Some Important Health Insurance Terms
Here are some of the important terms that you will come across while subscribing to a health insurance policy.
The sum assured, in simple terms, is the maximum coverage amount you can get in a policy year. It forms the basis of all your claims. Consider the increasing costs of hospitalisation, medicines, and treatment before you decide on your sum assured. It’s advisable to select a higher cover. At the same time, the cover shouldn’t be high enough for you to dig into your pockets for paying the premium. For instance, if the insurance policy states that the hospital bed cost will be 2% of your sum assured, then it’ll pay Rs2,000 against a ?1 lakh sum assured, for each day of hospitalisation. But if the hospital charges you Rs3,200 in this regard, then you have to pay the balance ?1,200 from your own pocket.
Co-pay and Sub-Limits
Some health insurance companies have introduced the co-pay and sub-limit system to prevent hospitals from billing unreasonable room rents to patients. In a co-pay policy, you need to pay a part of the expenses irrespective of the sum assured. For instance, if a policy has 10% co-pay, then the insurance company will pay 90% of the expenses and you have to bear the rest. Besides, some insurers cap the expenses of treatments to reduce the claims of hospitals. This is known as sub-limit. While buying a mediclaim, choose a policy which has fewer sub-limits. Some mediclaim policies have no co-pay or sub-limits. Try to select such a plan.
Some employers provide health insurance to their staff under group insurance plan. But you can still have a mediclaim of your own which covers the entire family. You may not consider having a second mediclaim policy if your employer allows you transfer the policy if you leave your job. It’s important that you compare several policies before buying one.
Majority of the comprehensive mediclaim policies cover critical illness. You don’t need to purchase another policy. It’s advisable to subscribe to a comprehensive plan and then top it up with an accident insurance plan which doesn’t cost much. In most cases, these two policies are enough to serve your mediclaim needs. If there’s a family history of a certain illness like thyroid or blood sugar, you should ideally buy a separate critical illness mediclaim. If your family has no such history, then there’s no need for a critical illness plan.
The restore benefit feature allows reinstating your basic sum assured, if you have already exhausted the same as well as the multiplier benefit within your policy year. But in most cases, the benefit is not available on the same illness if the limit is already used up.
But a restoration benefit can be useful if you have subscribed to a family floater plan where the full sum assured is exhausted for treating only a single family member. The remaining members will have no cover to fall back upon in case of hospitalisation for the rest of the policy year. The rest of the members, in such a case, can get covered for other ailments than the one for which expenses have been already paid by the insurance company.
No claims bonus (NCB)
Insurers usually extend a NCB to a policyholder if there has been no claim in the preceding year. While buying a mediclaim, check the NCB amount before signing on the dotted lines. NCBs can range from 5% to even 100% of the sum insured. A high NCB gives cover against medical inflation and you don’t need to worry about increasing your coverage year-on-year.
Pre-existing illness, waiting period, exclusions
Pre-existing diseases are the ones you have while subscribing to the mediclaim policy. Most health insurance companies specify a waiting period for these illnesses. If you have a pre-existing illness, the insurance company is unlikely to give a cover against the same. In most cases, a pre-existing illness is covered after at least two years of buying the policy.
Exclusions simply mean the diseases that are not covered under the mediclaim. For instance, if you suffer from diabetes while taking the policy, then kidney ailments are likely to be excluded from cover if the same happens because of the diabetes. Never hide any pre-existing ailments from your insurer while buying a mediclaim policy. It may reduce your hospitalisation claims.
Most health insurers provide free health checkup to the policyholder. But what’s termed “free” is actually not such. The cost of the checkup is included in the premium. Buy such a policy only when you are keen to get the facility each year. Also check whether the mediclaim policy, renewed every year, gives coverage for the entire life. This is important because life expectancy is increasing due to improved medical technology. While most insurance companies give full life coverage, some provide cover only up to 75-80 years.
Maternity and Daycare
Some newly launched Medical insurance policies provide cover on hospitalisation that doesn’t require overnight stay. These are called daycare procedures. Check out how many procedures are covered in the plan. Also, most insurers don’t consider maternity as medical emergency. So don’t look for a maternity cover if you have no plans for a baby.
Top up Plans
Medical costs are increasing. It calls for large covers. But not all can afford a high premium. A top up plan can come useful in such a case. It reduces cost of deductibles i.e. the amount you pay before the insurance company pays up. The insurance company will only pay up to the sum assured. A top up plan, on the other hand, doesn’t pay until the hospital bill breaches a specific limit. Say, if the hospital bill is ?8 lakhs with Rs3 lakhs as deductible, you need to pay the latter, while the insurer pays the balance Rs5 lakhs. But you can use your individual/group policy to pay the deductible amount. This is usually helpful because combination of a basic mediclaim plan along with a top up plan is much cheaper than a single cover. For instance, premium for a Rs5 lakhs regular cover for a 26-year old male, will be around Rs6,500. A top up with Rs15 lakh cover will entail an additional premium of Rs5,000, which is far cheaper than a standalone policy of identical amount.