What to look for in a Health Insurance Policy?
One of the important things to look for in a health insurance policy is the age till which you can renew the policy. The higher this is, the better it is for you; as healthcare costs tend to increase with an increase in age. You should also look for the limits on expenses and co-pay clause. The more the sub-limits, the more detrimental it is to you. Most private players do not have expense limits. While premium should not be the sole consideration factor, it is needless to say that you should not end up paying abnormally high premiums for a low coverage. Hence zero in on the coverage you need, keeping in mind the needs and size of your family and also your premium paying capacity.
Dynamics of a Health Insurance Policy:
Sometimes, it may work out to be less expensive to split the policy cover among your family members, rather than take a single family floater policy. For example, instead of taking one family floater policy covering yourself, your spouse and 2 children, you can take 2 policies - one for you and one child and another for your spouse and your other child. Work out the different options by adopting some smart engineering while making your decision.
With increasing medical expenses, it is recommended to take a family floater cover of atleast Rs. 10 lakhs, as hospitalization expenses tend to be very high, especially in metros. In addition, you can opt for a super top up cover, with a deductible which can be met from your existing policy. As top up covers come with various restrictions, readers are recommended to explore super top up strategy, depending on your family requirements. Also, when you opt for a super top up cover, it is better to take it from the same insurer as your base cover, as this will make logistics easier.
Many people tend to ignore purchasing a secondary health insurance cover and rely solely on the insurance cover provided by their employer. However, remember that this can be dangerous, as factors such as change of job, waiting period between job changes, cost cutting by employers, retirement or the initiative of starting your own venture will necessitate a secondary insurance. Read our article on why you need a secondary health insurance.
Important parameters in a Health Insurance Policy:
Age of insured: As mentioned earlier, the maximum age of entry and the renewal age are critical aspects, as healthcare costs shoot up after you become 60 years. Policies by Cigna TTK, HDFC Ergo and ICICI Lombard have no limit on the maximum entry age. In addition to the entry age, also look at the maximum renewal age. Many policies offer a lifelong renewal which is good for you.
Sum assured: You have to decide the coverage you require based on the number of members in your family, as well as your family needs. In today’s scenario, a family coverage of even Rs. 5 lakhs or Rs. 10 lakhs looks low. Choosing a high sum assured also means paying a high premium. Therefore you must choose your coverage based on your premium paying capacity as well.
Premium amount: Most companies offer premium based on the age of the insured. We analysed premium amounts for 11 companies, for an individual aged 30 years, his spouse and 2 dependent children, for a Sum Assured of Rs. 10 lakhs. For those insurers where the maximum sum assured option was less than Rs. 10 lakhs, the premium for this maximum amount offered was calculated. While taking a health insurance policy, it must be remembered that the premium cost differs across age brackets. It is important to note how the price changes across age groups. One should also try to ascertain how the premiums have been increased in the past by the various insurers. While premium increase needs to be done in accordance to IRDA, it is seen that the rate and frequency of premium increase is usually not disclosed on the websites of the insurers. You should ascertain this with the company itself or with any insurance broker, who can help you understand if the historical premium increase has been arbitrary.
Pre- and post-hospitalization time period: Generally, companies cover medical bills for 30 days before the hospitalisation and 60 days after the hospitalisation. However, policies by Apollo Munich, Bajaj Allianz, Cigna TTK, HDFC Ergo and Reliance offer a higher pre hospitalization period of 60 days. Similarly a higher post hospitalization period of 180 days is offered on policies by Apollo Munich and Cigna TTK, while it is 90 days for policies by Bajaj Allianz and HDFC Ergo. Understandably, the higher the time period covered, the better it is for you.
Sub-limits and Co-Pay: Sub-limits mean expense heads have a capping, and you will have to shell out beyond this limit from your pocket. Co-pay requires you to bear a part of the claim, while the insurer will only consider, say 80% or 90% of the amount claimed. This is usually characteristic for claims of people beyond a particular age or if the treatment is in particular areas or in non approved hospitals. Companies like New India Assurance, Oriental Insurance (silver plans), Bajaj Allianz, Religare, Star Health and Universal Sompo have this clause. If you fall under their criterion for determining Co-Pay, it is better to avoid such policies.
Major Exclusions: All policies give a list of items which are specifically excluded from coverage. All pre-existing diseases are generally excluded for a period of 4 years (in some cases 3 years) from the policy start date. Policies also specify an initial waiting period of 30 days (90 days for Max Bupa), during which all diseases are excluded. Understand exclusions and see if you may need any of those exclusions in future (eg; maternity benefits); if yes, it is better to avoid such a policy.
Additional benefits: It is best to choose a plan which is comprehensive and covers the maximum risk possible. Even if the sum insured is the same, there are other benefits you must check, which include OPD cover, maternity benefits, personal accident-death benefits, health check-up and domiciliary hospitalization benefits. Nowadays, there are policies which will restore your Sum Assured amount to original levels and offer no claim bonuses, which can be very beneficial. It is recommended to analyse the additional benefits in detail, by going through the company website or the product brochure before making the choice of policy.
Our observations on the policies analysed:
We have analysed health insurance products of 12 companies on the basis of several parameters. Apollo Munich’s Optima Restore and Cigna TTK’s Prohealth Insurance Plus Plan have decent benefits , although the premium for these plans is on the higher side. Policies by ICICI Lombard and Star Health have comparatively lower premium, but additional benefits are limited. The Health Companion Plan by Max Bupa and Religare’s Care Health plan are suitable if you are looking at no claim bonuses or restoration of sum assured amounts. However, higher coverage amounts in Religare attract co-payment. Although Oriental Insurance has a low premium, the silver plan comes with restrictions. So it may make sense to opt for the Gold variant. Reliance’s health plan has some unique benefits like a call option, policy service and claim service guarantee and free renewal (once in the lifetime) if the policy holder has a named critical illness. However, the sum assured option in this plan is limited. Universal Sompo’s plan has attractive benefits, some of which are generally not covered by health policies. These include maternity and child benefits, alternate medicine treatments, cover for people with AIDs and OPD treatment. In addition, features like No Claim Bonus and restoration of Sum Assured are also present.
HDFC Ergo’s health policy has a high premium and the sum assured option is also limited. Although Bajaj Allianz has some good benefits, the premium is among the highest of the policies analysed. Similarly, although the New India Assurance may be economical, there is a high co-payment of 20% in some cases, entry load applicability and a limitation in maximum sum assured.
Please note that we have only considered certain products offered by insurers. The above insurers may have other plans which fall under the health insurance category, which we have not considered. Readers are advised to check out all plans and choose the most appropriate one.
A detailed comparison of the policies analysed is available below. If you prefer to download the excel file, please click here. For more details, refer to individual company’s prospectus. Kindly note that this analysis covers offerings from major insurers only & this is not an all-product comprehensive comparison. The analysis is valid on the date being published.