical emergency, you have easy and quick access to your preferred hospital

5. Check whether your plan offers a facility for lifetime renewability

Generally, you may need the health plan during your later stage of life, so you must check whether your health plan provides renewability for any limited period of has lifetime renewability options available.

6. Individual or Family plan:

The choice depends upon your need, if you have family members who are dependent on you, have some serious illness, you should opt for the family plan to maximize the benefits with cheaper premiums. Else if you are an individual person or have a nuclear family with young & healthy members, you can opt for an individual plan which can provide adequate cover for each member.

7. Always do your homework by comparing quotations from multiple policy providers:

There are multiple platforms where you go online and compare health plans based on coverage, sum insured, medical benefits, premium, payment terms, room rent, add-ons, etc. You can get a quick quote from multiple insurance providers, by filling in some basic profile details, you can compare the premium, policy features, add-ons, etc to make a better buying decision.

What else to look for?

When it comes to coverage, one should be very selective, as many health plans do omit some benefits to keep the premium on the lower side, so it is advisable not to fall only for a low premium. For example, many plans do not cover room rent up to actuals, some have co-pay features where you will be required to pay a certain percentage of the total medical claim expense incurred.

So do compare the features thoroughly and discuss the same before coming to any buying decision.

Some additional key features to compare and check :

• Ambulance charge coverage :

Medical emergencies cannot be timed and in those circumstances, you may need to rely on an Ambulance service, so do check for these features in your health plan, many health plans do cover this benefit.

• Daycare treatment or procedures :

Many times you will need a treatment that may not require you to be hospitalized overnight, such procedures are called daycare procedures. Do check what all daycare treatments are enlisted in the health plan and compare. Some of the top insurance providers in India, do cover 160+ day procedures.

Treatments that usually fall within the scope of a Day Care Treatment include:

• Appendectomy
• Angiography
• Chemotherapy
• Colonoscopy
• Eye Surgery
• Radiotherapy
• Lithotripsy
• Hydrocele
• Piles / Fistula
• Prostate
• Sinusitis
• Liver aspiration
• Dialysis
• Sclerotherapy

The actual list can be much more comprehensive and mostly depends on the plan you select.

• Health Check-Ups & Vaccination Cost :

Many health insurance plans provide you an additional health check-up facility, which you can avail of yearly, some may even award for doing so. Do keep a close eye on this benefit.

Check What Is Excluded & Included In Your Plan?

While selecting the appropriate health insurance plan one must thoroughly read their policy document and understand what illnesses are excluded and what is included in their plan. Many plans do exclude illnesses like

• Hernia
• Dental treatment
• Cataract operation
• Sinusitis
• Gastric
• Knee & Joint replacement surgery

So do your homework and understand if the illness covered are helping you to be covered adequately or not, else you may end up getting surprised at the last moment.

Summary:

Choosing a health insurance plan is a critical decision and one should invest good enough time to filter out which one is right as per their lifestyle and medical needs. It has been observed that lower premium gets the maximum weightage and eyeballs, among all other criteria, and many online apps and web portals also promote the same.

But you should ensure that all your medical needs are being covered on priority and that all your family members have adequate coverage, even if you have to shed some extra bucks for that. Also, the track record of the policy provider in claim settlement has to be prioritized before low premium, as that will decide how useful your plan turns out to be in the time of need.

In a nutshell:

“Your need to meet the expense at the time of medical emergency is what should be the main driving factor for choosing your health insurance plan. so DYOR(Do your own research )and consult insurance advisors if needed, compare the plans online and get yourself insured early ”