Network Hospital parameter in decision making
My understanding of individual policy for my brother 28yr old.
Comparing, Max Bupa Reassure Vs. HDFC optima restore, both offer similar features.
The key difference- while HDFC has a high premium (cost per lakh SI) relative to Max Bupa it offers a higher % of the hospital network.
How important is the 'hospital network' factor?
How can one give correct weightage to this parameter in overall decision-making?
Network Hospitals is an important factor to consider while choosing health insurance. It is advantageous to take inpatient treatment at a network hospital for 2 reasons -
1) You get an easy cashless settlement facility at network hospitals.
2) Insurers have a pre-agreed tariff card for major procedures at their network hospitals. This reduces the chances of disagreement on the amount of hospital bills between you & the Insurer.
However, you should worry more about the network strength of the Insurer in your city or nearby cities where you take treatment rather than comparing the Insurers on the basis of their India-wide network. You can also check for specific hospital names in the network list of both HDFC Ergo & Max Bupa (preferred/big hospitals) before you take the decision.
Thank you Asad.
There are 30k hospitals pan-India which are part of cashless network of one insurer or the other. And yet, 65% of total claims are reimbursement claims (non-cashless). Why?
Because most people decide on doctor first and then think about how they will pay for treatment. Getting a trusted doctor is difficult, so people go by recommendations of their family and friends circle. Also, at the time of health emergency, one thinks of treatment first and consideration of cashless comes in later.
My advice - Don't waste your time looking at cashless network size. It is neither practical nor pragmatic, as the size of the network and hospital mix keeps changing every year. Tie-ups are not fixed.
Coming to Optima Restore and ReAssure, both are highly recommended plans. ReAssure has everything that Optima Restore plan has, and ReAssure has a few more features. Those features are marginally better. ReAssure ends up being 20% more expensive than Optima Restore over a 20-25 year period.
I hope these points help you arrive at a decision.
Thank you Anuj .
Could you please elaborate how Reassure end up expensive than Restore over 20_25yr period time ?
The premium of a product is linked to the entry age of the policyholder. In your brother's case, he is at 28. His premium will fall in 18-35 yr age bracket.
Then after the age of 35, there will be an increase in premium as he will enter next age band. Next increase will happen after he attains age of 45. Thereafter, every 5 yrs there will be increase in premium due to age bands.
This premium jump from band to band varies from 5% to 60%. At SureClaim we call it as Premium Acceleration.
Most insurers don't talk about their premium acceleration and customers like you have no way to foresee this premium impact. We have analysed Premium Acceleration for all health plans over 20-40 yr periods.
Different policies increase their charges or hikes differently. So a plan which is cheap today compared to another plan, may turn out to be more expensive over 10-15 yr period due to this Premium Acceleration.
That's why I mentioned that Optima Restore will turn to be cheaper than ReAssure in long term due to this acceleration.
I hope this clarifies. Happy to answer any follow-up questions.
Hi Anuj, others,
Just a small update that as of Sept '21, HDFC Ergo's Optima Secure and Reliance's flagship Health Infinity will both increase premiums every year, not on crossing age bands, as confirmed on their customer care. The former refuses to publish current renewal rate charts on the website, the same as ICICI Lombard. I don't know/couldn't find IRDA guidelines here, either on publishing the charts or on frequency of increase. It used to be age-band basis increase based on earlier research. The refusal to publish charts is altogether new (the alternative of using premium calculators will be too much for most people who will anyway be oblivious of the dangers of 'premium acceleration'). Bajaj still publishes the chart for its flagship Health Guard and follows the age-band method, as of today. I'll not be surprised if the industry moves towards whatever suits it best, even as the IRDA continues being blissfully unaware of what's going on.
This could be important for those who follow/wish to follow the guideline of purchasing the maximum possible cover affordable today, except that what is affordable today might well become unaffordable on premium increases due to changed life circumstances later.