Today we will find out how to Choose Best Health Insurance in India . With so many Insurance companies , so many health insurance policies with different names and complex features, it becomes an impossible task for a common man to pick a policy and be confident about it . So I requested Mahavir Chopra from medimanage.com, a vetern in the Health Insurance sector having a vast experience to give some insights to readers on how to choose health insurance product and explain the think step wise. Medimanage is a health insurance broker, which blends unbiased Health Insurance Expertise, Technology Powered Delivery and Professional Claims Management into one integrated service model. Over to Mahavir from here on -
Health Insurance, as its’ known worldwide is the only effective mechanism known and available that can ensure you to get the best healthcare at affordable price. Whereas, the healthcare industry being more organized abroad, has resulted in insurance companies offering more comprehensive range of products overseas. Comparing this to the Indian Healthcare system, in its current form, can be actually be called by ‘Hospitalization Insurance’. The products that are available in country, only covers for the expenses related to hospitalization charges for accidents as well as sickness. This benefit of course is subject to a looooong list of term and conditions.
Manish asked me to be very specific, and give the readers (of JagoInvestor.com, a blog I admire for its simplicity and rich content) a clear take away on how they can zero in the best product in the market. With more than 25 General Insurance Companies marketing more than 40 Health Insurance products, comparing multiple terms of such policies looks like a daunting task (see a common man complaint to a health insurance company) . It’s not, if you first come to terms with the following 2 things:
- Settle to the fact that there is no Exact-match, no Perfect Product available.
- You only compare the crucial features/benefits/terms that will affect your coverage in the long run.
Here are the most important things you must follow when you compare products. Of course, there are other features you can compare, which have been left out in this article. These features (like 1, 2 year waiting periods, Pre and Post Hospitalization Expenses, Loading, No Claim Discounts have been left out, looking at Health Insurance as a long-term product)
1. Cut out the frills. Go Basic
Most frilled products in India are not at all cost-effective. They are the products which take almost double the median premium and offers unnecessary frills is a strict no no. We have all traditionally lived with and survived the cost of routine medical expenses like Consultation expenses, Dentists bills, Medicine bills, and such costs are therefore manageable by most of us, unlike a huge hospitalization bill which could eat way more than a couple of months’ salary or savings.
Bottom-line : You should first look at covering ALL members of your family for the larger “unmanageable” costs, which could burn a hole in your overall financial planning before signing for any fancy product. (see two policies which are cost effective)
2. Don’t Compare Premiums
Never start by comparing premiums. Health Insurance is long-term purchase and it is more than a Mumbai-Delhi Air Ticket, which you can compare and buy from comparison/aggregator websites. Health Insurance is a long-term complex contract coupled with complex services. Comparison of premiums could be largely misleading and could result in a disaster. Comparing Health Insurance requires deeper insights into the overall insurance contract (called policy wordings) over and above price comparison. Either you need to get yourself into comparing the features in detail, or take help of an unbiased health insurance advisor.
Bottom-line: Understanding the benefits and terms is more important than the cost you are paying.
3. Look for Maximum Renewal Age
Maximum Renewal age is the age on which the coverage on your health insurance would discontinue. This could be for all members or for a specific proposer/member, depending on product to product. Remember, your core goal, when you buy Health Insurance is to save yourself from mounting healthcare costs right through your life. A product, which ceases renewal, while you are still alive and when you need it more than any time before, is a BAD product. Shift through all products and find out the maximum renewal age. Better, look for Lifetime products. Rule out all products, which do not cover your family members for a reasonable lifetime. As medical science progresses and becomes more accessible to the common man, life expectancy in India will move higher from the current average of around 70 years. A product with a lower renewal ceasing age than 70 years is a complete no no.
Bottom-line: An insurance product which does not work, when you most need it, is not insurance.
4. Look for Limits (Treatment wise limits & Copay)
Look for treatment wise limits in the products. Treatment wise limits basically cap the amount you can claim for a particular surgery under the policy. Say, there could be limits for Cardiac treatments of Rs. 1.50 Lakhs or for Cataract for Rs. 20000 per eye. Such limits would cap your claim, even n when you have a large sum insured under the policy. You need to weigh this in, before you sign up. Some products I remember are United India’s Family Medicare, Star Health’s Red Carpet have such limits. Bajaj Allianz General and ICICI Lombard have a limit only for Cataract. (Max Bupa Review)
Another condition is the COPAY – it is basically the share of admissible claim that the customer would have to pay from their own pocket. For instance, with copay option of 10%, the claim amount is of Rs. 50,000, and the admissible claim is Rs. 48,000 then the copay amount would be Rs. 4800. The Total amount you would have to pay is Rs. 6800/- (Rs. 2000 deduction in the policy + Rs. 4800 of Copay) .
Couple of products which have Copay
- Oriental Happy Family Floater at 10% of the Sum Insured upto Rs. 5 Lakhs Sum Insured.
- Bajaj Allianz has a copay of 10% for treatment at Non-Network Hospitals in their Health Guard products, and 20% in Silver Health.
- Star Senior Citizen Red Carpet has a copay of 30%. For Pre-existing the copay is 50%.
Bottom-line: Know what you will not get paid.
5. Understand Day wise Cash limit Health Products
There are some products marketed and sold as Health Insurance (Aegon Religare Life, Tata AIG General are the popular ones) which provide a daily cash benefit for the no. of days one is hospitalization. Most surgeries require an average of 6-10 days, so at the Rs. 5000 per day limit multiplied by 10 Days would pay Rs. 50000 per hospitalization, irrespective of the actual charges incurred. An Angioplasty in this will unknowingly burn a big hole in your pocket. Please avoid this product for your core healthcare expenditure risks or as an alternative to a Standard Health Insurance product. This product is more like an add-on cover, than the bigger solution.
Important Note : Do not confuse the above with products that have specific limits on Room Rent. Room Rent Limits, to an extent, make sense both for the customer, as well as the Insurance Company, as they categorize people paying a higher premium in the higher eligibility bracket. This has been further discussed in detail below in this article.
Bottom-line: All plans which are called Health Insurance may not be what you are looking for.
6. Zero in on a Coverage amount/Sum Insured
Sum Insured is the total annual liability under the policy. Since this is a long-term product, you should look at the maximum available cover you can afford. Remember, a sum insured of Rs. 2 to 3 Lakhs will have no value, by the time you start using it. As per a very recent report on Healthcare in India by Tower Watson, the medical inflation in India is rocketing anywhere between 17 to 20% annual
Option of Upgrading Sum Insured: The option of upgrading the cover at a later stage when you are older is dicey and complicated. There could be a requirement for a medical test. Moreover, if you or any of the family members contact a new disease in the interim, the ailment would be excluded for the upgraded amount. Upgrade would be almost like taking a new policy at that age, which I would not recommend.
Bottom-line: Look for the highest cover affordable. An I-will-upgrade-it-later option may not work.
7. Compare Premiums for age bands higher than 45 years
Premium in Health Insurance increases as per increase in your age, but, there’s something about the no. 45. Insurance Companies dislike this no. Have a look at the rate charts, and you will be surprised to see good jump in premiums after one cross the age of 45 yrs. In some cases, the increase in premium is as high as 50%. You need to factor this, before you sign up. Ensure premium remains affordable in your retirement days, and does not kill your hard-earned retirement savings.
Note: You need to factor in that these premium charts can change even tomorrow, like they have changed earlier, but looking at the current charts for older brackets would get you a flavour of the company’s pricing philosophy for older age bands.
Bottom-line: Know how the premiums change in the long run.
8. Credibility, Check. Look at the history of the company
If it is a new company, you could look at the history of the promoters and their businesses. Generally, a company or set of promoters known for their ethics and excellent governance, venturing out into Insurance would be a decent bet. Get information from your advisor, on the overall claims experience, on responsiveness, about changes and number of changes in the product, since it was launched. Too many or too large changes, indicates there could be more tomorrow.
Bottom-line: History in the best teacher.
9. Products for older age/Senior Citizen family members.
Most Insurers, including the ones ‘specialized’ in Health Insurance resist covering members above 45 years. Remember, you need to somewhere take the responsibility of not covering your parents, earlier in their life, and not completely blame Insurance Companies for not covering them, now.
There is no perfect product available for Senior Citizens. All products for senior citizens are restrictive. You need to settle for a product, best affordable to you, even if it has co-pay, exclusions and other restrictions. Again, if your parents have existing ailments, then this becomes more complicated.
Bottom-line: There is no Perfect Product. Definitely not, if you are a Senior Citizen.
10. TPA V/s Non TPA Insurance Companies
TPAs have unnecessary got caught in the blame game of high claims burning the health insurance industry. The point is, TPAs are just BPOs of Insurance Companies, and are therefore as good as the Insurance Company itself. Remember, India is the world’s processing house, and there are Indian BPOs which handle more complex health claims for large Insurance companies, the world over. Insurance Companies that have engaged TPAs better and insisted on execution of hardbound contractual agreements have not faltered on their service.
11. Government V/s Private Insurance Companies
Some consider Private Insurers better due to their modern infrastructure, their responsiveness. Some consider Public Sector to be more reliable. Private Sector would run for business and hence would be very responsive. Public Sector, are the Government’s mechanism to ensure a great healthcare infrastructure, and hence somewhat have a social angle, changes in the policy are not driven only by profits but also need to socially acceptable. You need to understand the pros and cons diligently and hence set your own expectations right for your choice.
12. Finally, Ensure you have a Good Advisor
I have always said this, ensure you spend good time in deciding, who is your intermediary. Once you have taken pain to finalize a good advisor, you are more than half way done. A good advisor is one who would provide -
a) Unbiased advice, without any special affiliation to any Insurance Company.
b) Provides Routine services like Pickups, Renewals etc.
c) Assists and Guides you at the time of Claims.
Health Insurance industry is witnessing huge changes both in products, price as well as processes, being an insider, it is sensible to have an expert on your side, who updates you on changes, their impact on your coverage and suggest change in course, in case necessary.
Bottom-line: Insurance Companies will always have their own vested interests. Have someone on your side.
Note: The other terms & benefits comparable are Pre and Post Hospitalization, Benefits like No Claim Bonus/Discount, Loading of Premium, 1-2 or 4 year waiting Period for Specified Ailments have not been considered as they do not make a very big impact on the decision to purchase Health Insurance.