Health Insurance – What I need to know?


Medical expense is one expense,which we hate to spend-on, but it is also an expense which we cannot escape. Medical expenses are rising every year,even the smallest of tests prescribed by doctors, make us cough-up, at least couple of thousand Rupees. The lifestyle which we lead and the environment we are living in is contributing largely to the ever increasing diseases. Yet India’s health insurance market remains highly unpenetrated.

Some of the key terms, which are usually not explained by the seller, or we overlook at the time of signing the policy are explained below. But one should carefully read all the terms, conditions and clauses related to the insurance, before one finalises on the preferred health plan.

Capping’s:Many health insurance companies have certain capping (maximum limit), usually, a percentage up to which the insurer will settle the claim for hospital expenses.For example, on room tariff capping is at 2.5k daily limit & actual is 4k, insurance company will only pay 2.5k per day.

Co-pay:In co-pay feature, the insured is liable to pay a certain percentage of the medical expense along with the insurer. It is generally in the range of 10-20% of the total medical expense.For example: If your insurance policy has a co-pay clause of 20% and your medical expenditure has amounted to Rs.1,00,000, you will have to pay Rs.20,000 out of your own pocket and the insurer will cover the remaining Rs.80,000.Co-pay insurance is usually available at a lower premium than that of non-co-pay insurance.

Pre-existing disease waiting period:If an insurer at the time of buying a health insurance is suffering from any pre-existing disease (PED), there is a waiting period before one can claim hospitalization expenses related to the declared disease. This period ranges from 1-4 years depending on the ailment. It is important to be open about PED at the time of buying insurance. The insurer has the right to deny claim if it comes across any PED which the insured had not disclosed. People with any pre-existing disease should go for health insurance with lesser pre-existing waiting period.

Restoration benefit:Some health insurance policies come with restoration benefit. This means your policy will get refilled or restored by your insurance company in case it gets exhausted during the annual policy tenure. The restored sum can be utilized to that specific policy year only. It cannot be claimed for ailment for which claim has already been availed in the same year.

No-claim bonus:No-claim refers to the bonus given by insurer for every claim-free year. The type of NCB offered, and the discount rate provided vary from one insurer to another. Most of the private health insurance service providers in the market offer cumulative benefit to their customers.Most insurers offer NCB in the range of 5% to 10% for every claim-free year.No-claim bonus typically comes in two different forms:a) Discount on premium amount charged for a policy; b) Cumulative benefits offered in the form of higher sum insured amount.

List of hospitals covered:One should check the list of hospitals and clinics where your health insurance policy covers cashless treatment. With the help of cashless facility you won’t have to negotiate claims process. The insurer will settle the bill directly with the health service provider.

MWP Act – Married Women’s Property Act 1874- INSURANCE TERM PLAN


One interesting & great legal tool in hand, but hardly been pushed by anyone.

What it means; at the time of initiating (buying) a term insurance policy, one should also sign this document. This document legally ensures that, post the policy holders demise, only wife will receive the policy cover value and not the creditors (policy holders outstanding with others) or relatives.

We take Term-Plan, to ensure the well-being of our family, specifically wife and children in case of any unforeseen events. Therefore, ensure that you sign this document.

Once a policy is availed under the MWP Act, it may not be attached by courts for repayment of your debts. Only your wife and children will be entitled to the Sum Assured in the event of your demise.

Term Insurance – Don’t Delay Further


“Tum Term Insurance Lena Bhul Gaye, Ab GharKa Kharcha Kaise Chalega”

Quote from one of the recent TV Ad campaign on “Term Insurance Cover”; a lady is seen cursing her dead husband, on not buying a “Term Insurance Policy”, even though they (both) had decided to start same.

We Indians (I’m also included), believe in the fact that “Accidents” or “Death” is a wrong word and one should not get involved with same, in any context. Therefore, buying a policy to cover only death, that too without money-back, makes no sense 😉


Insurance data – an eye opener

insurance claim form

When we say Insurance, what comes first in your mind? answer would be, LIC.

And if I further probe, what LIC means? answer would be, money back plan or some investment plan.

I was reading an article today in Mint, “Life insurance policies continue to die early”, prompted me to write this blog. As per the article, which is based on data analysis from IRDA (persistency ratios), it states that 2nd year renewal on Insurance policy stands below 80%, and 6th year renewal stands below 50%. Which means, every 2nd customer, is not renewing insurance policy after the 5th year. Why?

The surrender value for most of the polices, post 5th year is not attractive, as has big penalty by the insurance companies to discourage same. But still customers are not renewing.

My understanding & working with our customers, Insurance is pushed in India, mainly based on investment philosophy, with a massive pay-out as a carrot to the agent for the first year. First year pay-out can go as high as 50% of the premium in some cases & in the range of 2% to 5% for the subsequent years.

Insurance agents, I must say, are doing the job very well. To earn this handsome reward, they are going the extra mile to push, whether in the form of tax saving, or some goal based plans, or some other incentive offered. I still remember my father being very happy one day, as Insurance agent has given him Rs.5000/- in cash back, for signing the policy.

Customers, like any of us, first are hard wired that Insurance means money back, saves tax & safe avenue (may be some incentive, like my father) and 2nd agent is related in some ways (relation, friend, known RM, favours or gifts), that they cannot go wrong or do wrong 😉.

2nd year onwards or later, either thru some other advisory talk, or reading the policy fine prints, or doing basic calculation, comes the blooper. Now what to do? Surrender or continue? And that is what is happening, as per this article.

My advice to everyone, please & please read the policy document before investing.

Insurance is a subject matter of solicitation, you should consider the Investment objectives, risks, charges and expenses carefully before investing. And above all ask questions.

Happy Investing!!

Why a term insurance policy is the best life cover option?

Life Insurance

Gautam, a 28-year-old IT professional, has got married recently. His parents are financially dependent on him. He saves Rs.15,000 each month. He thinks his insurance requirement would be Rs. 50 lakh. For the term insurance plan that his relationship manager is recommending, his annual premium will be Rs. 10,000, payable over 30 years.

He thinks a term insurance is a bad choice because he will not get any ‘returns’ on it. It seems unprofitable to him, as he is unlikely to get back the amount he pays as premium. Is term insurance really a waste of money? Should Gautam consider an insurance cover which provides a good ‘return’ at the end of the tenure instead?

First, Gautam needs to be educated about the concept of insurance and the purpose of buying it. The only way to do that is for him to imagine how his family would fare, if he were to pass away tomorrow. Wouldn’t it make things difficult for his wife and parents?


Insurance in India; what it means? – Investment series 2


A recent survey conducted by an international agency on India’s financial literacy:

  • 67% of the Indian prone to think insurance as investment

  • ONLY 7% people have taken term insurance, out of all who pays insurance premium

  • ONLY 5% of people have health insurance

  • 92% people after their retirement depend on the children and 8% who plan for retirement, 61% of them resort to insurance as retirement plan

I am sure, most of us will not find it surprising, as we are also part of it. I don’t even have to validate this data, as this is a common occurrence with most of the customers I meet.

Insurance is the most preferred “Investment avenue” by Indians, after bank FD’s. This is where the problem starts, we treat or understand Insurance as Investments. We have Insurance agents floating around virtually everywhere; family, friends, office colleagues, neighborhood agents, and lastly, relationship managers from banks & brokers… hammering same!!


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