Things to keep in mind before buying a health insurance policy

A health insurance plan helps people manage this risk to a great extent. However, even though a health plan provides you a comprehensive cover against fatal diseases and accidents, the scope of coverage has some limitation and preconditions

It takes years for people to do disciplined savings and investments to achieve their life goals. However, one medical emergency in the family during this journey can potentially derail the entire financial planning of the family. A health insurance plan helps people manage this risk to a great extent. However, even though a health plan provides you a comprehensive cover against fatal diseases and accidents, the scope of coverage has some limitations and preconditions. The primary purpose of the policy will stand defeated if you confront surprises later or face rejection of your claim. It is better to know the basic contours of a health insurance policy if you are planning to buy one or already bought one. Here is the list of things that you must know before you buy a medical insurance policy:

1) Individual versus family floater

While buying a health insurance plan, the first dilemma you face is whether you go for an individual plan or a family floater plan. If you are single you may go for an individual health policy. However, it's better to go for a family floater policy if you're married. "Family floater plans are more cost-effective due to discounts on such plans offered by insurers,". Family floater plan gives you the benefit of wholesale. "One should ensure that the total sum insured purchased is sufficient to cover the high cost of hospitalization,". However, if you are a sole earner, you may choose an additional individual health policy besides the family floater plan.

2) Know how much coverage you will need

It is difficult to find the right coverage amount that is suitable for everybody. Although medical science and treatment technologies have evolved, many diseases that were considered untreatable earlier can now be successfully cured. This comes at a high cost. "With the rising cost of healthcare, one should ideally be opting for high sum insured coverage because one should always be future perfect. Around two in 1000 claims may go beyond Rs 15-20 lakh. So, to cover oneself from catastrophic hospitalization expense events, a higher sum insured is advisable,". No one can predict with certainty that who will get affected with which disease and what could be the exact cost of treatment. Therefore it's better to base this decision on your affordability in terms of premium payment. The higher you can afford, the more protected your family would be. "The cover amount shall always be linked to the family composition of the customer. The cover amount should be increased as the number of family members grows as it will make sure that enough cover is available for everyone in case of family floater cover,".

4) Know the coverage network of the insurer for Cashless Claim

The claim is paid by the insurer in two modes; one is reimbursement and the other is cashless. In the reimbursement process, you have to pay for medical expenses from your own pocket and collect all the documents from the hospital and submit them to the insurer to make claim. The reimbursement process may often be time-consuming and may require a lot of running around. Another process is a cashless claim in which you do not have to pay from your pocket as the claim is settled between the hospital and the insurer. However, a cashless facility is provided by an insurer only in hospitals with which it has a tie-up. So, before buying a health plan, make sure you go for the one that has a good number of network hospitals not only in India but also in your locality.

5) Beware of things that may not be covered

It is important to understand that no health plan covers all diseases and eventualities. Every health plan has a number of conditions that may not be covered by the policy. "Permanent exclusions like the treatment of diseases such as AIDS, dental treatment, psychological disorder, gender-change surgery, sexually transmitted diseases, cosmetic treatments, intentional self-injury and hospitalization due to war or nuclear perils are not covered in a standard health insurance policy,". Therefore, it makes sense for you to go through the list of exclusion while buying a health plan so that you are aware of it.

6) Understand the waiting period

Not all diseases included in the coverage list of the health plan are covered from day one of your policy. "Every standard health insurance policy has 30-90 days of waiting period from the day of commencement of the policy for any kind of treatment. Most accidents are covered from Day 1,". There are provisions of a state waiting period for many diseases and medical conditions. Some medical conditions have a standard waiting period. "Every health insurance policy has a list of diseases with a waiting period ranging from two-four years. Diseases like cataracts, piles, hernia, ENT surgery, kidney or gall bladder stone will be covered after certain years of the waiting period,". Besides there are also some pre-existing diseases (PEDs) whose waiting period varies from insurer to insurer. "Pre-Existing Diseases are the ones that are already detected and are disclosed by the policyholder before buying the policy. Such type of diseases can be hypertension or diabetes, which if detected prior to buying a health insurance policy, will only be covered after a few years of buying the policy,". It makes sense for you to check the list to ascertain the waiting period if you or your covered family members have any such pre-existing diseases.

7) Brace for a future escalation of premium

Unlike life insurance where the annual premium generally remains unchanged throughout the policy, in health insurance this is not the case. "Premium increases with the age in most products. Every insurer has a different method of increasing premium. Some insurers do it every five years, some every year,". Therefore, you need to inquire about the frequency of premium increase from your health insurer.

8) Have provision for the future rise of coverage

With time, the cost of most products and services rises and medical cost is not immune to inflation. Therefore, your health insurance cover also needs to grow with time to take care of the rising cost of medical treatments. Some health plans help you deal with inflation to a good extent. "No-claim-bonus or inflation protection are offered by some of the insurers to cope up with rising cost as it increases the available sum insured by a certain percentage depending on the insurance policy,". There are some plans that offer restoration benefits, which effectively doubles your cover. If the health cover limit is fully exhausted due to hospitalization, a health plan with restoration benefit restores the cover again. However, this benefit works only once during a policy year.

9) Disclose all material details

During the claim process, if the insurer finds out that the insured person has hidden critical information, her claim may get rejected. Therefore, it is advisable to disclose all material details and provide accurate information. This is especially needed for people who consume tobacco and alcohol. Such disclosures may increase your premium to some extent, but it will ensure that you do not face hurdles when you make a claim against your policy.