- Insurance to cover your medical expenses
Caveats
- The premium of the medical cover changes as we age.
Day care procedures
- Procedures and treatments that are covered under the insurance, but do not require to stay for 24 hours in the hospital
- There is a standard list of 130 such procedures such as cataract surgery, surgery for a ligament tear, etc.
No claims bonus (NCB)
- When you don’t make a claim in a year, you get rewarded by the insurance company - no-claims bonus
- Typically, the NCB is given by increasing your cover by 10% for the same premium.
- For example, if your cover was Rs 15 lakh for a premium of Rs 25,000.
- After a claim free year, you will get a coverage of Rs 16.5 lakh for the same premium
Excluded diseases and procedures
- A policy will list out diseases, conditions and medical services that it will not cover
- Dental treatment, pregnancy and cosmetic surgery are standard exclusions
- The insurance company can change the list of excluded diseases at some future point in the policy
Sub-limits
- Some policies have in-built limits to what you can spend on what part of a hospital’s service.
- Example: Room rent (when hospitalised) may be limited to a certain amount
Co-pay
- Some policies will not pay the full amount because of “co-pay”
- Co-pay means that you agree to pay for a part of the medical cost
Pre-existing disease
- Most insurance companies do not cover your “pre-existing” disease and related medical costs for a maximum of 4 years.
Disease waiting period
- Many companies have a cool-off period of 30 to 90 days during which they will not pay any claim.
- Some ailments such as cataract or hernia may have a special “waiting period” before the company will pay
Intent of the insurance company
- The intent of the insurance company is NOT TO PAY
Tips
- Generally, a policy will cover doctor’s fees, medicines and diagnostic tests done 3 months before and after hospitalization
Top-up plan
- Best way to get a larger cover
- Think of it as a policy that will pay after a certain threshold amount has been paid by you
Example
- Suppose you have an existing policy for Rs 3 lakh coverage.
- You buy a top up plan that gives another Rs 5 lakh of cover
- If you medical bill is Rs 4 lakh, you will pay Rs 3 lakh from the basic policy and Rs 1 lakh from the top-up.
- Even if you get admitted again, your medical costs will be covered up to the remaining balance of Rs 4 lakh.
For nuclear family
- Buy insurance product called ‘family floater’ that allows the insurance cover to whichever member of the family that needs it
- Always disclose your correct present and past medical history to the insurance company when you sign up for a policy.
About riders such as critical illness and accidental cover
Should you buy critical illness cover?
- Yes, you should
- A critical illness, like cancer, is a disease where you may not spend too much time in hospital but has very large out-of-pocket expenses.
- It may also affect your ability to work for some time.
- These policies pay a lump sum if you get any of the critical illnesses.
- The policy contract will list all the diseases that qualify
- Examples of such ailments: cancer, kidney failure, heart attack, major organ transplant, stroke, serious burns, end-stage diseases of the liver and lungs, etc.
- Typically, Rs 10 lakh policy should cost Rs 3000-5000.
Riders
- Try to buy a stand-alone accident policy from a general insurer instead of rider add-on to the basic policy. Why?
- The cover is likely to be more comprehensive.
- The cover will not lapse if you discontinue your basic policy
Accidental cover
- This kind of policy gives you a lump sum if you meet with an accident that leaves you temporarily or permanently disabled.
- A personal accident policy has 4 covers: | Type of cover | Compensation (Typical scenarios) | | ---------------------------- | ----------------------- | | Death | Entire sum assured | | Permanent disability | Entire sum assured | | Permanent partial disability | Part of the sum assured | | Temporary total disability | Weekly compensation (usually up to 104 weeks) |
How much insurance cover should you get?
- Depends on your health and how much you feel confident about your health and the future.
How to find the best insurance provider?
Theoretical advice
- Research the company
- Management of the company
- Its hospital reach
- Its third party agent (TPA) service
- Its claim experience
Practical advice
Try to find answers to the following questions when researching:
How does the company perform on the metric of price?
- How does it compare to the other companies right now?
- How does the price compare over the years?
- Ask the agent (Or find out yourself) to show the price comparison at ten-year differences. For example: if you are 40 years old, ask for the price of the policy as it is today when sold to a 50-year, 60-year and 70-year old.
- Check for the no-claims bonus (NCB) of the company
How does it perform on the metric of benefits?
- Ensure that there is no “co-pay” clause
- In the policy document, search for the words “co-pay”. Search the internet to check if the policy has complaints related to co-pay.
- Check for the “pre-existing” disease clause. Check for the waiting period for pre-existing disease
- Check if the policy has a “disease waiting period”.
- List out all the diseases that are covered under this clause
- Try to get a policy that does not have “disease waiting period”
- Check if the policy has “sub-limits”. Try to get a policy with no “sub-limits”
- Check for exclusions
- Get the list of “day care” procedures
- Check the details of this clause: such as what will be covered, the amount of coverage, the duration of stay required for a claim, etc.
- Buy a top-up that allows you to claim after the deductible is covered across different episodes in hospital.
How does it perform on the metric of claims?
- How much of the costs before and after hospitalization the policy will cover? Typically, you can claim expenditure made of doctor’s fees, medicines and diagnostic tests done before a planned hospitalization and for 3 months afterwards
- What is claim success rate of the company? If the company settles less than 95 claims out of 100, avoid the policy
- Look at the claim-complaints database and look for a policy that has less than 30 complaints on every 10,000 claims made.
- Be careful of firms that give data on complaints as a percentage of policies sold.
Build an email trail with the insurance company or the agent to ensure that you are not being lied to