Health is the topmost priority of human life. Health maintenance sometimes leads to financial costs, and health insurance is an instrument to cover this cost.
Health Insurance penetration is very low, and not many know how health insurance works in India.
Insurance is basically the pooling of resources or money so that it can be used at the time of an emergency in a family or at the national level in pandemic, famine, flood, or fire.
You have seen the world going through a health crisis in this pandemic. In these situations, families lose years of savings in few days.
The importance of health insurance is more in situations like this when we already see job losses, salary cuts, the economy going down, inflation on rising, poor bank returns, and uncertainty in the market.
Without health insurance, your savings and investments are always at risk.
In India, most of the population is dependent on employers’ health insurance which normally ranges from Rs. 50,000 to Rs. 2,00,000 of cover.
This amount could be sufficient for an individual, of course not for the family.
The COVID-19 situation has increased the awareness about health insurance which has led to a boost in health insurance policies this year compared to the previous years.
What Is Health Insurance
Insurance is a contract between the insurance company and the insured individual in which the company promises to pay for pre-decided expenses for losses in return to the individual paying timely premiums to the company.
The type of insurance that covers an individual’s medical or surgical expenses during the illness is called health insurance.
It covers hospitalization expenses, tests, daycare, and post and pre-hospitalization expenses.
Why Health Insurance Is Important
Below are the reasons why you should know how health insurance works in India.
#1 Medical care is expensive
Medical care inflation is rising at an alarming rate in India. Health care is becoming costly and out of reach of the common man.
Health insurance can help save on these expenses as it covers more than just hospitalization and includes checkups, pre, and post-hospitalization costs, medicines, ambulance, daycare, etc.
#2 Family Safety
Floater health insurance ensures not only an individual but also the entire family, including spouses and children.
Floater health insurance provides all-around protection to the entire family at a very reasonable premium.
You can relax that your family will receive the best treatment for anything that happens to them once you have the right insurance.
#3 Protect savings
The direct impact of any health issues in the family is on savings. Your hard-earned money can be swept away by the expensive medical costs.
If you and your family are protected by suitable health insurance, you can use this savings for what it is meant for, like education, house, etc.
Health insurance also ensures cashless treatment, which will help keep you save upfront costs for medication.
Also, you can take tax benefits on your health insurance under section 80D of the Income Tax Act, which will add up to savings.
#4 Cashless Treatment
In a cashless treatment facility, the insurance company directly coordinates with the hospital networks.
They do all procedures, and hospitals maintain the required record and papers for claims so that your headache of maintaining bills and going through the claim procedure is reduced.
#5 Inadequate employer mediclaim
Most of the people covered under health insurance in India are because of employers’ medical facilities, but in most cases, the cover is not sufficient.
You need to check if that amount is sufficient for your family. If not, then I need to take separate health insurance.
Also, when switching between jobs, if you are having a gap of a few days, then you might not be covered under any medical.
#6 Better financial planning
Having health insurance is the first step to better financial planning and is even more important than saving and investing.
By not saving or investing, your future could be at risk but not having health insurance makes the present insecure.
Because accidents and health emergencies do not warn before coming, it‘s always better to be prepared with health insurance.
How To Choose Health Insurance
#1. Floater or Individual
An individual plan is self-explanatory, and a floater is family health insurance. If you are married and have kids, it’s best to go for a family floater.
With a small increase in premium, you can get the entire family covered.
#2. Private or Government
Private insurance companies or the government don’t make much of a difference as the private health insurance business is regulated by the Insurance Regulatory and Development Authority of India (IRDAI).
The only thing you should make sure of is that the insurance company is well known, and the claim settlement ratio is healthy.
Claim Settlement Ratio is the number of claims approved against the number of claims raised; the higher the number better.
#3. Base Cover
The amount of cover you require depends on your lifestyle and the risk in your job.
Individual: If you are single, then 3 lakhs of cover is sufficient.
Floater: For a family of husband, wife, and 2 children, it is recommended to have a family cover of 5 lakhs minimum.
#4. Room Rent
You might find health insurance with a capping/ limit on room rent.
Suppose you are in a hospital where room rent is Rs. 7000 per day and your insurance has a capping of Rs. 5000 for room rent then extra Rs. 2000 need to be paid by you.
And this proportion can also impact the overall cover of the medication, so make sure your room rent does not impact coverage.
In simple words, just to be safe, try to select health insurance where there is no capping on the room rent.
#5. Sub-limit on Diseases
In some policies, there could be sub-limits or cappings on different kinds of diseases. Ideally, you should avoid and try to go for one that does not have such sub-limits for particular diseases.
If the premium of policy without sub-limits is going out of budget, then you can go deep and see what diseases are capped and what are the chances of occurring in the future.
Ideally, the entire claim should be paid by the insurance company; however, there are health insurance policies where some % is required to be paid by you.
So try to go for a policy without a co-pay clause.
#7. Zonal vs Pan India Policies
A premium of policy also depends on the place of residence because the cost of medication could be different in different cities.
If you selected zonal policy, the premium could be low but suppose you get hospitalized in some other place and not in the place of residence; then you might not get the entire claim and have to co-pay some amount.
To avoid such situations, try to go for PAN India that covers you anywhere in the country.
#8. Pre & Post Hospitalisation
The health insurance policy also covers pre and post-hospitalization expenses. You should check for the most number of days you can get.
Policy cover with Pre-hospitalization of 60 days and Post hospitalization of 180 days is a very good option to choose.
#9. Daycare coverage
There could be situations where you are not required to stay in hospital for more than a day.
You may get discharged the same day; in that scenario, it is required that policy covers the daycare expenses as well.
#10 Cosmetic or Ayush Treatments
Do you have a requirement for cometic or Ayush treatment?
If yes, then check for that too.
#11. Waiting Period
The policy does not provide cover immediately when you purchase it; it has a waiting period normally of 30 days.
If you have a pre-existing disease and you get hospitalized for that, then you may not get the claim.
However, there is a waiting period for pre-existing diseases as well, which usually can be from 2 to 4 years depending on the company, minimum the better.
#12. No Claim Bonus
If you have taken the policy but did not use it for a cover period because you and your family were all healthy and safe, which is a good thing.
In this case, the company provides you some benefits for next years like increasing base cover for the policy in the same premium, which is anyway a good option.
#13. Cashless Hospitals
Try to have a policy with companies having tie-ups with a lot of hospital networks for cashless payments so that you do not have to arrange money in emergency situations and treatment can continue.
#14. Ambulance Charges
Go for a policy covering the ambulance charges.
#15. Free Health Checkup
A lot of health insurance companies provide free health checkups for individuals or families once a year.
Do these checkups and save the reports. This could help you when you actually have to apply for a claim and prove that you didn’t have pre-existing diseases at the time of the policy.
How To Buy Health Insurance
Before buying a policy, make sure you declare everything honestly and without any mistakes, because wrong information or mistakes can lead to your claim being rejected.
Now, where to easily find a policy on so many parameters?
You might totally get confused visiting one company site to another; the solution is to use Policy Bazaar; I, too, purchased from them.
Because on Policy Bazaar you just have to enter a few details like Name, Email ID and Phone and you will directly get a call from one of the executives within a few minutes.
This can be irritating sometimes, but it can save you from visiting and searching for health insurance on your own.
You can tell the list of requirements to the executive, and they will filter the most suitable policy for you in 10 – 15 mins.
When you purchase a policy from Policy Bazaar, they assign an Insurance agent who will manage all your process when you need to claim.
This could be very helpful in emergencies, as you would be busy handling the situation rather than preparing for claims and all.
They also assign a Relationship Manager to each policy so that you do not have to go through the hassle of contacting the insurance company for the claim process, and the Relationship Manager himself will try to process the claim on priority on your behalf.
Another advantage is whenever you get to the hospital and show your cashless card; Policy Bazaar will know that you will need to initiate a claim process.
So, without you informing the insurance company explicitly for the claim, the Policy Bazaar will initiate the process so that the claim does not take a long time to process.
Sometimes if the claim process takes time, the hospital does not allow you to go home even after discharge; in that case, Policy Bazaar will make sure that you do not have to wait and can go home, the hospital and Policy Bazaar will sort this out within themselves.
Frequently Asked Questions
What Not To Do While Purchasing Health Insurance?
You should not treat insurance as an investment; insurance and investment are 2 different things.
Never hide any pre-existing diseases that can lead to claim rejection in the future, which also can impact your premium next time when you buy health insurance.
Health Insurance Comes Under Which Section?
You can avail exemption under 80D for health insurance premium.
What Is Waiting Period In Health Insurance?
When you purchase a policy, you cannot claim the next day; you have to wait for a few days, which is usually between 30 – 90 days depending on the policies.
And for pre-existing diseases, this period could be around 2 – 4 years.
You might have got clarity on how health insurance works in India, why health insurance is important and how to choose health insurance.
Do not delay this anymore in the current circumstances, go ahead, do some research and you will find the right health insurance for your family, or you can directly go to Policy Bazaar and compare various plans in one place.
Best of luck and Be Safe !!