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Guide to buying an individual health insurance plan

Today as the world is scaling new heights, even the diseases are showing signs of escalation. In this fast-paced world, health care has taken a back seat. Today’s middle aged citizens like Mr. Arjun are facing more health issues than any generation before. 

Mr. Arjun and his friends are having to keep their families in more polluted environments than ever. While doing this, sole breadwinners of their families do need to take care of their health too. 

People take care of their health when they are in the midst of a health crisis, but by then it is just too late. Preventive costs of healthcare are much lower than curative costs of medication and therefore prevention is better than cure.

Here are the pointers that we shall discuss:

  1. Assess your requirements
  2. Know your company
  3. Cost of insurance, i.e. premium
  4. Know the network hospitals
  5. Go for cashless facility
  6. Limitations and exclusions
  7. Claim settlement ratio
  8. Future cost of living

In this era of rising prices, getting decent health insurance can only prove as a life hack from skyrocketing medical costs.

However, with increasing competition, it is vital to be aware and know the selection of your plan. There are hundreds of plans offering similar benefits with slightly different terms. It is essential to understand what you need, how much of it you actually need and at what cost. Choosing the right plan is a tough row to hoe. 

Here is a guide to assist you in the steps to the selection of an ideal health insurance plan:

1.     Assess your requirements

Your needs should determine your policy. Your age is crucial to identifying a policy. For instance, if you are planning a baby within two years, you will be better off without the maternity cover, which comes with long waiting periods and almost double the policy premium. The requirements also cover the current level of lifestyle and exposure to diseases in terms of hereditary problems and environmental interactions.  

2.     Know your company (KYC)

KYC is just not an important activity done by the company to know its customer at the time of onboarding. You need to know the company well before finally selecting one. This is important. You should know where you’re investing your hard-earned money. What if the company doesn’t live up to its promise?

You should read customer reviews on several online forums as existing customers give you a better picture about it and not just believe what your agent says. It is better to get feedback from a consumer of the product than a financial beneficiary like an agent.

3.     Cost of insurance, i.e. premium:

All risk mitigation techniques come at a cost. Insurance is one such mitigation technique of transferring the financial risk on account of health uncertainty to the insurance company. The insurance company generally charges a premium to offer the insurance cover. The premium amount depends on many factors including but not limited to, age, income levels, policy coverage, riders, No claim bonus adjustments, etc. Many insurance companies offer similar policies, and hence, comparing the premium becomes a critical decision point. 

Hence, paying premiums that fit your requirements and need is of utmost importance. Premiums are tax-deductible expenses. Tax benefits is a great metric to determine the policy but it should not be the sole driving factor to choose the policy.  

4.     Know the Network Hospitals

The insurance company generally honors the insurance claim, once approved, either by reimbursing the policyholder for the costs or by paying the amount directly to the hospital (in case of a cashless facility). 

The reimbursement insurance policy asks you to pay for medical expenses first out of pocket and then file a claim with the insurer. You will have to collate all the relevant documents from the hospital and submit them to the insurer to make a claim. However, in a cashless policy, the claim is directly settled between the hospital and the insurer. Therefore, there is no out of pocket expense burden on the insured. However, cashless facility is provided by an insurer with the network hospitals, i.e. they have collaborated to offer such benefits.

The number of network hospital becomes an essential factor in comparing plans across different companies. 

5.     Go for cashless facility

As discussed before, the cashless facility allows the insurance policyholder to get treatment in the network hospital of his choice and ask the insurance company to pay the bills under the insurance cover directly to the hospital. In times of medical emergency, financial burden, and heavy out of pocket expenses is the last thing that any patient would want. The cashless facility offers stress-free and quality treatment to the policyholder. An insurance policy with a cashless facility may be preferred over an otherwise standard insurance policy. 

6.     Limitations and Exclusions

It is important to understand the nitty-gritty of the insurance policy better to know the limitations and exclusions of the plans. Most basic plans carry sub-limits for specific treatments. For instance, hospital room rent restrictions. Also, it is crucial to understand that no health plan covers all diseases and eventualities. Permanent exclusions like the treatment of diseases such as AIDS, dental treatment, gender-change surgery, sexually transmitted infections, and intentional self-injury are not covered in a standard health insurance policy.

7. Claim settlement ratio

Imagine a situation where the insurance company rejects your claim or pays it partly during emergencies? You surely wouldn’t like that. Hence, it would help if you had a policy wherein you can get maximum coverage. An excellent way to check the legitimacy of an insurance provider is through their claims settlement ratio. You can find the details of the claim settlement ratios on the insurance provider’s website and you can also get the audited figures on the IRDA website. You can even see the number of claims settled the number of days taken to settle a claim and check the pending claims. 

8.     Consider the future cost of living

With rising inflation, cost of medical treatment is bound to increase at a faster pace. It is important to consider inflation and buy a policy with higher sum assured. Policies with a lower cover may not be sufficient in the future. With the increasing cost of medical treatments and surgeries, a plan with inadequate medical coverage would be insufficient. Sure, the sum may feel adequate at the moment, but while buying insurance, you have to factor in inflation. With the rising rate of inflation, a kidney transplant that costs Rs 5,00,000 today will cost ₹800,000 within a decade. Therefore, choosing a policy with higher sums assured should be your priority, and you should factor inflation while doing so.

There you go

You must ensure that you get the value for money for the insurance cover you buy. Getting your health insurance policy may not be as easy as it sounds. However, once you evaluate the different plans based on the above matrix, you will become more familiar with the plans and choose the right one easily. Your research may become more manageable. With the number of options available, you can probably find a plan that meets your needs; and also fits into your budget.

FAQs: Health Insurance for Individuals

How do I opt for a cashless facility?

The claim process for the cashless facility depends on the type of medical treatment i.e. whether it was planned or unplanned. To know whether a particular hospital is part of the network of the insurance company, you may have to visit their website or contact the customer care number.

Are there any out of pocket expenses in case of cashless facility?

There are certain non-reimbursable expenses as per the policy document that is not covered under the cashless facility. Some of the charges which may not be a part of the cashless facility include but not limited to registration charges, visitor pass charges, charges for extra bed for the attendant, food, and beverages for the visitors, etc.

What are the tax benefits on the health insurance premium?

The individual can claim the amount of premium paid on account of the health insurance policy under section 80D of the Income tax Act, 1961. There are rules thereunder, highlighting the maximum amount of deduction that can be claimed in case of health cover for self and family as well as limits for health cover for parents. The maximum limit of deduction available under the provision of the Act is based on the age of the policyholder and his/her dependent parents who are also covered under the policy.

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