In the current wedding season, I have been meeting lot of friends, relatives and clients. I usually tend to ask whether they have a health insurance cover (mediclaim) or not. Some of them are covered, while some are not covered but plan to buy one. The ones who wanted to buy didn’t have a clue which one to buy and the ones who already had didn’t know which one they had.
Having adequate health insurance is essential for a financially peaceful life; so that one doesn’t have to break their investments for any kind of medical emergencies. Being a financial planner, I had to guide them to help them decide which one to buy. Here are few key features/clauses/conditions which I generally recommend to check before buying a health insurance (mediclaim) plan and also check in their existing mediclaim policy.
Room Rent Sub-Limit
You should check if there is a capping on room rent as a percentage of Sum Insured (most of the insurers keep it at 1% for normal room and 2% for ICU). Majority of the insurers have this clause in their health insurance policies. It means the room rent of the hospital should not exceed a specific percentage of the sum insured; if it does then all your medical expenses will be paid proportionately.
So, this is one of the most dangerous conditions in a mediclaim policy because in case of an emergency hospitalisation none of you are going to check what the room rent is before hospitalisation.
You should check if there is a co-payment as a percentage of the total claim amount. Some of the insurers keep it as 10-20% of the claim amount. It means irrespective of the cover you have, the co-payment portion has to be borne by you.
For example, if your policy has 15% co-payment clause, and if you have a claim of Rs 1,00,000, the insurance company will only pay Rs 85,000. You will have to bear the balance Rs 15,000 (i.e. 15% of Rs.1,00,000) and pay from your pockets.
Waiting period for Pre-Existing Diseases
All health insurance policies (except most of the group mediclaim) have waiting period for pre-existing diseases. Most of the mediclaim policies have 36-48 months waiting period for pre-existing diseases. It means while applying for the health insurance policy if you are suffering from a disease/illness then any claims related to that disease/illness will not be covered till the waiting period expires.
For example, while buying a mediclaim policy if you are a diabetic, then you will not be covered for any illness related to diabetes till you are covered under the policy for a continuous period of 36-48 months (depending on the policy).
Waiting period and capping for specific illness / treatments
All health insurance policies have waiting period for specific illness/treatments like hernia, cataract, knee replacement, etc. You need to be aware of those illnesses/treatments and its applicable waiting period and not assume everything is covered under the insurance from day one.
One should also keep in mind that certain treatments also have a capping on the amount that you can claim. Most of the policies have a capping on cataract and pregnancy.
List of Network Hospitals
You can get hospitalised in any hospital in India (except for the black-listed hospitals). But network hospitals are the ones where the insurance company and/or its TPA (Third Party Administrator) have a tie-up for cashless hospitalisation. So, it is better to know which hospitals in your locality are part of network hospital with your insurer in order to have a hassle-free cashless hospitalisation.
No Claim Bonus/Discount
All insurers do have a No Claim Bonus (NCB)/Discount (NCD) ranging from 5-10% of the Sum Insured (in case of NCB)/Premium (in case of NCD). It means if you or your family members covered under the same insurance policy and do not have any claim during the preceding policy year then on renewal of the policy you will be entitled to a No Claim Bonus/Discount.
According to me, a policy which has NCB is better compared to NCD because your cover keeps on increasing for every claim free year without any additional cost. While in case of NCD it will just save you on your premium but the cover will remain constant forever. So, in case of NCB of 10%, with continuous ten claim free years your Sum Insured will double after 10 years without any additional cost (certain insurers do cap it at 50%).
I would recommend all of you to keep a close check of these features/conditions while buying a new health insurance (mediclaim) policy. If you already have a mediclaim policy, you should know if it has room rent sub-limit and co-payment clause. If it does you do have an option of porting it at the time of renewal, to a policy which doesn’t have such clauses. Also, one should keep in mind the waiting periods and capping on specific illnesses/treatments. So, health insurance is a blessing, if opted wisely!