health insurance plans

A Step-by-step Guide to Choose Health Insurance Plans

  • It provides financial coverage during medical emergencies and safeguards you from substantial medical expenses. 
  • It covers various kinds of medical expenses such as pre and post hospitalization, medication, cost of laboratory tests, and critical illness, among others.
  • Most policies offer cashless medical treatments so you can avoid the hassles of claiming reimbursements.
  • Many insurance policies also include free medical health check-ups as part of the health insurance package. 
  • Many health insurance plans offer a co-payment feature. It allows the insured and the insurer to make part payments.
  • Health insurance provides tax benefits under section 80D of the Income Tax Act, wherein you can cover your family and also the health of dependent parents.

By now you know why you must definitely have health insurance. And you’ve decided to invest in a good health insurance plan. Well done! 

Now comes the exciting part – familiarizing with the aspects of buying a policy. Numerous types of insurance plans, different features and calculations can seem overwhelming. We understand your agony. So, we’ve made it easy for you with these seven steps.

Follow this guide, buy the best health insurance plan 

1. Assess your healthcare needs

The first step is to evaluate your healthcare needs. Do you want a personal policy or a family floater plan? Is healthcare for children and senior members your priority? 

If you prefer a family floater plan, consider the below points. These details will help you estimate the coverage requirement.

  • The number of family members that need health insurance: some insurance policies have a cap on the number of members that can be included in one family floater plan. 

For e.g. most insurance companies have family plans for four to six members, but some plans allow up to 12 members in one plan. 

Once you know the exact number of individuals, you can start looking for policies available for that category. Remember: the more the number of members, the higher the sum insured and the premium. 

  • The age of the family members part of the plan: typically, insurers consider the age of the oldest family member to calculate the premium. The higher the age, the premium amount will increase accordingly. 

E.g., if you are 35 years old and your father is 70 years old, the insurance company will consider your father’s age to calculate the premium, which will be much higher than that for a 35-year-old. In that case, it is better to take two separate policies.

This is an important factor that can help you decide whether or not you want to include parents and senior family members in the plan. In most cases, it is advisable to have a separate insurance plan for parents so that the premium amount doesn’t become too high.

  • The medical history of each of your family members: insurers will take into consideration the medical history of each member while underwriting. 

E.g., insurers consider serious illnesses history in families, especially the ones that are hereditary such as diabetes, heart problems and cholesterol, among others. As such conditions affect the life expectancy of the insured, the insurance company might increase the premium in these cases or even reduce the cover.

If you’re looking to purchase a family health insurance plan, one option is to exclude members with existing serious health conditions as it might increase the premium. Instead, buy a personal health policy for them.

If you’re going for a personal health plan, consider factors such as the age at which you are buying a policy, your medical status – past, present and future needs, your budget, premium, and benefits. 

2. Estimate the amount of cover required

Whether you want an individual health insurance plan or a family plan, it’s important to get a sense of the amount of cover required. A number of factors should be considered when deciding the amount: 

    • Age: the older you get the more your medical expenses would be
    • Pre-existing illnesses: if you already have certain illnesses, you should account for those and related health conditions that may require attention in the future
    • Budget: the first thing to consider is your monthly and annual budget and capacity to pay premium
    • Inflation: going by trends in the healthcare sector in the last couple of years, there has been a significant increase in lifestyle diseases and critical illnesses. Inflation would mean increased medical bills.

      For e.g. if a treatment costs you Rs 5 lakh in 2020, the same treatment may cost you Rs 15 lakh in 2030 as medical costs inflation much faster than your standard price inflation. The purpose of health insurance is to provide financial support against your healthcare needs. Hence, consider inflation and then opt for a suitable amount of cover.


3. Compare plans

Do not pick the first plan that you come across. Always compare a few plans for these parameters: 

Types of plans: personal, family floater, plans for senior citizens, maternity health insurance plan, and critical illness plan, among others. Check out this infographic on the basics of health insurance plans.

Benefits and bonuses: different insurance policies may provide different benefits such as no-claim bonus, no-claim discount on premium, or an increase in the sum insured. Go for the plan that provides the best of perks and benefits. Among other benefits, look for features such as tax exemption, cover against critical illness, renewal age, waiting period, and flexible premiums. 

Network hospital: every insurance company has a network hospital list with which it has a working relationship. Choose an insurer that has a large network hospital and one which has more number of hospitals and medical facilities in and around the area where you reside. This would make it easier for you to find a suitable hospital closest to you in times of emergency. Moreover, check if you can avail cashless treatments from network hospitals. 

Age limit: while some health insurance policies have an age limit for renewal, for e.g. 60 years or 70 years, some policies are life long, without any age limit. It is of course, advisable to buy policies that provide a higher age limit.

Premium: with tough competition, different insurance companies provide competitive premium rates to policy seekers. However, you should keep in mind that a lower premium is not always the best selection parameter. 

This is why there are online aggregators that can help customers compare premiums of different insurers and plans. You can use online aggregators to draw comparison based on different factors such as coverage, premium, benefits and more.

Premium payment terms are another key factor to consider. Recently, the IRDAI has introduced the feature of premium payment in installments – monthly, quarterly and half-yearly. 

Compare claims processes: Policyholders often assume that the claim process for every insurance plan and insurance company would be the same. Wrong! 

Firstly, there are two types of insurance claims: 

  1. Cashless: without making payment
  2. Reimbursement: payments have to made by the insured, to be reimbursed later

Apart from the types of insurance claims, the process differs from one company to the other. Imagine a scenario where you have a health emergency and have to be hospitalized. In such a situation, how would you make use of your health insurance policy if you don’t know the claims process? Normally, once your family member is admitted to the hospital, you are required to immediately inform the insurer call center so that they pre-approve the claim by fax.

4. Consider network hospital

Insurers are associated with hospitals and clinics. Every insurer would have its own network hospitals. Make sure you choose a plan that has a wide network across cities because medical emergencies could occur at any place. 

 

5. Check inclusions and exclusions of health insurance plans

When you clearly know the inclusions and exclusions, you will be able to set clear expectations from your insurer. Some of the most basic inclusions in health insurance plans are hospitalization, pre-existing diseases, free health check-ups, daycare procedures, ambulance charges and more. 

Among the exclusions are HIV, STDs, cosmetic surgeries, dental and eye care treatments and most kinds of rehabilitation are also excluded. Make sure you are aware of the inclusions and exclusions while choosing a health insurance plan. 

Let’s look at inclusions and exclusions further:

InclusionsExclusions
In-patient hospitalizationPre-existing illnesses (Before waiting period)
Pre and post hospitalizationIllnesses within three months of buying policy
Day care treatmentsSelf-intended injuries
Ambulance costsCosmetic and dental treatments
AYUSH treatments (alternative treatments)Unproven and experimental treatments
Free health check-upsWar, nuclear contamination related ailment

 

6. Choose a reliable insurance company

There is fierce competition in the health insurance market and companies may be promising the moon, but it’s essential to assess a company’s reputation, history, service quality and claim settlement ratio, to assess if it is reliable and efficient. 

You can find information about insurance companies from the insurance company’s website, recognized insurance aggregators, social media profiles, IRDA data sheets, insurance blogs etc. It is essential to focus on information sources that are authentic and reliable.

This exercise will help you distinguish between established and sub-par insurance companies, give you unbiased overviews, and make your decisions much easier. 

7. Consider a worst-case scenario before your final decision

Last but not the least; imagine the worst-case scenario with a plan that you are considering. That will give you a sense of how risky or how beneficial your selected health insurance plan can be. 

E.g. You buy a personal health insurance plan with adequate coverage. This particular plan has all the basic features such as pre and post hospitalization cover, pre-existing diseases, no-claim bonus and the option of additional coverage. 

However, the policy doesn’t cover critical illnesses such as cancer. What if, a few years down the line, you are unfortunately diagnosed with cancer? Your existing policy would not cover the medical expenses such as chemotherapy, surgery, etc. In this case, wouldn’t it be better to choose a health insurance plan that offers coverage for critical illnesses, too?

 

Points to consider when choosing a health insurance plan

Premium amount and payment option

Insurers offer various premium payment options: monthly, annually, bi-yearly or a lump-sum amount. Work out your budget and financial capacity for paying health insurance premiums before choosing a plan.

Flexibility

While some plans have the option for recharging the sum insured up to a certain percentage, some others do not have the option of additional coverage. Another e.g.: a number of health insurance plans offered by employers to employees who provide flexible plans, where the insured can choose the benefits according to their needs and requirements. 

Always look for plans that have some room for changes and adjustments, if and when the need arises for it to be flexible to meet your needs. Think additional coverage, options for adding family members to your plan, or alternate treatment coverage that offers the insured the flexibility to choose medical or clinical treatments.  

Claim settlement ratio of insurance companies

An oft-overlooked factor when choosing an insurer is the claim settlement ratio of the insurance company. A company with a higher settlement ratio would be more reliable compared to a company that shows a lower claim settlement ratio record.

Want to learn more terms related to insurance? View this infographic.

Age limit for renewal

The age limit clauses differ for different plans. Some plans have an age limit for the renewal of a policy, while some offer life-long renewal. It’s better to go with life-long renewal. 

Waiting period for pre-existing illnesses

Some policies have a waiting period before they offer coverage for pre-existing diseases. It’s advisable to choose a health insurance plan that has a lower waiting period for pre-existing illnesses. 

Claim process

Get a sense of the claim process – how simple or tedious it would be for you to process claims. During times of medical emergencies, a difficult claim process can take up a lot of your time and energy.

Coverage for day-care procedures

Many plans offer coverage only if a patient is hospitalized for 24 hours or more and do not pay for day-care procedures. It’s better to choose a plan that offers day-care coverage. 

Network Hospitals

Accidents and medical emergencies can occur anywhere and at any time. They can even occur while you are travelling to another city. It is better to choose an insurance policy that offers a wide network of hospitals across cities. 

 

Over to you

Now that you know the things to consider when choosing health insurance plans and the steps to follow, it’s time to get started. Having said that, health insurance is considered to be an important pillar of personal finance planning.

However, if you still feel lost or require help, get in touch with a professional health insurance agent or simply give us a call and we can walk you through the basics in no time.

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