Your Guide to Buying a Health Insurance Policy

Thus, choosing an appropriate health insurance plan from the 100s of available options can be a challenging task for a common man. However, you need not fret over it. In this article, we will discuss some factors which you should consider when buying health insurance. It will help you choose an appropriate health insurance plan for yourself and your family.

How to Choose Health Insurance for You?

Here are Some factors you should consider when purchasing a health insurance plan, include the following.

Things to Consider Before Buying Health Insurance:

1)  Scope of Coverage

The scope of coverage defines the inclusions and exclusions of the policy. Apart from hospitalization, the scope of coverage also includes pre and post-hospitalization coverage, day care procedures, the waiting period for specified diseases, AYUSH coverage, etc. Understanding the scope of coverage will help you know what you are purchasing. It will help you avoid claim rejections and incurring out-of-pocket expenses.

When choosing a health insurance policy, the wider the scope of coverage, the better.

2)  Network Hospitals

Every insurance company has a tie-up with hospitals where its policyholders avail treatment through in-patient department (IPD) hospitalization or day care procedures. A policyholder can avail the convenience of cashless treatment at a network hospital. The bigger the hospital network, the better.  

While choosing a health insurance policy, ensure the hospitals in your vicinity or your preferred hospitals are a part of the network.

3)  Premium

In the last few years since the COVID-19 pandemic, health insurance has become expensive compared to earlier. Most companies have hiked their premiums multiple times during the previous four years. So, when you go to buy a comprehensive health insurance policy for your family, the premium may look expensive. However, it is still important to purchase health insurance because if there is a major hospitalization event, it can push you behind in your financial planning journey by a few years.

When buying a health insurance plan, you must compare the premiums of various health insurance plans offered by various companies. Most insurance companies offer plans with varying features, making a direct comparison difficult. However, you can compare the premiums based on features like coverage amount, hospital network, waiting periods, inclusions and exclusions, no claim bonus, free health checkups, etc. It will give you an idea of the premium.

4)  Waiting Periods

All health insurance plans have various waiting periods for various events/diseases. Some of these include:

1. There is a 30-day initial waiting period during which a claim cannot be made. The exception to this is hospitalization due to an accident.
2.  Similarly, there is a 90-day waiting period during which a claim cannot be made for a critical illness. Also, there is a 30-day survival period post the critical illness diagnosis.
3. There is a waiting period for treatment for specified diseases or procedures, such as cataract, hernia, piles, kidney stones, etc.
4. There is a waiting period for coverage of pre-existing diseases, usually in the 24 to 48 months range. However, some plans can have a lower waiting period or cover specified diseases from Day 1 itself.
5. Maternity coverage has a waiting period, usually in the 24 to 48 months range.

Usually, the lower the waiting period, the better. A no waiting period is even better.

While choosing a policy, compare the waiting periods for different policies, and choose the one with the lowest waiting periods.

5)  Restoration of Sum Assured

With the restoration feature, if the entire cover is exhausted, it is restored. For example, assume you have bought a family floater health insurance plan with a Rs. 5 lakh cover. A family member gets hospitalized for a major treatment, and the entire Rs. 5 lakh cover is exhausted. With the restoration benefit, the entire Rs. 5 lakh cover is restored for the remaining tenure of the policy year.

The restoration benefit comes with specific terms and conditions. For example, the restoration benefit may be applicable from the next hospitalization event or for a different disease than earlier hospitalization, or something else. Check the terms and conditions related to restoration.

Choose a health insurance policy with the restoration feature. Check if the terms and conditions related to the restoration feature suit your requirements.

6)  No Claim Bonus

If there is no claim during the entire policy year, the insurance company rewards you with a no claim bonus (NCB). Usually, the NCB is in the form of an increase in the sum assured. For example, assume you have bought a health insurance policy with an Rs. 5 lakh sum assured and an NCB of 10% for every claim free year. For every policy year where there is no claim, you will get an NCB of Rs. 50,000. It means your insurance cover will increase by Rs. 50,000 in every year wherein there is no claim.

There may be an upper limit on the maximum sum assured after the NCB. For example, suppose there is a policy with a base sum assured of Rs. 5 lakhs, 10% NCB for every claim free year, and an upper limit of 100% of base sum assured. In this case, after every claim-free year, Rs. 50,000 will be added to the sum assured. However, after all the NCBs, the sum assured can reach a maximum of Rs. 10 lakhs. 

Choose a policy with a higher annual NCB percentage and a higher overall limit for the sum assured.

7)  Coverage for Alternative Treatments

These days, apart from Allopathy, people prefer other lines of treatment like AYUSH. It stands for Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy (AYUSH). There may be specified terms and conditions for AYUSH treatment. So, make sure you go through them. Choose a policy that covers AYUSH.

8)  Health Checkup

Prevention is better than cure. You should undergo a complete body health checkup at least once a year. It is in the interest of insurance companies also to keep their policyholders healthy. As a result, many health insurance policies come with free health checkups. The frequency of the health checkup may vary from annual to once in four years.

While choosing a health policy, prefer one that gives an annual free health checkup for all the members covered. It will help you monitor your and your family's health condition. Any health conditions can be identified at an early stage, and necessary action can be taken.

9)  Maternity Benefit

The maternity benefit covers the cost related to childbirth. It covers normal delivery as well as caesarian delivery. Maternity benefit usually comes with a specified waiting period of 24 to 48 months. There is a maximum limit for the maternity coverage amount, along with inclusions and exclusions. In some policies, maternity benefit is offered as an optional benefit.

If you got married recently and plan to start a family a few years later, you may consider a policy with a maternity benefit.

10)  Co-payment Clause

The co-payment clause specifies the percentage of the claim amount you must bear. For example, suppose there is a 5% co-payment clause. In this case, you must bear 5% of the claim amount payable, and the insurance company will pay you the remaining 95%. The co-payment may be in the 5 to 25% range.

Choose a policy with either no or low co-payment percentage. 

Choose a Health Insurance Policy That Best Suits Your Requirements

As discussed at the start of the article, several insurance companies offer 100s of different health insurance policies. Many of these policies have multiple variants, making choosing a policy even more challenging. It is better to use a health insurance aggregator platform to select the features you are looking for and compare policies offering them. You don't need to choose the best policy available in the market. You need to choose one that suits your requirements. It may take time to decide on that policy. But it is worth spending time to select it.