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How to choose the right health insurance for your needs?

Buying health insurance is not something a “normal” person can accomplish without assistance. There are a lot of moving parts in the process, each of which affect the quality of the medical care you will receive. Make one wrong decision and you will either end up with compromised healthcare or a major financial crunch. 

So when Rahul was faced with the prospect of buying health insurance, he took it very seriously. He exercised due diligence, conducted in-depth research, and came up with 7 key factors every buyers should consider before buying a health insurance policy:

  1. Budget
  2. Coverage
  3. Type of insurance
  4. Healthcare network
  5. Copayments, deductibles, and out-of-pocket expenses
  6. Inclusions and exclusions
  7. Additional benefits

Who can help you choose the right health insurance plan?

There are many ways of buying a health insurance plan. One can buy it online through the website of insurance companies, through an agent or through online insurance marketplaces or aggregators that provide the best options from different insurance companies in one place.

  • Online insurance marketplace
  • Health insurance agent
  • Insurance company representatives/experts

Benefits of buying health insurance from online marketplaces

There are a number of benefits of buying health insurance plans from online insurance marketplaces:

  • Wider options to choose from: online insurance marketplaces offer a wide range of plans from a large number of insurance companies. It’s a one-stop shop where one can explore and type of different companies using a variety of parameters.
  • Online marketplaces offer better prices: with fierce competition in the insurance market; online marketplaces take a proactive approach to offering the best plans at competitive prices by way of discounts. Buying online is also cheaper because there are lesser administrative costs involved and the insurance company normally passes these cost savings to the customers. This helps the customers a lot in choosing the right health insurance plan at lesser costs.
  • Insurance marketplaces offer objective comparison of policies instead of being focused on just selling on behalf of one insurance company. Hence, one can find the newest health insurance products on online marketplaces from the most credible and genuine insurance companies at the best prices.
  • Online marketplaces also invest a lot of time and effort in sharing the correct and important information with their customers. Most marketplaces would have comparative studies of different and similar health plans, explanatory articles that help customers and guides to read and make informed decisions. Such value-added analytics make your insurance decision easier.

Benefits of buying health insurance from agents

A face-to-face experience of buying something always feels better compared to buying online from a machine or interacting with a lifeless chatbot. That’s why 55% of Indians prefer buying insurance from an agent. There are many benefits of buying health insurance plans from insurance agents:

  • Insurance agents have in-depth knowledge about different types of health insurance plans, although it is restricted to the company they represent. They would be in a position to explain the details of plans clearly. Insurance terminologies have garnered a reputation of being too difficult and confusing. That’s where the expertise of insurance agents comes in. Agents can explain difficult terms in a simple language; and this is extremely useful if you are a first-time insurance buyer. You can also get the best health insurance quotes.
  • Buying a policy through an agent means building a long-term relationship with the agent. Policyholders know whom to contact during times of emergency, to solve any issues, to renew a policy, for porting a policy, among other things. This relationship can be useful especially at the time of making claims; especially if the insurer creates problems in approving your claim.

Benefits of buying insurance from insurance company

Just like many people choose to buy consumer goods directly from the company, a large number of people prefer buying insurance plans directly from the insurance company, not from an agent or from a marketplace. There are benefits in this approach:

  • Buying insurance from the company builds long-term relationships and trust between the buyer and the company. Customers feel more secure and comfortable when they buy an insurance plan directly from the insurance company as they do not have to deal with middlemen and receive information directly from the insurer. However, it does tie you up to just one service provider.
  • When customers build long-term relationships with the insurance companies, they might avail special loyalty discounts or offers, which other buying options might not offer. It is also possible that the insurance companies would give first preference to their loyal customers and share information about new products with their direct customers.

How to choose health insurance plans that meet your needs?

Here are some key steps to zero in on the health insurance plan that best suits your unique needs.

Decide the suitable amount

The main purpose of investing in health insurance is to ensure financial support during an emergency and to cover the medical costs. Increased occurrences of diseases, virus-borne ailments, lifestyle diseases and the rising costs of healthcare have made heath insurance covers mandatory. 

Let’s look at the average hospitalization costs in India: general illness treatments cost between Rs 50,000 – Rs 1 lakh, bigger treatments cost between Rs 5 lakh – Rs 10 lakh and 

Treatment for critical illnesses can amount to Rs 10 lakh – Rs 25 lakh. Add to it, the increasing inflation. A treatment that costs Rs 50,000 today might cost at least Rs 3 lakh after 10-15 years. 

For those who are in their 20s and 30s, a health insurance policy with a minimum sum insured Rs 10 lakh to Rs 15 lakh is a must. Hence, it is advisable not to buy a plan with a small sum insured of Rs 3 lakh to Rs 5 lakh just because it costs less. Ask yourself; ‘Will it be sufficient to cover your medical emergencies?’

Check the key factors and inclusions

This is the most essential component that you need to review all the insurance plans against for choosing the right health insurance plan.

Room rent: typically, health insurance companies have a limit on room rent. Most insurers cap it at 1 to 2% of the sum insured or a fixed amount, e.g. Rs 2000 per day. Most health policies only approve twin sharing rooms. It is advisable to choose a health plan that covers the expenses of a single private room with good network hospitals. Better still, a plan with no room rent limit.

Copayments and deductibles: Many health insurance plans have co-payment and deductible clauses, which means the insurance company is not liable to pay the entire hospitalization cost for the insured. The amount of co-payment or deductible, e.g. 10% or 20% of the sum insured, will have to be paid by the policyholder.

Benefits and add-ons: Most health insurance plans offer benefits such as no-claim bonus that can help increase the sum insured with every claim-less year, add-on benefits such as maternity cover, critical illness cover and more. It is advisable to buy a health plan that offers all or most of these benefits to make the most of your investment.

Inclusions and exclusions: Check for all the inclusions and exclusions in the insurance plan. A plan that meets 80% to 90% of your requirements is a good plan to buy. A plan that meets just half of your requirements may not be a good choice. However, if a plan allows customization with the help of add-ons and riders, you should consider it and buy after thorough considerations.

From whichever channel you buy health insurance; don’t do this

These are some of the biggest mistakes that people make in the pursuit of choosing the right health insurance policy:

  • Don’t rush your health insurance buying decision. Think through, gather all the details, understand all the clauses and then buy a plan after making a cost-benefit analysis.
  • While price is important, don’t make a decision only on the price factor. A cheaper plan does not always mean it’s the best plan. It may not meet your requirements. The main thing to focus on is the health insurance coverage with respect to the price factor.
  • Don’t merely buy a plan based on recommendations by friends and family, because everyone’s healthcare needs are different. A health insurance plan that works for one person may not necessarily work for you.

In a nutshell

As you see, there are a lot of dos and don’ts when it comes to buying health insurance. It is definitely important to assess where to buy a plan from; an agent, directly from the insurer or from an online marketplace. Whatever route you choose, make sure you choose the right health insurance policy wisely and one which makes the process of buying easy, affordable, and seamless.

FAQs: Health Insurance

Which is the best way to buy health insurance in India?

There are many ways to buy health insurance in India - through agents, online marketplaces and directly from insurers. Buying insurance from online marketplaces is one of the most preferred ways to buy insurance. Online marketplaces not only offer the best plans from the most credible companies, they also share all the necessary information and details - all under one roof - which makes the process of buying insurance much easier.

What precautions must one take when buying a health insurance plan online?

Technology has made online buying and online transactions safe and secure. However, customers can take a few additional precautionary measures:

Check if the insurance company and plan is registered with the IRDAI. The details are available in the IRDAI website.
Check if the company is genuine and not a fake version with the name of the genuine company. You can visit the registered office of the insurer to satisfy yourself.
Check if the online payment gateway is secure and safe. Reputed platforms use secured gateways and you can make it out from the (https://) in the address bar.

How can one assess the right sum insured that one requires?

Everyone’s healthcare needs are different. Deciding the right sum insured depends on many factors:
Firstly, your budget. Will the premium for a particular sum insured fit into your annual budget on a sustained basis?

Secondly, your health conditions and coverage requirements. For example, if a person has a pre-existing disease, they might need a higher sum insured as their chances of hospitalization are more compared to a completely healthy person.

Thirdly, their location. A person living in an expensive metro city such as Mumbai or Bangalore might have to shell out more towards hospitalization compared to a person living in a tier-two town.

You can arrive at a final buy decision only after considering all these factors.

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