Health Insurance, Personal Accident Plan – What You Need to Know
Insurance is a mechanism which protects you from financial losses. It is a method of risk management and should be used by people to mitigate their risks against the losses that are uncertain. There is increased awareness to health insurance plans now. The news of pandemic Covid-19 has stirred even those who earlier kept dilly-dallying as far as securing their health goes. I have highlighted below some basic checks that one should remember while going for health insurance and personal accident plan.
Health insurance and your lifestyle
You may have sound health; you may be young or you are maintaining a healthy life style and this could prompt you to not take health insurance. But remember, a good health is never an assurance to not take a health insurance plan. You are still exposed to future diseases which your body is at risk of contracting. Also, assess how is the health of your other family members. While your health may be good; your spouse and children may not enjoy the same fitness. You should not ignore this situation. Health insurance is a protection and you must have it.
Further, your healthy lifestyle will not protect you against personal accidents. You may be the best driver in the town or follow 100% of the traffic rules but this cannot protect you against errors committed by others on the road while you drive or walk on road. Accidents could be due to other reasons as well like fire, floods, building collapse, earthquake etc. Your other family members are exposed to this risk as well.
Kind of insurance cover
If you have a family, then it is recommended that you look to take a family-floater plan rather than individual health plans, as the blended premium for a family floater plan is definitely cheaper plus the plan provides coverage to all the members of the family under one single policy. If a member in your family is affected by a disease for which frequent treatment is required, then your interests may be best served if you take an individual plan for that member. By doing so, you will be able to get the family floater plan for other members without impacting the premium.
For a pre-existing disease of an individual, the insurance companies provide for a waiting period. Also, for certain diseases, the proposal is first sent to the underwriter of the insurance company and it is only after the underwriters’ acceptance of the risk, the policy is issued. So, it is better to take a separate plan for that person which is appropriate to his health condition. For your dependent parents, it is advisable to take separate plans for them. If their age is 60 and above, senior citizen plan will work for them. For any critical illness or specific health issues like diabetes, insurance companies offer specific plans. Some companies offer plans even for those who have recovered from cancer.
A personal accident plan offers high sum assured at reasonable premiums. Personal accident provides coverage for accidental death, temporary as well as permanent physical disability.
Take a health insurance plan early; do not delay!
It is recommended to take health insurance plan as early as possible. The benefit of taking the insurance plan when you are healthy and young is multi-fold. First, you start at lower premiums. Then, the exclusion period for pre-existing diseases and certain specific illnesses is easily covered as there are no claims in the initial years. Further, with addition of no claim bonus, the amount available under the policy goes up. For example, if your policy sum insured is Rs. 5 Lakhs, then for every claim free year no-claim bonus is added till it reaches 100% of the policy sum insured. Thus, your health cover will double from Rs. 5 Lakhs to Rs. 10 Lakhs.
There has been a recent ruling by the regulator which says that if you have been paying premiums on your policy continuously for eight years, then in the subsequent years, the insurance company cannot raise objection on your claims. This becomes effective from 1st April 2021.
If you delay taking a health insurance plan; there is a cost attached to it. It may so happen that you may attract certain illness for which the insurance company can reject your proposal or accept it at a very high premium. So, why let that possibility affect you. Instead, opt for the best available insurance plan and secure yourself and your family.
How to decide on sum insured for health insurance
When you decide on the policy sum insured, an important factor that one should not overlook is the pace at which medical expenses are rising year-on-year. The uncertainty of life plus the stressful working conditions in a competitive world poses further challenges to your health. You need to consider these while deciding on the policy sum insured. Also, it is recommended that your starting health policy amount should not be too low.
Make use of top-up plans but be wary of deductible
If you have initially taken a plan with low sum insured and are not happy, then do not worry. Most companies offer top-up plans which provide you with additional sum insured and also better features in certain respects like reduction in waiting period etc. These top-up plans come at a slightly better premium. Top-up plans come with options on deductible amount.
Let us understand with an example. Your original policy has a sum insured of Rs. 5 lakhs. You would like to take a Rs. 10 lakhs top-up plan as medical costs have risen. Now, an insurance company may have more than one top-up plan options, such as – Rs. 10 lakhs top-up with a deductible of Rs. 3 lakhs or Rs. 4 lakhs or Rs. 5 lakhs deductible. Only these deductible options are relevant in your case as your basic sum insured is Rs. 5 lakhs. Now, if you take a top-up plan option of Rs. 10 lakhs with a deductible of Rs. 3 Lakhs, then with this option in case of any claim, only Rs. 3 lakhs will be adjusted under your original policy and thereafter the balance amount will be adjusted from your top-up plan. This means that Rs. 2 lakhs of your original sum insured literally goes waste. This is not the best option for you, even though the insurance company may be offering this option at a slightly lesser premium as compared to a Rs. 5 lakhs deductible plan.
Compare policy plan features, hospital network
There are many policy plan features like auto restore, automatic recharge benefit that you may like to understand and compare. You are also advised to study if there is any room rent capping. Also, check for any sublimit/co-pay. Make sure you understand them clearly. Hospital network is an important criterion to check. A good wide-spread network is always beneficial for a cashless treatment.
Conclusion
If you have an existing medical insurance plan, then you may want to cross check it once on the above suggested parameters. If your policy is found wanting in features/benefits, then you may look to port your policy to a better insurance company. Also, it will serve your objective well should you take services of a good health advisor/health planner. With the help of a health advisor, you will be able to zero down on the best health plan for yourself and get the much needed help on claim process coordination with the insurance company.
Arnab Wealth Advisors
March 2020