CHECKLIST: 7 things you must not ignore before buying a health insurance policy

• Introduction
• 7 important features every health insurance policy must have
  • 1️⃣ Adequate coverage for old age
  • 2️⃣ No Room-rent limits or capping
  • 3️⃣ Covers ‘all’ day care procedures
  • 4️⃣ Covers organ donor costs without limits
  • 5️⃣ No co-pays
  • 6️⃣ No caps on treatment costs for specific conditions
  • 7️⃣ Restoration Benefit for related or unrelated conditions

There’s no short-cut to finding the best health insurance plan for your family. You will have to endure the uphill task of handpicking features that fit your needs - both today as well as in the long-term. And, if you don’t pay heed today, you might end up with a sub-par plan costing you your savings as well as your peace of mind - at an older age. 

While this research process could be arduous, a good checklist can help you keep track of the big and small details. And, we’ve put that together!

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Unless you’ve hidden under a shell all this time, you have heard horror stories of hospital bills reaching 15, even 20 lakhs for just a few days of Covid hospitalisations. And then, there’s the usual healthcare inflation itself. Rising at 8.87% as of December 2018, healthcare costs are further taking a boost under the pressure of the ongoing pandemic. 

Do you think the 5 lakh floater that ‘seemed adequate’ a few years back will cover any of your family’s needs, when an admission actually occurs? What about the future - say, 10-15 years down? We doubt that. Now combine all this with the fact that upgrades get difficult as you grow older, you might not be able to buy a larger enough cover after you develop a disease or make your first claim. 

If you don’t act now, and buy the highest cover you can afford, you are most likely ending up in soup - either not affording quality care for your family when they need it, or losing your life’s savings in the process. 

What can you do? We would say have at least a 20-30 lakh family floater, but if that is unaffordable at the moment - buy the highest cover you can afford. And over the next few years, increase it gradually. That’s the only way to ensure that you are protected now and in the future. 

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If you have a health insurance plan with a low sum insured (say less than INR 5 Lakhs), the policy might come with a room-rent limit. Room-rent limits may be imposed either as a percentage of the sum insured (eg.: 1% of sum insured per day) or as a category of rooms (twin sharing room allowed). 

Why is this important? Room-rent limits restrict how you use your sum insured through proportionate deductions. For example, if you have a sum insured of INR 4 lakhs, and a room rent limit of 1% of sum insured, you will need to choose a room that costs less than INR 4000 per day to get a full coverage. If you pick a room that’s more expensive than your allowed limit, your insurer will not only deduct the additional room charges but also proportionately deduct all other hospitalization costs that are linked to the room you choose. 

If you check the room-rents across large hospitals across cities today, a single room’s cost could easily go beyond 6k-7k per day, reaching even 12k-13k per day in some cases. This is only rising. And the only way around it is to take a plan that doesn’t have a room-rent limit. 

That way, you’ll be able to make use of your large sum insured without being restricted on the comfort and convenience of which room you pick. 

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A Day Care Procedure is a medical procedure or surgery that previously required a prolonged hospital stay but with advanced medical science, can now be completed within 24 hours. Some examples are procedures such as dialysis, piles/fistula treatments, appendectomies and even chemotherapy - that can now be done without admitting you for a day!

Why is this important? As medical research improves the quality of care and reduces the need for prolonged hospitalisation, there will be more and more treatments that do not need you to get admitted to the hospital at all. You walk in, take your treatment and go back home the same day. In fact, such treatments also reduce the burden on the healthcare infrastructure as quicker (but effective) treatments will mean more people can get access. 

But - your policy might have limits on which day-care procedures are covered, and which not. Most insurers give you a ‘number’ of day care treatments covered in their policy, and this could be misleading For instance, one insurer might cover ‘ear surgery’, while another might cover ‘repairing a hole in the eardrum’ and ‘rectification of ear bone’ - just to increase the number of treatments. 

So, what can you do? To avoid any confusion, pick a policy which gives a blanket cover on all day care procedures, so even in the future any new additions to this list will be properly covered. 

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Radical advancements in the field of organ transplantations are offering us life-saving options in case of chronic organ failure. As these procedures gain traction and become more accessible across the world, the question will soon come down to affordability of such treatments. If you ever require an organ donation in the future, your insurance plan will cover the costs of surgery for you. 

But what about the donor who also undergoes a surgery, just to save your life? Costs involved will include organ screening expenses, pre-hospitalisation tests and consults, surgery costs, post-hospitalisation recovery costs and costs arising out of any complications post surgery. Technically, this amount could match up to the amount your surgery to receive the organ costs. And it will be your responsibility to bear. 

If you haven’t thought this through, you’ll end up not getting the life-saving transplant despite having a donor-match and having an insurance cover. (Or, lose all your savings covering such expenses).

The answer lies in an organ donor cover that can help you get the donor’s expenses as well covered. A number of health insurance companies in India have stepped up and now offer comprehensive plans which have an in-built cover for the hospitalization of the organ donor. 

Without this, you’ll have to bear the costs of these transplantation surgeries leaving your family financially exhausted, despite having health insurance cover. 

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Many health insurance plans, especially those purchased for senior citizens, have a co-payment clause. This means that you’ll have to bear some portion of the hospital bill before the insurer pays the balance amount. 

For example, if your policy has a co-pay clause of 10% and your total hospital bill is Rs. 1 lakh, you’ll have to pay Rs. 10,000 out of your pocket and the insurer will cover the remaining Rs. 90,000. As costs of treatments rise by the year, it will slowly become unaffordable for your to foot such copayment costs. You’ll need to build a dedicated healthcare fund only to meet these costs - else this money will eat out of your savings.

So, try and purchase a policy that comes without any such clauses. Sometimes it might become impossible to get a policy without copay - either because you have a preexisting condition or are buying for a senior citizen - and every insurer is imposing this - buy the policy that has the lowest co-pay. 

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Some policies come with limits on how much cover will be provided based on specific diseases or treatments. For example, there might be a limit that says - maximum 1 lakh cover for appendicitis surgery. So, what happens when you get admitted for an appendicitis surgery, but have a complication? You end up paying the rest of the money from your pocket, despite having a large sum insured. 

Insurers can include such restrictions in the fineprint - and you might not even notice this before signing the policy. In fact, you’ll most likely not notice this until you make a claim (and only a part of it gets paid). 

What can you do? Go back to the basics. Make yourself aware. Read the policy document in detail before agreeing to the terms and conditions and sealing the deal. Compare these fineprint details across plans before deciding which plan will help you the most. 

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You might have an adequate sum insured to cover your family’s expected needs, but what happens if an unforeseen situation occurs and one particular incident results in a huge bill - taking up your entire sum insured? You will be left without a cover for any hospitalisations you might need in the same year. Further, if you’ve picked a floater - the rest of your family might be left without any cover. 

While this seems far-fetched, this has happened to several families in the last year, during Covid hospitalisations when multiple family members needed to be hospitalised - and once one of them exhausted the large floater amount, the rest were left without any cover. 

What’s the solution? Restoration benefit. With this benefit - your sum insured gets replenished, within the same year after you use it for a hospitalisation. It is like eating your cake, and having it too! While it sounds too good to be true, restoration benefit is a feature many health insurance plans today provide so that you have enough coverage despite exhausting your sum insured in treatments. 

Restoration benefits can be offered in both individual policies as well as floaters. In individual plans, if you use up a part of (or the entire) sum insured of one hospitalisation - the amount is restored, and you will be able to use the plan again for your next hospitalisation. In floaters, if one person of the family takes up a large chunk of the sum insured for a treatment, a restoration will ensure that the rest of the family is not left without sufficient cover. 

Important points to note in a restoration benefit : 

• Get a plan where this benefit is an inbuilt feature, and available in the base-policy itself, and not an add-on. As a result, you’ll not be paying an additional premium for this as an ‘optional cover’.
• While choosing a plan with this benefit, it is important to look for unlimited restoration (meaning the sum insured gets restored any number of times in a year) and where the benefit is part of the base cover itself (and not an ad-on).
• Some plans allow restoration only for unrelated conditions. For example, if you utilise your sum insured for a heart surgery - the sum insured will be restored, but cannot be used again for heart surgery. However, if you need an appendicitis surgery within the same year, you will have a cover. This condition limits you from getting covered, if you undergo repeated hospitalisations for the same conditions. To avoid this, try and find a plan that allows restoration for both related and unrelated conditions, so you’re adequately protected. 
• Look for a plan that replenishes the sum insured even after partial utilisation, so you get a full cover for every hospitalisation. 
• Get a plan where the restoration benefit is up to the Sum Insured (and not just the claim made). This will give you a larger cover for every hospitalisation. 

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These seven features improve the quality of your health insurance plan providing you with adequate cover, minimum limits and utmost flexibility. Ensuring at least a majority of these features are included in your health insurance policy, will help you and your family get quality healthcare, whenever you need it - without having to worry about the financial burden. 

Got a question related to any of these features, or any other aspect of health insurance? Post it on the Beshak Insurance Forum - and get answers for free!