A personal health insurance or individual health insurance policy provides coverage for your medical expenses which arise due to hospitalization, pre and post hospitalization, and in many cases, day-care procedures and OPD consultations among others. Depending on your age and medical condition, you may select an individual health plan that best suits you and the sum insured on the policy will be wholly available for utilization by you and will not be shared by the entire family as is the case with family floater policies.
Gone are the days when a mediclaim cover used to be a necessity in the remuneration package. Today smart Employers use various permutations of health insurance to attract and retain talent.
Super Top up Health insurance is one such instrument.
The average medical cover provided by an employer is generally in the range of ₹ 3 to 5 Lakh. While this figure would have seemed appropriate before 2019, the Covid pandemic changed things forever. It has suddenly made us aware of the exponential pace at which medical inflation is rising.
Given this knowledge, do you think a cover of about ₹ 5 Lakh would suffice, if and when need be? Readmore...
Well, the answer could be Yes and No
85% of medical treatments in India cost less than about ₹ 5 Lakh.
Medical inflation in India is rising at a rate of about 14% per annum. We, by the way, top the list of Asian countries in the rate of rise of medical inflation, as reported by Motilal Oswal Financial Services report on Indian health inflation. Couple this with the abysmal single digit salary hike and you are in fact losing money on health expenses every year.
We seem to have opened Pandora's box with Covid. The frequency at which new diseases are being discovered far outpaces the pace at which vaccines are being engineered.
Advancements in medical technologies like robotics and stem cell research are blessings for mankind. If only these blessings could be as cheap as the ones our forefathers shower us with, we would be sorted. Alas, that is not the case.
But, with an appropriate health insurance cover in your armory, you can be rest assured of minimal damage to your financial health.
Around 3-5 lakh expenses on health care may not impact my lifestyle. We can always depend on my friends and relatives or on my savings. But imagine if the treatment cost goes beyond 20 lakh or 40 lakh.
It happens in accidents, cancer, joint replacements, heart attacks, kidney transplantation etc..
Many of us will be set back 2-5 years financially. Many of us will have to sell our houses to cover the cost.
This is when we actually need health insurance.
This is where Super Top Up Health Insurance helps.
The Super Top-up policy has been one of the finest products designed in mediclaim history. The basic concept is - you are your own insurer for the base Sum Insured. The Insurer is not concerned with any claims that you incur till a particular Sum Insured, known as the Threshold in technical parlance. It is only when you cross this Threshold, your Super Top-up policy kicks in.
It covers a higher value of claims and surprisingly very low cost of premiums. It does not cover the lower value of claims and that can be covered from your pocket or from your employer group health insurance or from any other regular health insurance policy.
In-fact it is a wise idea to first cover ourselves with a higher amount of claims through Super top up Insurance and then if our budget permits, we can cover for a lower amount of claims too
How does it Work?
Mr. Raju had a major surgery for which the medical expenses were Rs 9 lakh. His insurance policy provided by his company had a threshold limit of Rs 3 lakh. When his boss asked how he would manage the rest of the expenses, Mr. Raju said that he had a Super top-up plan.
A regular health insurance policy has a sum insured limit, beyond which it does not cover any expenses. This is when a Super top-up policy is useful. It becomes effective soon as the sum assured from a health plan is exhausted. Therefore, Mr.Raju can claim the balance amount of Rs 6 lakh from his super top-up health cover. So essentially, he has a super top up plan with a deductible of Rs 3 lakh.
Let’s say you have taken two policies
A Normal Health policy of 3 lakh and (it could be your corporate policy or you may choose to cover up to 3 lakh from your pocket.)
Super top up policy of 10 lakh with 3 lakh deductible.
Now if the claim is for 9 lakh,
Policy 1 will pay 3 lakh which is equal to its sum insured. If you don’t have a base policy or corporate policy, then this amount will be paid from your pocket.
Policy 2 will pay above 3 lakh (which is deductible). That means 6 lakh (9-3=6) will be paid from this policy.
You will still have a balance sum insured of 4 lakh (10 lakh – 6 lakh = 4 lakh) in the super top up policy which can be utilized in any future claims.
Don't Get Confused between "Top up" and "Super Top up" Health plans.
The top-up plan considers the deductible for each claim in a given year. Thus, if Mr.Raju submitted three different claims of Rs 3 lakh, Rs 3 lakh and Rs.3 lakh respectively, the top up plan would be useless since none of them exceed Rs 3 lakh individually.
A super top up comes to the rescue in such a situation. The Super top up policy considers the aggregate amount of all claims within the year. So, once the deductible of Rs. 3,00,000 is exceeded, the remaining amount for all subsequent claims will be payable under the super top-up policy, subject to the maximum sum insured on the policy. In this case, the first claim of Rs. 3,00,000 will be considered as a deductible but the remaining claims amounting to Rs. 6,00,000 will be paid by the insurer. Thus one should always choose Super Top Up instead of Top Up. View less...
(Portability of Health Insurance)
Remember the time when you used to feel helpless stuck with your mobile telecom operator, especially with the call drops, network congestion and the lackadaisical Customer Support? And then the telecom regulator brought in Mobile Number Portability and the entire landscape changed, as if overnight.
It was with this intent that the insurance regulator brought in portability in health insurance.
Every time you go through a harrowing claim settlement experience, you are tempted to switch insurers. Moreover, in an extremely price sensitive market (like ours), competition is always ready to undercut premium to acquire a good risk (a healthy family).
But, if you make lower premiums your only consideration before switching, your nightmares are just about getting started my friend.
Why, you ask?
Well think about it, why would the regulator allow for portability of insurance only in the health line of business? Waiting periods, which used to be, and to an extent still is, the biggest reason for rejection of a lot of health claims.
The complexities involved in waiting periods does not end there, policies have multiple waiting periods - waiting periods for specific illnesses, waiting periods for general ones. These waiting periods could be anywhere between one to four years; and this cycle for these waiting periods starts afresh every time you switch insurers, i.e., if you haven’t availed the benefits of portability.
It is, however, possible for an insured to switch insurers and yet get a waiver on the waiting periods under the new policy. IRDA allows for exemption of waiting periods to the extent of time that you have already spent waiting in the existing policy.
Your waiting period in the new policy therefore cannot exceed the waiting period in the current policy less the period you have already spent waiting in the previous one.
Here's a broad list of waiting periods that get waived in case of portability
The one complexity to note however, is that, these waivers can be availed only to the extent of claim free years under the current policy. You could therefore have a policy for 4 years, but if you have preferred a claim in the last year and it has been paid by the Insurer, you cannot claim any benefit.
Let's look at an example to understand this better -
Rashmi has had a health insurance policy for ₹ 5 Lacs for two years. She isn't happy with the service delivery and wants to switch insurers.
What does he do now?
Rashmi needs to apply to the new insurer 45 days before the renewal date of current policy. Please also note that this limit of 45 days is suggestive and not meant for insurers to dissuade policy holders from porting. Always ask the insurer to give you the reasons as to why they would not underwrite your health risk in writing - the written word has always weighed heavily on every soul.
Assume she decides to take a policy from a new insurer for ₹ 10 Lacs. Her current policy has grown to a Sum Insured of ₹ 6 Lacs (original Sum Insured of ₹ 5 Lacs + no claims bonus of ₹ 1 Lac).
Under the new policy, the insurer will waive the 30 day waiting period, 1 or 2 years specific disease waiting period, and reduce the pre-existing disease waiting period by 2 years. These waivers however, would apply for the first ₹ 6 Lacs only and not for the entire ₹ 10 Lacs.
The new insurer will also make you sign a new proposal form wherein you will need to declare your current health conditions. If Rashmi was diagnosed with diabetes six months back, her current policy, will have diabetes as a pre-existing disease and will be covered only after the waiting period for pre-existing diseases is exhausted.
If Rashmi forgets to declare the diabetes information in the proposal form, the insurer might give him the cover now, but her claim will be rejected on the basis of misrepresentation of material facts.
Come to think of it, portability while bestows you with the benefits, there are riders attached - Buyer Beware!
What IRDA says about Portability
Health insurance is for healthy people.
Unfortunately, this is true!
Metabolism can be called the housekeeper of your immune system. It is incharge of keeping your immune system up to the mark, so that the immune system can do its job i.e., keep you healthy.
However, somewhere around the age of 45, human metabolism starts to slow down, and this in turn leads to deposit of unwanted fats in the body, which in turn makes human organs work harder to keep replenishing their energy needs. Readmore..
While not every disease could be attributed to a slowing metabolism, majority of them can be. If Insurers could, they would avoid offering Health Insurance Policies to people who’ve crossed 45 years of age, when the metabolism rate of a person slows down). Even when they do underwrite such policies, they do it with lots of ifs and buts, applying conditions and sub-limits, and the premiums are expensive.
Yet another reason for Insurer’s skepticism in covering people over 45 years of age is the morbidity rate. Morbidity rate is the likelihood of 1 person falling sick out of every 100 people. As per the statistics, the morbidity rate for people under 45 yrs of age is usually 3-5%. Whereas the morbidity rate for people more than 45 yrs of age can be as high as 10-15%.
Most of us cover our parents under our organizations group policies , hence we usually don’t consider taking a separate personal (retail) Health insurance policy for parents.
However, organizations have started restricting the coverage for parents. This is true even in cases where the premium is being collected from the employees. And the reason for this is the high claims ratio that the organization ends up with, on account of the parent policy. A high claim ratio in turn results in a higher premium for the organization.
Some organizations therefore have gone to the extent of discontinuing coverage for employees' parents.
Even if your current employer covers your parents in the policy, if and when you switch jobs and your new employer does not, you would land in a soup, primarily because of the loss of continuity and advance age for your parents.
Unfortunately, the employers who cover parents usually do so to the extent of ₹ 2-5 Lacs sum-insured. In the inflationary times we live in, this amount is barely enough, especially considering advance age. It is as a matter of fact, barely enough to cover minor illnesses like flu, dengue etc. Hospitalization like cancer, heart ailments, joint replacements etc., we don't think so.
But do not despair, we can help you get the best policy and coverage for your parents, our team of experts can help you.
Shall I move my parents from a group policy to retail policy?
Yes, here’s why
In a retail health insurance policy, even if you claim, the policy premium does not increase during the renewal.
The insurance company cannot refuse your renewal even if you prefer claims, every year.
The policy can be renewed for life, irrespective of the current age of the parent.
After a certain waiting period, the pre-existing diseases also get covered under the policy.
But do not despair, we can help you get the best policy and coverage for your parents, our team of experts can help you.
For less than ₹ 10500, cover them for ₹ 3 lacs.
For just ₹ 7500, add ₹ 7 lacs more.
No Co-payment.| No disease wise limit. | No room rent limit. | No increase in premiums in the future due to an increase in age or claims | Life Long Renewal Assurance irrespective of claims | Pre / Post Hospitalisation – 60/90 days respectively | Unlimited consultations with doctors, nutritionists on phone. | Unlimited counselling sessions with psychologists.| Waiting Periods applicable.
The indicative premium is for a couple less than 65 years of age.
Indemnity based health insurance
This policy covers expenses to the extent of ones actually incurred. You can either avail a cashless facility at the treating hospital, if it is empanelled with the insurer or pay upfront and claim for a reimbursement.Empanelment is the process whereby an insurance company ties up with a hospital to provide cashless treatment to the insured. The cost of such treatment is settled by the Insurer at a later point in time, mostly in lieu of a credit note. Hospitals where the insured can avail cashless facility are called network hospitals. Readmore..
One must always opt for cashless treatment if available, because
That said, the insurer must be informed 48 hours before the planned treatment or within 24 hours after an unplanned hospitalization about the claim.
Almost all the hospitalization expenses like room rent, doctors fees, intensive care unit, nursing expenses, surgical fees, operating theater, anesthesia, oxygen and their administration, physical therapy expenses, medicines consumed on the premises, miscellaneous expenses like ones on laboratory, x-ray, diagnostic tests, cost of dressing, ordinary splints and plaster casts, costs of prosthetic devices if implanted during a surgical procedure, organ transplantation including the treatment costs of the donor but excluding the costs of the organ, are covered under most policies.
Non medical expenses like expenses on TV, food, fruits, transport charges, gloves, needles, cotton, disposable items, tissues, consumables are not covered in any Health Insurance policy. A sample list of these non medical expenses can be found here.
Some insurers restrict expenses on doctor fees, room rent or other medical expenses by a sub-limit clause. Such policies are better left avoided.
Benefit based health insurance
There are policies that pay based on the number of days of hospitalization, on a per day basis and there are also policies that pay a fixed lump sum, mostly on detection of a disease. The later category policies are also known as critical illness policies.
People tend to misunderstand the two policy types and end up buying the benefit-based policy to cover their indemnity based hospitalization needs, for e.g., A Critical Illness policy triggers only when the policyholder contracts a critical illness that is mentioned in the policy, buying it for other hospitalization needs does not serve any purpose. The fact that benefit based policies are cheap is an attraction that misleads price sensitive Customers into buying the policy without having read the terms.
Benefit-based policies are offered by life insurance companies and that is the biggest distinction that a policyholder can use to her advantage when buying the policy. As a matter of fact, IRDA in its latest circular dated 12th May 2020 has categorically asked life insurers to withdraw indemnity based policies for health insurance. That essentially means, going forward, only general or standalone health insurance companies can offer indemnity-based Health Insurance plans.
Minimum 24 Hours inpatient Hospitalization Clause
Most Health Insurance policies will consider a claim only when the hospitalization is more than 24 hours. Advancement in technology and medical sciences has however brought down the amount of time one needs to spend in a hospital considerably. This in turn was leading patients into getting hospital stays extended or their bills forged, all of which was neither in the interest of the insured or the insurer.
Insurers have therefore, on IRDA's behest, curated a list of Day Care Procedures which allow for medical coverage even if the duration of hospitalization is less than 24 hours. There are more than 580 Day Care procedures and the extent of coverage differs from insurer to insurer. The best approach when planning a day care procedure is to get it vetted from your insurer beforehand.
Proportionate Deductions clause
Apart from room rent, all the other items listed under hospitalization expenses are a function of the room rent i.e., every subsequent charge after you have chosen the hospital room will differ based on the room that you have chosen. This feature has a great impact on the overall claim amount payable under health insurance. Insurance companies put a sub-limit on the room rent payable under a health insurance policy in case of hospitalization. If you opt for a room rent crossing the limit mentioned in the policy, along with excess rent, the insurance company will deduct the cost of other services like doctor’s fees, surgery charges, etc., in a proportionate amount.
This is because, in any hospital, the cost of exactly the same set of services is charged differently for different room types. Hospitals charge low cost for rooms with lower rent and high cost for rooms with higher rent. Charges which are based on MRP (like medicines) are charged the same for all types of rooms. Hence, these charges will have no impact on room rent capping.
Let’s understand this better with an example:
If room rent capping in your health insurance policy is ₹ 2000/- per day, and the actual room rent you opt for is ₹ 4000/- per day the claim amount would be calculated as follows
|Factors||Actual Room Rent||Claim amount payable after deduction|
|Room Rent (x)||4000||2000|
|Surgery (2.5 * x)||10000||5000|
|Doctors fees (0.1 * x)||400||200|
Hence, it’s always advisable to select your health insurance policy wisely by verifying the terms of room rent under your policy. It is good to have no cap on room rent to feel free to select the room as per availability and rent charges in the hospital.
Life long renewal
Once the insurer has accepted your health risk and issued you a policy, the policy must be renewed regardless of your health condition now or at subsequent renewals, regardless of claims status, regardless of age, and regardless of medical inflation. That means you do not worry about the coverage in old age as long as you pay the premium on time and renew the policy on time. The most that an insurer can do is stop sending you the renewal notice for your policy renewal, but then keeping track of your renewal shouldn’t be a problem in today's day and age, should it now!
Grace period is the number of days you get to make premium payment for renewal of your policy, after its expiry date. Failure to pay within the grace period could result in the termination of your policy.
A grace period comes in handy when
IRDA allows a grace period of 30 days when the premium payment for policies is made on an annual basis, and 15 days for all other modes. These are the minimum standard guidelines as set by IRDA. Your insurer could therefore also grant a 30 day grace period even if the premium payment is on a quarterly basis. The important point to note however is that one should try and get the renewal payment done before one gets to any other financial commitment. This is because there is no coverage available during the grace period.
Out patient expense
Out patient expense are often confused with Day care procedures, because neither of them requires a 24 hour hospitalization.
It is however extremely important to note the distinction, because no insurance company pays for the stand alone outpatient treatments like POP because of bone fracture, stitches with local anesthesia, doctor consultations, health tests etc.
Another complexity to note is the fact that a 24 hour hospitalization need not necessarily lead to admissibility of a claim. The hospitalization should warrant an active line of treatment.
Here’s an example to help you understand active line of treatment - Let's say I experience chest pain at night and I go to emergency hospitalization thinking it may be a heart attack. After being admitted and undergoing tests, the doctor determines that my chest pain is due to a gastric problem and that no treatment is required. While I am happy that my condition wasn’t serious,I will be disappointed when my insurer rejects my claim on the grounds that there was no active line of treatment.
In certain cases where the patient’s condition is serious and they cannot get admitted to a hospital, insurers agree to consider the claim and reimburse the expenses under the domiciliary hospitalization cover. This cover, however, needs to be approved by the insurer beforehand.
Reasonable and customary charges
Reasonable and customary charges is one of the most dreaded clauses in Health Insurance.
The term refers to the average claim paid by your Insurance Company for a particular ailment. A charge is considered reasonable, usual and customary if it matches the general prevailing cost of that service within a particular geography. The insurer keeps gathering information on charges that are being levied on services and then uses this information to determine the average price for a particular service that would be paid under the policy. If your hospital charges above the reasonable and customary charge, you may have to bear that extra cost. This clause, disreputed as it is, gives the insurer a lot of room to cut down on the settlement amount.
We can call this clause "Fine print of Fine prints” Once you have paid premiums for eight consecutive years, your insurer is required to pay all claims as per the policy limits as of April 1, 2021.The Insurance Regulatory and Development Authority of India (IRDAI) states in its guidelines on standardization of terms and clauses in health insurance that no health insurance claim should be challenged after an eight-year moratorium period has expired. An exception to this rule is fraud that has been proven beyond a reasonable doubt and permanent exclusions outlined in the contract.Thus, policyholders do not need to wait in anticipation for health insurance companies to approve claims after eight years. The claim will have to be settled within the limits of the medical insurance policy.
Free Look period
The "Free look" period applies to all types of health insurance. The period of time varies between 15 and 30 days, depending on the insurance company. It begins on the day you receive the policy document. In the event that you feel the purchased policy does not meet what was promised, or if you feel a different plan could serve your needs better, you can cancel the policy within the look up period. A minimal cancellation fee applies, and the remainder of the amount is refunded to you. There are some key takeaways of this clause in health insurance.
Let’s check them out in detail:
In the free-look period, a cancellation must be made within 15 to 30 days of receiving the policy documents; your policy document will mention this period. Considering the relatively small time margin (look up period), your insurer would insist on proving the date of receipt of the policy document. You should be able to substantiate this date.
Credentials and Details
In order to initiate the cancellation process during this period, you will need to provide certain details that the company will require. You can usually find the list of required details on the company's official website. For this process, you will need to provide proof of start date (date when you received the documents), information about the insurance agent (if involved), and a reason for cancellation, among other details. Your bank details are also required for the refund process.
To initiate the cancellation process, some documents are required. These include original documents, receipt of first premium payment, canceled cheque, etc. An indemnity bond is required in the absence of the original documents. Your insurer may require other documents as well. The list of required documents can be found on the company's official website or by contacting customer service.
The cancellation refund even during the free-look period is not 100%. The insurer will most likely cut a minimal fee for charges incurred on stamp duty, medical test, the proportionate risk premium for the coverage period, etc.
Whether you buy health insurance online or from an agent, always make sure you read all the scheme related documents carefully and make an informed decision. Thereafter, if you feel the need to change your decision, go ahead and avail the benefits of the free-look period and cancel your insurance anytime within the specified duration!
The biggest pain point, atleast from a Customer’s perspective, in the health insurance value chain is the claim processing vertical. More often than not the decision as to whether the
Customer would continue patronizing an Insurer boils down to the qualitative and quantitative aspect of claim settlement.
While the qualitative aspects are subjective and Insurer dependent, IRDAI brings in some objectivity to the quantitative aspect in terms of what claims would not be settled by the insurers.
These are generally referred to as standard exclusions and are the same across the board for all Insurers
Time dependent exclusions
Ones that would be covered after you have been a continuous policy holder for a certain period of time. Such exclusions are
The 30 day waiting period clause.
This clause is meant to protect the Insurer from Customers with ill-natured intent - Customers buying insurance policies after they know they are going to need hospitalization in the near future doesn’t sit well with the principles of insurance.
That said two exceptions to the rule are
Claims arising out of an accident - the Insurer is liable for a claim if you have made the premium payment at the thier office and have an accident on your way home.
Policies that are being ported in - this is a benefit that accrues to the policy holder by virtue of having already borne the 30 day waiting period with an earlier insurer, when she had bought the policy for the first time.
Specific disease/ procedure waiting period
This clause, like the earlier one, gives an Insurer a sense of surety that a Customer isn’t buying a policy to make a claim, in the immediate future.
One of the principles of Insurance for a Customer is to have a policy but to act like she doesn’t have one i.e. an individual is expected to take care of her asset (in this case her health) like she doesn’t own a policy.
IRDAI doesn’t mandate the number of years that an Insurer can prescribe as a waiting period, but does cap it at 4 - none of the waiting periods in a policy can exceed 4 years.
The general industry practice is to club all non life-threatening hospitalizations like Cataract, Kidney Stone, Hernia into one bucket and cap the waiting period for such hospitalizations at 1 or 2 years, and life-threatening hospitalizations into another bucket and cap these at 2 or 4 years. Your policy will generally specify the hospitalizations (broadly if not specifically) and the bucket that these would go under.
Pre Existing Disease (PED) waiting period
Generally speaking, PED form the most number of contentious cases that are heard by the Insurance Ombudsman.
IRDAI defines PED as a condition/ ailment/ injury/ disease which was either diagnosed or treated not before 48 months from issuance of a policy. General insurance practice is to cap PED’s at 3 to 4 years.
IRDAI also allows for carrying forward of this benefit when you decide to port the policy - the number of years of PED waiting period gets reduced from your incoming insurers policy by the number of continuous years you have spent with your outgoing insurer.
While insurance has been an evolving industry, we have sadly not reached a point where private Insurers could bear the cost of diseases that are draining in terms of cost (Birth Control/ Infertility); certain treatments are also aesthetic and personal (Cosmetic/ Plastic surgery) in nature and the number of people subscribing for such treatments is simply too small for the insurers to break even let alone make profits on them; finally some treatments are in conflict with the law of the land and can therefore not be covered under any insurance policy.
IRDAI allows for insurers to exclude such diseases as permanent exclusions. These can broadly be classified into
Investigation & Evaluation expenses. IRDAI allows for exemption of charges incurred on diagnostic expenses that do not lead to a hospitalization. Even before/ during/ after hospitalization any diagnostic expense not directly related to the active line of treatment is exempted.
Maternity & other miscellaneous expenses. Most individual health policies exclude the maternity cover. Lawful termination of pregnancy is also a standard exclusion, as is treatment for birth control, sterility and infertility.
Here’s a list of some other standard exclusions
Rehabilitation & rest cure expenses. Expense incurred on rehabilitative treatment i.e. treatment to restore an individual's health to normal after an addiction or illness is a standard exclusion. In the same vein, any treatment to address a spiritual/ emotional need remains an exclusion.
Any Obesity related surgery that is not prescribed by a doctor and/ or is life threatening in conjunction with comorbidities.
Cosmetic surgery, unless certified by a medical practitioner towards reconstruction of a body part, following an accident, burn or cancer.
Expense on treatment of hazardous or adventure sports.
Expense on treatment arising out of a breach of law with criminal intent.
Treatment for addictions including but not limited to alcoholism.
Treatment received in spas, nature cure clinics.
Treatment by dietary supplements unless prescribed by a medical practitioner as a part of hospitalization.
Correction of eye sight due to refractive error less than 7.5 dioptres.
Unproven treatments that lack significant medical documentation to support their effectiveness.
Any treatment specifically excluded by an Insurer in black and white.
IRDAI permits insurers to list certain diseases as permanent exclusions if they do not fit into the underwriting philosophy of the Insurer, albeit after appropriate disclosures to the Insured at the time of underwriting. Some of these illnesses are unfortunately ones where medical science hasn’t been able to achieve any significant breakthrough towards their ultimate cure like HIV, AIDS, Alzheimers, Parkinson's disease; others like Cerebrovascular disease, Inflammatory bowel disease, Chronic liver disease are lifestyle related.
Can the insurer decline to renew my policy?
No, an Insurer cannot decline to renew your policy.
IRDA vide its circular 52/15/IRDA/Health/SN/08-09 has advised Insurers to not deny renewal of policy on any grounds other than fraud, moral hazard and misrepresentation.
An Insurer can, however, deny renewal of a policy when the Insurer has decided to close that particular product. Closure of a product could be dictated by business considerations i.e. aspects like profitability, serviceability. But even when an Insurer does decide to close a product, they have to make provisions for a replacement product and accord a suitable time for the Insured to make alternate arrangements.
When I claim, will my renewal premium increase?
No, premium increases in personal health policies are not linked to claims. That said, premiums can be increased :
What is normally covered in the Health Insurance policy?
Health Insurance is an instrument designed to protect you from the monetary shock of your hospitalization needs.
Here's a broad list of covers that your health insurance policy will generally cover
What is not covered in the Health Insurance policy?
While there's a whole gamut of things that your health insurance covers, there's some things that your policy will not cover.
However some of the exclusions/ add-ons can be covered by paying an additional premium. This might vary from Insurer to Insurer.
Death due to Suicide.
What is a Family Floater Policy ?
A family floater policy is an umbrella cover for the entire family i.e. if you have opted for a family floater cover of ₹ 5 Lac, this cover is available for all the members in the family who have been covered under the policy. This coverage is different from the coverage under an Individual Health policy, wherein, each member of the family will be covered for a sum of ₹ 5 Lac individually.
Isn’t that wonderful? Well, it would be if not for the cost implications and the fact that you can opt for a family floater cover and stay appropriately insured at the same time. Moreover, both of the products are aimed at serving different policy holders.
Lets examine when to opt for a family floater cover as opposed to an individual one.
Somewhere around the age of 45, human metabolism starts to slow down, and this in turn leads to deposit of unwanted fats in the body, which in turn makes human organs work harder to keep replenishing their energy needs.
While not every disease could be attributed to a slowing metabolism, majority of them can be.
What does any of this have to do with a Family Floater policy?
Well, quite a lot actually. Lets try and understand how. Lets look at a couple of scenarios
Scenario I - If you are a young family of four, that includes your spouse and young kids, with maximum age in the family capped at around 45, your risk profile is low. The probability of your young children needing a hospitalization cover are on the lower side, thanks to all of your metabolisms. A floater cover of ₹ 5 Lac should therefore take care of your emergency hospitalization needs.
Scenario II - Now, if you are a young couple, around 35 years of age, who also want to insure one set of your aging parents, the same floater cover of ₹ 5 Lac might be a risky proposition. This is primarily because of the added risk of elder parents. The chances that elders in your family use up the entire cover by mid term of the policy cannot be denied. You do not want to run into a scenario where your minor claim of ₹ 50,000 is rejected because of exhaustion of Sum Insured and you end up bearing it out of your pocket.
The solution to this problem is to always insure elder folks under a separate policy. These days we have policies that have been tailor made to cater to the elderly.
Are Bancassurance Health policies any good?
Here’s a list of some of the benefits of the policies offered through Banks
Here’s some of the disadvantages
Is there a tax savings I can achieve by purchasing health insurance?
Yes. Purchasing health insurance not only saves medical expenses but also provides tax benefits.
Under section 80D of the Income Tax Act, you can claim tax exemption for the total health insurance premium paid by you during the assessment year. This benefit is over and above the one that you claim under section 80C and depending on the age of the members in the policy, the tax exemption amount can range from ₹ 25,000 to ₹ 1,00,000.
Limits of exemption
|Age of insured||Tax exempted under 80D (₹)|
|Self, spouse & children < 60 years||25,000|
|(Self, spouse & children < 60 years) + (Parents < 60 years)||25,000 + 25,000|
|(Self, spouse & children <60 years) + (Parents > 60 years)||25,000 + 50,000|
|(Self, spouse & children with age of eldest member > 60 years) + (Parents > 60 years)||50,000 + 50,000|
Health check-up benefit
Section 80D benefit also includes expenses incurred for preventive health check-ups; this benefit can be availed up to a maximum amount of ₹ 5,000 per year.
Here’s a couple of scenarios
Scenario I - Say you’ve bought health insurance for yourself, your spouse and children, and also for your parents who are above 60 years of age. You paid a premium of ₹ 30,000 for your family and ₹ 35,000 for your parents. In this case, the maximum tax exemption that you can claim for yourself is ₹ 25,000, while for your parents, the entire amount of ₹ 35,000 will be exempted.
Scenario 2 - Now, let's suppose you paid an annual premium of ₹ 23,000 for a health policy that covers you and your spouse. You also got a health check-up done for the both of you for ₹ 3,000. In this case, although the maximum amount that can be exempted under health check-ups is ₹ 5000, since your total expense exceeds your exemption limit, you will be able to claim only ₹ 25,000 as tax deduction under section 80D.
Few important points to remember
How to choose the right Sum Insured in a Health Insurance policy?
Not less than ₹ 50 Lacs!
If there is one thing the Covid-19 pandemic has taught us, it is the fact that Sum Insured, sometimes even to the tune of ₹ 20 Lacs, got exhausted in a matter of days in case of hospitalization. Moreover the higher you go in the Sum Insured ladder, the lesser it will cost you per Lac.
Here’s what you need to keep in mind while choosing your sum-insured.
Hence the ideal Sum Insured in the given scenario is ₹ 50 Lacs.
However we do understand budget constraints, especially in the current economic scenario, and therefore advise you to explore the option of a Super Top-up policy.
Super Top-up policies are policies where the Insurer is not bothered about how you pay for a claim that is below a threshold. The Super Top-up policy is triggered only when your claim amount crosses the Threshold.
Super top-up policies can therefore be used to cover expensive claims and at a fraction of the premium that you would have paid for an individual health policy.
Smaller claims (i.e. claims below the Threshold) can be insured out of pocket or from your employer’s group policy.
What is Deductible and Why should I opt for it?
A deductible on a health policy is the amount that is borne by the insured. The insurance company becomes liable to pay any claim for such a policy only after the deductible amount has been paid by the insured. The way the insured covers her deductible is irrelevant - she could cover the expense on the deductible from her pocket or via a separate policy.
In other words, deductible is the amount beyond which the health insurer will pay claims. If the claimed amount is lesser than the predetermined deductible limit, the insurer will not be liable to pay anything. Choosing the deductible intelligently, therefore, can save you money.
Lets look at an example to understand this better
Scenario - You are already covered under a basic health policy, possibly by your employer, and you wish to go for a higher cover. In this case, you may buy an additional policy with a deductible that is equal to the sum insured on your base policy.
Let’s understand the benefit of such an arrangement with an example.
Suppose you have two policies:
Policy 1 : A normal health policy with a sum insured of ₹3,00,000.
Policy 2 : A super top-up policy with a sum insured of ₹ 10,00,000 and a deductible (threshold) of ₹ 3,00,000.
If your claim amount is ₹ 9,00,000, then Policy 1 will pay ₹ 3,00,000. Since the sum insured of Policy 1 is now exhausted, policy 2 will kick in. The deductible of ₹ 3,00,000 will not be payable under Policy 2. Policy 2 will pay the remaining claim amount of ₹ 6,00,000 (₹ 9,00,000 - ₹3,00,000). The balance sum insured on policy 2 can be utilized for any future claims.
Whenever the claim amounts are smaller, you should compare them to the total discount you can avail at renewal via the no claims bonus (NCB) feature. Say, you are towards the fag end of your policy renewal and need to make a claim of ₹ 2000, but the NCB at renewal is ₹ 3000, you should then pay the claim out of pocket and save yourself the ₹ 1000 (NCB renewal discount - claim amount).
Policies with deductibles are cheaper, so you get a higher cover at a lesser cost. If the members to be covered under the policy don’t have a major illness requiring frequent hospitalisations, then going for a policy with a suitable deductible can prove more economical over a period of time. This is also the broad concept behind Super Top-up policies.