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.

Mushtaq Kazi
Mushtaq is the co-founder of Mushtaq has had corporate stints with Kotak Securities & IIFL group. He holds an MBA degree from Pune University.
His interests include cooking & gardening. When he is not cooking or gardening, he is writing.

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