The quick guide to buying your first Health Insurance cover

Advancements in science has extended people’s life expectancy considerably. but it will come at a cost as healthcare is out of reach for many. this is where health cover can help

As per 2017 figures, only about 27 per cent Indians had health coverage, meaning the rest were vulnerable against the astronomical costs of hospitalisation. The situation has improved with the arrival of Jan Arogya Yojana where about 50 crore Indians are provided a cover of Rs 5 lakh per family per year. However, the scheme is directed at the poor. Therefore, everybody else needs to buy health insurance — not just for the tax benefits, but to protect their finances against the catastrophic impact of hospitalisation. If you are in the market for your first health insurance policy, let’s look at some key features to be mindful of.

WHAT HEALTH INSURANCE HELPS WITH
A health insurance protects you against healthcare costs. This normally means costs of hospitalisation which includes room rent, surgery, treatment, and medical costs. Today, most health policies also cover pre- and post-hospitalisation expenses to a predetermined limit. The coverage is provided cashlessly if your hospital is part of your insurance company’s network. Alternatively, you can also settle your expenses out of pocket and seek reimbursements by filing an insurance claim. You can also pay a higher premium to avail additional, useful coverage for ambulance charges, maternity expenses, or a lump sum payment upon diagnosis of a critical illness.

EXCLUSIONS & WAITING PERIODS
All health insurance plans have exclusions — treatments that are not covered — and waiting periods during which certain treatments are not covered. For example, health policies have a 30-day waiting period in which diseases and illnesses may not be covered. The treatment of certain diseases — such as AIDS — may be fully excluded, and so will be expenses brought about by situations such as war or by dangerous activities such as sky diving. Some treatments may be limited by time. For example, one policy may not cover treatment required due to pregnancy for up to 48 months since the inception of the policy. Every policy documents lists in detail what it excludes and what the waiting period for the treatment of a defined list of illnesses is.

COSTS OF HEALTH INSURANCE
The premium you pay for your health insurance is linked to your age, health and the cover size. The lower your age, the lower will be your premium costs. A cover of Rs 5 lakh for a 30-year-old non-smoking male would cost upwards of Rs 5,200 per year. If you increase the cover to Rs 10 lakh for the same person, the premiums would be upwards of Rs 7,500. Health coverage is mandatory to protect yourself against healthcare costs. Therefore, you should get your policy while young.

DEDUCTIBLE & CO-PAY
Deductible is the amount you need to pay towards your own healthcare costs before the health insurance pays anything. For example, you have a cover of Rs 1 lakh with a deductible of Rs 20,000. Let’s say your hospital bill is Rs 40,000. The first Rs 20,000 will need to be paid by you out of pocket. Insurance will cover the rest of your medical expenses. Co-pay is where you bear a fixed percentage of your hospitalisation cost. For example, one policy may require all policyholders to pay 10 per cent of all claims. Both these features are useful if you already own some form of coverage. This will allow you to purchase additional coverage at a lower cost. For example, you have a base cover of Rs 5 lakh which cost you Rs 5,500 per year, and you buy a top-up plan with a Rs 5 lakh deductible where the premium cost would be much lower.

INDIVIDUAL POLICY and FLOATER POLICY
You can purchase your health policy in an individual capacity or buy a family floater where your family jointly shares the benefits of a single policy. Nuclear families — husband, wife, and children — often take floater policies. Floater plans are useful in combining the coverage and keeping premium costs manageable. However, if you take a floater plan, you must also be prepared for a situation where the same policy may have to be used multiple times in a year, not leaving enough coverage for the rest of the family. Therefore, look to buy adequate coverage for the whole family — ideally Rs 10 lakh or more — and look to upgrade it periodically to stay above healthcare inflation.

KNOW YOUR OPTIONS
Insurance products differ from one insurance company to other. Ensure that you know of all your options and pick the best one for you. Modern insurance products provide additional benefits at a higher premium. These benefits may include organ donor costs, cover restoration (where your cover regenerates in the same year), coverage for alternative medicine such as Ayurveda, and coverage for day-care expenses.