How to choose health insurance in India?

Taking insurance is very important but confusing as well. We see a lot of ads, TV commercials; and every company says that they have the best policy in the market. Now, how do you decide which policy to take? 🤔

Never just go blindly and take insurance as per someone else’s suggestion; it’s for you (and your family), so policy should be as per your requirements/needs, you need to make a list of requirements and decide which policy is best for you.

There are many factors you should consider before buying health insurance. I have mentioned most of the factors below.

Quick tip 🔖

  • Buy the insurance at an early age, preferably 20-25. The premium for the insurance is usually low at this age range. The premium for health insurance increases as age increases.
  • Don’t fall for cheap premium, look for features that policy offers and decide.
  • When buying insurance don’t forget to read the terms and conditions. there are always some hidden conditions that agents won’t tell you upfront unless you ask.

Factors to consider for buying health insurance

Don’t go for a cheap premium policy. see what are features a policy is offering and whether your requirement checklist is met.

You won’t buy a tata nano just because you want to buy a car, would you?. In the same sense, don’t buy health insurance just for a sake of having health insurance. Identify the purpose of your health insurance. Health insurance is for emergencies and sudden medical needs.

Room rent cap for hospitalization and hidden rules: Check if the policy has a cap on room rent. There might be different caps for different room types. For example, a private air-conditioned room might charge 1000 INR/day and a general ward, would 500INR/day. Usually, policies have a rule that they will allocate 1% of the base amount for room rent. Let’s say your insurance is of 5 lacs then the insurance company will approve the claim of 5000INR which is 1% 5 lacs for room rent.

Note: Always choose a policy with no or higher cap on room rent. Make sure that the claim is not linked to room type in your policy. Try to avoid these kinds of policies.

Let’s take an example to understand it better. You have a coverage of 5 lacs. One day you met with an accident, got hospitalized, and undergone surgery that costs 2.5 lacs with room rent being 10K. During your claim, the insurance company says they can cover up to 5k for room rent as i.e. 1 % of the sum assured amount. Technically only 50% of your room rent is getting reimbursed. It doesn’t end there since your treatment is linked with room rent, you will get only 50% reimbursement on your total claim, I.e. 50% of 2.5 Lacs.

Sub limit: sub-limit is a monetary cap that your insurance provider places on your medical insurance claim. Sub-limits are usually expressed as a fixed value for a particular illness/disease or treatment but can also be included as a percentage of the total sum insured. Many health insurance providers place two kinds of sub-limits on the insured – on the hospital room rent (already explained above) and the sum assured for specific diseases. Before you buy a policy with a sub-limit on the specific treatment, you must check the list of diseases/ailments which come under the sub-limits clause and the costs specified against each of them. For example, if there is a sub-limit clause of 50% of the sum assured for cancer treatment, then even if your total sum assured is Rs 10 lacs, you cannot claim more than Rs 5 lacs due to the sub-limit clause. Try to avoid the policies which are having sub-limit on major common treatments.

Tip: Don’t fall for the max number of diseases offered by the policy, rather than that look for the policies which are covering common diseases or diseases that are prone to happen. There might be a list of diseases mentioned in the policy which are not even in India so it’s useless. Also, ask the agent/policy provider for diseases that are included and not included.*

Co-pay: This means that some percentage of your claim will be paid by the insurance provider and remaining by you. For example, you do a claim of x amount then the insurance provider will pay 80% of x amount, and the remaining 20% will be paid by you. Try to take a policy that has no co-pay or very less %. My suggestion would be to take a policy that has a 0% co-pay. why would you take insurance where you need to pay??

Zonal vs. pan-India policy: Some policies are only available in few top-tier cities and not pan-India. Take the policy which is pan-India. Let’s say you and your parents are living in a different city. You are buying a policy for yourself and your parents, so make sure that the insurance provider approves the claim from your parent’s city as well. Usually, insurance companies will approve the claim from a residential address. For instance, you are in a tier3 city and got hospitalized due to an accident. You do a claim for your treatment but the insurance provider only approves 80% of the claim stating that it’s not in their zone. Also, I have seen people buying policies with a different address where they don’t live currently because some insurance providers have a low premium for tier3/tier2 cities. Some people give the address of their native place because the premium is low in that city. Take a policy that is pan-India and the premium is also the same across pan-India.

Check for reasonable and customary clause: I’ll explain it with an example. For instance, you do surgery in a city (let’s say Mumbai) hospital (apollo) which costs you 1.5Lacs but the insurance company will approve only 1 lacs saying that another hospital in the same region(city) is costing less (i.e. 1 Lacs) for the same surgery. So make sure to check this clause as well. In emergencies like accidents, we don’t have time to think about which hospital to take the patient to. At max, we prefer the hospital which is under an insurance provider network.

Don’t take a top-up, take super top-up: Let’s say you have a policy with base coverage of 5 lacs, and you do a top-up of another 3 lacs on base coverage amount when buying insurance. (so total 5+3 = 8 lacs) Now, You got hospitalized and after treatment, your claim amount is 7 lacs. In this scenario, your claimed amount will first be deducted from the base amount and the remaining (if any) amount will be deducted from the top-up amount. So out of 7 lacs claim, 5 lacs will be deducted from base policy coverage (i.e. 5lacs), and the remaining 2 lacs will be used from the top-up amount (which is 3 lacs). Now you have 1 lac remaining from the top-up. In case, you get some treatment again in the same year, and this time the claim amount is 2 lacs. Although you have 1 lac remaining in the top-up amount, you won’t be able to claim. Your top-up amount will be used only when the sum assured amount is over. But in your case, the full sum assured is already consumed in 1st claim, so you can’t claim the remaining amount from top-up. Now you have to pay from your own pocket.

In super top-up, you can claim the bill even if your base coverage sum assured is utilized fully. considering the same example from the above, the remaining 1 lac will be deducted from the top-up amount in your 2nd claim.

In short, in a super top-up policy, you can claim the remaining amount from the top-up even if your base coverage amount is exceeded.

Pre and Post hospitalization: Take a policy that gives claims for pre and post-hospitalization expenses also. Nowadays almost all insurance providers have this feature. Also, check for how many days they are covering the expense of pre and post-hospitalization; the average is 60 and 180 days respectively.

Daycare coverage: Check if same-day treatment is covered or not, Or the policy requires you to get hospitalized for 24-48hrs. Some policies offer same-day treatment coverage also, for example, same-day surgery which doesn’t require hospitalization after a treatment.

Extended coverage: Check if policy provides cosmetic treamemet, AYUSH treatment etc.

Waiting period: The waiting period is a time span when you can not claim your health insurance benefits. Usually, there are 2 types of waiting periods:

  • Waiting period pre-existing diseases: How many waiting years are for existing diseases.
  • Waiting period slow-growing diseases: They will give you the list of diseases as well. It’s up to 2 years nowadays.

Note: Also check the waiting period for COVID-19 and other diseases.

No claim bonus: In case you did not claim the amount for a year, then is there a bonus for that. Most of the companies add the non-claim year as an additional amount on-base amount or they lower the premium amount in next year’s premium. In most of the policies, they increase the cover but won’t reduce the premium.

Free health checkup: policy should offer heaat least one time a year. Other factors:

  • Ambulance charges.
  • Cashless Hospitals in your city/area.

Checklist for buying insurance ☑️

  • Do I need a floater or individual plan? (floater means for family)
  • Shall I go with a private or government company?
  • Do I know enough about the insurance provider and its background? (Read about the insurance company if in doubt, prefer companies with solid background)
  • Do I need a super top-up add-on with base coverage?
  • What’s the room rent coverage? and is there any upper cap on that?
  • What’s the sub-limit on diseases? which diseases are not covered in this policy?
  • Does the policy have no Copay?
  • Is this policy zonal or pan-India?
  • What are the pre and post-hospitalization features?
  • Does it cover daycare treatment?
  • Does it cover cosmetic or AYUSH treatment etc?
  • What is the waiting period?
  • Is there a “no claim” bonus?
  • Does it support cashless hospitals and have a good network of hospitals in my area?
  • Is there a free health checkup benefit?

How to buy a policy 🧐

  • You can use Policybaazar. They show you the list of companies with comparison, pros, and cons. Policybazaar also assigns a relationship manager for you, post-policy purchase.
  • Talk to company agents who are in your neighborhood/network.
  • You can directly check it on the company’s website.

I have taken my policy from Policybaazar and the experience was good. I am also writing about how to choose a term(life) insurance, which will be coming soon.