A Few Tips to Keep in Mind While Buying Health Insurance

Health insurance has become a necessity these days, yet India still remains a country where insurance possession is dismally low. While life insurance is a priority for people, the same cannot be said about health insurance.

A Health Insurance Policy

Let us start with the basics and understand what a health insurance policy is.

• A health insurance policy is an agreement between the person who is buying the policy (policy holder) and the insurance company.
• Depending on the terms of the contract, the policy holder can make claims for a reimbursement for a medical expense that is covered by the policy.
• In some cases, cashless service is offered by the hospitals that have a tie up with the insurance provider.

When we want to buy a health insurance policy, most of us will approach an insurance intermediary or a third-party administrator (TPA). Some insurance companies have their own TPA.

This TPA acts as the link between the person wanting to buy the health insurance and the health insurance company. The TPAs are regulated by the IRDAI and you should make sure that the TPA you choose is licensed by them. If you are approaching an individual agent, make sure he/she is also authorized by the IRDAI.

Whichever intermediary you choose, you are entitled to the following from them:

• Once you buy the policy, the intermediary is the person you will contact for everything from policy servicing to claims processing. So, make sure you are happy with the intermediary you choose.
• The intermediary should understand your needs and suggest appropriate policies. Suggestions should be made without any vested interests and no information should be withheld from you.
• Talk to the intermediary regarding any doubts you have in policy coverage.
• Make sure that the policy you choose is affordable and doesn’t overburden you financially.
• Be clear on not only the policy premium but also on the claims amount and no claims bonus.
• Ask for a brochure that clearly states what the policy promises.
• Once you have decided on a policy, go through the document carefully and do not blindly believe the intermediary.
• Also make sure you understand clearly what is not covered by the policy.
• Before signing the proposal form, make sure you understand everything in it.
• Understand the claims procedure and find out if anyone other than the insurance company have to be informed in the event of a claim.

Why Are People Averse to Buying Health Insurance?

• While there are many reasons for this, the foremost among them is lack of awareness regarding health insurance.
• A majority of our working population has a careless view when it comes to health insurance. They believe themselves to be healthy and view health insurance as expendable.
• Paying for something as essential as health insurance is considered an unnecessary expense by many. However, if they read up on it, they will realize that a no-claims bonus is offered when a claim hasn’t been made during the insurance duration.
• Many people also consider the process of buying a health insurance a bore. Add to it all the industry jargon and people just give up.
• The thought of falling ill is something many of us would rather not think about. It stirs up unpleasant emotions and instead of dealing with it rationally, people choose to turn their backs on it.

Need for Health Insurance

• Unexpected hospitalizations can happen to anybody and we all have to be prepared for this eventuality. If we are unprepared, we will be forced to use up the finances we had reserved for other purposes like education. In case we are already handling other loans, a sudden hospitalization will only add to our woes.
• Lifestyle diseases are something the current generation is dealing with which affects the younger population to a large extent. Unhealthy eating practices, lack of exercise, stress at work, smoking, alcohol consumption, not having a proper routine, etc. all take a toll on health.
• Inflation is something which affects every sphere of life and this is bound to affect medical costs as well. With a health insurance, we can safeguard our health without burning a hole in our pockets.

A Few Pointers

• Buying a health insurance will entitle a person for a tax deduction. Deductions up to Rs. 25,000, sometimes more, can be availed.
• Depending on the type of health insurance coverage, many associated medical expenses too can be covered. For example, payment towards an outpatient consultation, laboratory tests, ambulance services, vaccination, etc.
• While there is no such thing as the correct age to buy a health insurance, the fact is that buying when a person is young will bring down the cost. The cost (other than the age factor) typically depends on the history of previous illnesses and the place where the person is based.
• The need for a critical illness cover is something that has to be considered by every buyer. With this cover, the person will be given a certain lumpsum on diagnosis of the critical illness. This cover can be bought as an add-on with the health insurance policy or as a separate policy. The reason for having it as an add-on is so that while a health insurance policy will take care of all health expenditure, the money from the critical cover can be used for other financial expenses.
• Most insurance companies offer policies that cover around 1-5 lakhs (though more or less than this is also available). The duration of the policy too varies typically from 1 to 5 years.
• Find out which of the hospitals have a tie up with the insurance company you choose for cashless service. In such cases, the claim is settled between the hospital and the insurance company directly.
• Also be aware of how soon after policy purchase, a claim can be made as most policies have a waiting period.

Health Is Wealth

Waiting for a mishap to happen and then regretting not having bought a health insurance policy benefits no one. If you haven’t got a health insurance, now is the time to think of getting one.