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How to Select the Perfect Health Insurance Policy? Research Team | Posted On Friday, May 31,2019, 06:09 PM

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How to Select the Perfect Health Insurance Policy?



While some millennials consider health insurance to be a tax savings plan, many others are aware of the benefits of a health insurance plan. According to a recent survey conducted by ICICI Lombard of 1,400 people in the age group of 25 to 35 years, 75% of the respondents had health insurance plans. Around 46% of the respondents were influenced by the tax deduction on the health insurance premium and availed the health insurance policy.

A majority of respondents including women availed the health insurance policy, just because of tax benefits. But, health insurance plans are more than just tax benefits. Financial planners are of the opinion that getting a health insurance plan is an essential part of financial planning.

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How to Select the Perfect Health Insurance Policy?

Why Health Insurance?

In India, medical inflation rises 10% each year. This is much more than the usual inflation levels. The number clearly shows the importance of having adequate health insurance to meet medical emergencies. Insurance companies can design a regular finance structure by forecasting the total risk of health system overheads and health care. Buying health insurance policies for yourself and family members is important, as medical treatment is expensive. Unexpected hospitalization disrupts your finances. When an earning member of the family falls sick and gets hospitalized, the situation becomes even worse. Just buy a health insurance policy to avoid paying heavy and unexpected medical expenses.

See Also: Health Insurance Benefits

Check What Type of Health Cover You Require

Health insurance plans are of two types. They include defined-benefit plans and indemnity plans. Defined-benefit plans reimburse a lump sum amount, irrespective of the actual medical expenses whereas indemnity plans only pay hospital overheads. The hospitalization facilities offered by indemnity plans are extended up to the sum insured amount selected by policyholders. Understand the merits and demerits of each health insurance plan.

Check Which Indemnity Cover Better Matches your Requirement

You have a choice of either a family floater health insurance plan or an individual health insurance plan. An individual health insurance plan is much preferred over a family floater plan if you seek extensive coverage. A family floater plan may not be sufficient for family members and you might need individual plans. The premium for an individual health policy is as per the age and sum assured. Health insurance companies offer a discount of 10% on overall premiums, when you insure multiple family members at once. Family floater plans allow you cover multiple family members. Under such plans, the sum assured may be claimed by any or all family members.

See Also: Health Insurance Plans

Determine the Cover You Need

The cover you need depends on the city you reside in, the life-stage, the nature of job, the medical history of family and so on. The minimum health cover is Rs 10 Lakh if you are residing in metro cities like Mumbai, Kolkata, Chennai and Delhi. In class B and C cities, it should be at least Rs 4-5 Lakh as per industry experts. For middle-class families, the minimum sum assured must be at least Rs 5-6 Lakh. Look for plans that enhance health insurance cover. When you’re young and healthy, choose individual or family floater plans after accessing requirements. If you are older, go for individual health insurance policies to enjoy maximum coverage.

See Also: Family Health Insurance Plan

Check the Sub-Limits

Today, many health insurance companies include sub-limits, which are the caps defined by health insurers for costs associated with certain medical treatments. Some policies have sub-limits, while others may not have them. Insurance companies place sub-limits in order to limit their liability to pay policyholders. The limits are computed on the basis of the prevailing medical expenses, the hospital room rent and so on.  

Pre-existing Ailments

Most health insurance policies cover pre-existing ailments after 2-4 years, whereas a few policies have them covered after 3 years. Disclosing pre-existing ailments is essential at the time of availing the policy for hassle-free claim settlement. The coverage of a few specific ailments has a waiting period of 1 to 2 years.

Bottom Line

Compare health insurance plans and understand their terms clearly. Take a look at the inclusions and exclusions of the policy. Do not make the decision only on the basis of the premium amount.

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