Risk planning is essential in any field of life. We should always hope for the best but prepare for the worst. This later part about preparing for the worst is risk planning. The tool that helps to plan the risk in life is insurance. Insurance ensures safeguard against the risk that may arise in any course. It could be life, health, wealth, etc. Insurance is an umbrella protecting a lot of possible threats. This article will focus on the importance of health insurance and how to choose perfect health insurance in India in 2024.
A few of the points that we will investigate
- What is health insurance, & how it works?
- Types of health insurance
- Health insurance features
- How to choose perfect health insurance in India in 2024
Also read: Why does investing in mutual funds makes sense in 2024?
What is health insurance, & how it works?
This fast-paced life, ever-changing lifestyle, and ease of living have changed the world. With the goods, it has also brought some bads. One of the bad of these changes is health scares. The health-related issues have been rising with an unprecedented growth rate that has had a great effect to and extent of macroeconomic levels. Fortunately, the medical sector has been growing rapidly and trying to catch up with the healthcare requirements of our country.
Medical emergencies are one of those risks that can arise with anyone at any time. This exponential growth in the healthcare sector has also resulted in an exponential rise in the cost of health treatment. This expensive health treatment can not be borne by one and all. It can eat up all your savings, push you into a pile of debt, and additional worries about arranging funds when you should be worried about the patient’s health.
This financial aspect of medical treatment can put an additional burden on the already stressful situation. This can be mitigated with an adequate health insurance plan. A health insurance plan can help you to fully focus on your medical recovery while living tension-free from the financial aspect of life. It is a kind of medicine that helps to keep at least one of the stresses under check.
Health insurance is an essential tool that helps you cover the cost of the treatment up to the sum assured. For this, you need to pay an annual premium amount. Pooling of this premium amount from all the insurance buyers makes a corpus with the insurance provider. This pooled corpus is utilized for paying the genuine medical bills raised by anyone who is insured. The size of the corpus can give you clarity about the capability of the company and help you in How to choose perfect health insurance in India in 2024
Types of health insurance
Knowing the types of health insurance is essential as it imparts the much-required information about health insurance and helps you How to choose the perfect health insurance in India in 2024. Let’s find out about different types of health insurance.
- Corporate health insurance: – these are health insurance plans bought by corporates for their employees. This is one of the most popular insurance plans as it helps to cover health insurance for employees and their families without incurring additional or higher costs. Some corporations pay the entire premium and others partially pay and ask employees to contribute for a remaining fractional cost.
- Pros: – these insurance plans are cheaper compared to regular health insurance plans. This plan does not have waiting periods for pre-existing ailments.
- Cons: – some of the features like restore benefits, no claim bonus, and daily cash benefits are missing in these policies. Options to opt for additional features are not provided with these policies. Usually, the sum assured can be inadequate, as the cost of medical treatment can go high. This high cost may require additional personal, family floater, or top-up plans.
- Individual health insurance: – this is the health insurance offered to an individual by health insurance providers. This health insurance policy is designed for an individual with a specified premium. It can be availed with features like no claim bonus, restores benefits, free health check-ups against no claims, daily cash benefits, etc. A health insurance provider may give a chance to the insured individual to increase the sum assured by paying an additional premium. This is one of the most popular options for health insurance seekers.
- Pros: – it comes with many flexible features. The premium can be considered fair.
- Cons: – the premium can go high compared to corporate plans, and existing health conditions can result in increased loading charges, waiting periods, cancellation of insurance proposals, etc.
- Family floater: – A family floater provides almost all the features that are provided by individual health insurance. It is differentiated by its name. it covers the entire family. It can be for 2 adults and can be stretched up to 4 children too. Previously some of the companies also offered health insurance covering three generations. Almost all the companies have discontinued offering three-generation covering family floater plans.
- Pros: – With the family floater, you are covering dear ones with a single insurance plan. A single plan can be used by multiple individuals at a time when the sum assured is adequate. It can prove affordable if the family size is large.
- Cons: – The premiums for a family floater can be expensive compared to individual plans as it is calculated by the age of the eldest member. It is expensive for smaller families of 2-3 members. If more members fall sick at the same time or in the same premium year, it could be inadequate to cover all the medical costs.
- Top-up health insurance: – Many health insurance providers offer top-up health insurance. It has gained traction over the period as it offers a considerable cover at a fractional cost. A top-up health insurance plan provides an additional sum to assure coverage at a fraction of the cost. A top-up needs to have base health insurance. A top-up offers extra coverage to the insured person. In top-up insurance, up to a certain cost of medical treatment needs to be covered by the base plan, over and above that, the top-up plan gets activated and it covers the rest up to its sum assured.
- Pros: – the marginal cost provides can large sum assured. Works well with all types of health insurance plans.
- Cons: – it needs a base plan with a certain level of sum assured. Some of the features offered by mainstream plans are missing with top-up plans.
- Direct plans: – A direct health insurance plan is designed by the company and usually sold directly. A direct plan could involve a sales agent, but these are on individual levels. These plans are considered superior to group plans as they offer better features. As Direct plans are considered superior to group plans, they require higher premiums than group insurance plans.
- Pros: – feature-rich, no risk of third-party discontinuing tie-ups, higher possibility of portability.
- Cons: – Higher premiums compared to group plans.
- Group plans: – these types of plans are designed by the insurers for specific channel partners. These are offered by a specific channel partner only. usually, these are considered under the bancassurance channel. As these plans are designed for certain sets of customers catered by a specified channel partner, it is cheaper than direct plans but lacks a few of the features present with direct plans.
- Pros: – affordable compared to direct plans
- Cons: – may lack some of the important features, risk of breakup of tie-ups. Highly unlikely for portability.
Features of health insurance
A health insurance company can offer you multiple features as given below. These are mentioned in their flyers and brochures. Knowing these features is helpful for your decision on How to choose the perfect health insurance in India in 2024
- Cashless: – Cashless is a facility health insurance providers offer. In this, the health insurance provider has a pre-decided financial arrangement with health service-providing hospitals. The claim documents are submitted by hospital personnel on behalf of the patients and the approval is taken. Here patients need not pay anything except non-medical charges. The bill is settled online directly by the insurance provider up to the sum assured. Cashless ensures no large fund is needed during treatment.
- Reimbursement: -When the cashless facility is not provided by the hospitals, the patient needs to opt for reimbursement. It can be due to multiple reasons. This can be due to the non-availability tie-up between the health insurance provider and the hospital, pre- and post-admission expenses, the rejection of cashless claims, etc. It helps the patient to raise claims based on the documents created during treatment. Pre- and post-hospitalization expenses are claimed only through reimbursements.
- Pre- and post-hospitalization: – Health insurance gets activated only in case of 24 hours of hospitalization except for some of the daycare procedures. Once this period of 24 hours of hospitalization is passed, the patient can claim the health insurance policy. if a patient needs to be hospitalized, the most probable scenario is patient has been suffering from an ailment for the past few days. After discharge too, the patient will require some medical assistance to fully recover from the ailment. These pre and post hospitalization condition will attract financial expenditures. Many health insurers cover these expenses by days. E.g. the insurer will cover 30 days of pre-hospitalization expenses and 60 days of post-hospitalization expenses. This means whatever expenses occurred during these defined time limits related to the ailment are covered by the insurer.
- Daycare procedure: -Health insurance requires a minimum of 24 hours of hospitalization to consider the claim valid. Due to advancements in medical science, there are a few medical procedures that can be completed within a matter of a few hours. These do not require 24 hours of hospitalization. These procedures are covered by health insurance without the condition of 24 hours of hospitalization.
- Daily cash benefits: – our health insurance sum assured covers only medical costs. In so many scenarios, we observe that there is a non-medical cost component in the medical bill. This component needs to be borne by the patient. To mitigate this, insurers are providing daily cash benefits to patients. These benefits are predefined and will be paid to the patient as per the sum assured. Daily cash benefits provide additional cushion for customers to cover their nonmedical expenses. It can be in the range of 15 days to 30 days.
- Co-payment: – this is one of the features offered by many insurance companies. When a health insurance has defined co-payment in the policy a fraction of the bill needs to be borne by the patient while the rest would be covered by the insurer. Co-payment is stated in terms of percentage.
- Waiting period: – a health insurance policy can define a waiting period for the insured. This waiting period can be in two forms.
- Pre-existing medical condition: – when the patient is suffering from an ailment before opting for health insurance, the patient needs to wait for a pre-defined period, this is a waiting period against the pre-existing health condition.
- Specific health-related ailment: – certain health conditions do not require immediate treatment and can be treated over some time. These specified health conditions can have waiting periods depending on the health insurer.
- Restore benefits: – Restore benefits deal with the sum assured amount. In a specific policy year, if the patient has utilized all the sum assured for the medical treatment, he can be without any medical insurance. To cater to this, the insurer provides a restore benefit, where the full sum assured is restored and can be re-used by the patient. it comes with the condition that this restored sum assured can only be used for all ailments except for the ailments previously claimed.
- Free health check-ups: – some of the insurance providers offer free health check-ups up to a certain cost. This benefit is given to the clients for no claim in the past year by the insurers. This can help the client to stay more vigilant about their health.
- Tax benefits: – buying health insurance can help you save taxes too. Under section 80D of the Income Tax Act, an individual can claim a tax rebate for him and his family. It can also be claimed for either set of parents or parents-in-law.
How to choose perfect health insurance in India in 2024
Opting for health insurance can be a personal choice. It depends on the specific requirements of the individuals. There are a few points that need to be taken care of while opting for health insurance.
- Incurred claim ratio: – Insurance policies are known for their claim ratio, but health insurance is not. The term for health insurance is accrued claim ratio. An incurred claim ratio is the ratio of claims paid against the premium received. It tells about the insurer’s capacity to settle claims.
- Medical history: – while buying health insurance, your medical history matters. A medical history of the insured individual can attract additional loading over premiums. This will ensure transparency in future claim processes.
- Full disclosure: – full disclosure is one of the most important aspects of health insurance. When buying health insurance, full disclosure is essential. If some medical issues are kept in the dark, it can lead to claim rejections, and at any time the policy could be terminated by the company.
- Premiums: – premium can be one of the deciding factors for buying health insurance. Many companies offer health insurance plans with different features and attributes. This can lead to varied premiums offered by the companies. One more factor that can decide the premium is the channel used for buying a health insurance policy. a dealer channel policy can be expensive compared to bank assurance. A direct policy can be expensive compared to a group health insurance policy. ultimately you get what you are paying for. The cost of the premium can be decided by the source of buying the health insurance policy.
- Features and terms and conditions: – as discussed previously, features offered by different companies can lead to buying a specific insurance policy. Buying a family floater may require restoring benefits with a higher sum assured, whereas, for the individual policyholder, a base sum assured can be enough. Terms and conditions for a health insurer are very important as they apply to claims.
Conclusion: –
Buying health insurance is a personal choice but everyone who can afford it must have one. If you cannot save for the health insurance premium, surely you will have to spend for the ailments. A few important points one must remember that will help to decide on How to choose perfect health insurance in India in 2024
- Suitability: – every person or family has their own needs, and depending on your needs, you should decide to get health insurance. For families, a family floater with restore benefit can be useful, for individuals, a base plan can also be adequate.
- Cost of medical treatment in your neighborhood: – the cost of medical treatment is rising rapidly. When buying health insurance, you must ensure that sum assurance is adequate for covering all the bills. It should be at least twice your annual income.
- Disclosure: – all the medical conditions should be disclosed at the start of the processing. This helps both by maintaining transparency and avoiding claim rejections in the future.
- Features: – additional features can cost you higher premiums. Before buying a policy, you should make a calculative decision whether you need all the features offered or not. Based on that, make your effective decision as the premium cost will keep on increasing over a period, so better to opt for those features that make sense. It will help you know How to choose the perfect health insurance in India in 2024
FAQs
Q1. Does buying expensive health insurance guarantee no rejection of claims?
Ans: – Buying expensive health insurance can provide extra features with additional coverage but that does not guarantee that all the claims will be successfully processed. A health insurance policy is governed by the terms and conditions written on the policy documents. Every buyer should read the terms and conditions once they receive the documents and decide whether they wish to continue with the same or not. Customers are provided with a free look-up period where they can surrender the policy if some conditions are not satisfactory. This feature benefits customers and helps on how to choose perfect health insurance in India in 2024.
Q2. How does restore benefit work in individual and family floater plans?
Ans: – restore benefit is a feature offered by many health insurance companies. It simply restores your sum assured once it is exhausted but it comes with certain terms and conditions.
For the individual plan, if a patient has exhausted all the sum assured for a specific ailment in the premium year, his sum assured will be restored but he cannot use it for the ailment he has used his original sum assured. This additional sum assured can only be used for a different ailment.
In the case of family floaters, if a patient has exhausted the sum assured, then s/he will receive the additional sum assured for a different ailment. Similarly, if another family member requires cover when other/s have exhausted the entire sum assured, others can use the restored sum assured for the same or different ailments.
Restore benefit can be a deciding factor for how to choose perfect health insurance in India in 2024.
Q3. Does health insurance cover accidents and death?
Ans: – health insurance covers all types of accidents with medical emergencies provided all the conditions are met. It also covers all the costs up to the sum assured in case of the death of the patient, either due to ailments or accidents. In case of death, the sum assured can be given to the appointed nominee while buying the health insurance.
Q4. What are the waiting periods for a health insurance policy?
Ans: – waiting periods are the time you just need to spend without any coverage before claiming health insurance. There can be different waiting periods as per the insurance terms and conditions.
While buying health insurance companies may pose a 15 to 30 days waiting period before activating health insurance. This can be used by the buyer to understand the policy and if not happy, they can surrender with repayment of paid premiums. For accidents, the policy does not have any waiting periods.
For existing health conditions, insurers can have a waiting period of 2-4 years. for this period, the patient needs to cover the medical cost by themselves.
For specific ailments, which do not require immediate attention and are treated over a long period can have a waiting period of 2 years.
Knowing the details about the waiting period can help on how to choose perfect health insurance in India in 2024.