Health Insurance: Mistakes to avoid

Health Insurance has become critical today in light of rising medical and hospitalization costs. To counter this, it is critical to have a proper health insurance coverage in place. We discuss here common mistakes people make in choosing a health policy:

1) Employer Plan: If you are working for a MNC or large Indian company, you and your family will most likely be covered by a health plan provided by the company. Most employees feel since they have an employer plan there is no need to spend money out of their own pocket to buy health insurance. In a metro city for a family of 4 with a couple in their mid-thirties this could mean an additional annual cost of INR 30-35K. By mid 45’s the premium would be 50k or higher. A lot of families struggling with their monthly budgets or trying to upgrade their lifestyle would think of spending this money on something else since they already have health insurance from their company.

The thinking is if their next employer does not provide insurance they would defer the expenditure and buy health insurance then or after they retire. Seems simple and logical right? Unfortunately, health insurance does not work this way. Your best chance of getting a policy is when you are free of any medical conditions. If within your employment you develop any serious medical condition especially heart or brain related, most insurance companies would not provide coverage to you. So now imagine in this scenario, you already have a pre-existing condition which increases chances of hospitalization and complications in your old age, but you would not have any insurance coverage! Bottom line, do not take chances and get a personal health insurance policy.

2) Low policy coverage: Few years ago a policy of INR 5 lakhs seemed ok. However, today INR 5 lakhs is not enough. Policy needs to be bought keeping in mind coverage requirements 20 to 30 years ahead. Bear in mind, in case you develop serious medical conditions your insurer may not agree to increase your coverage post that. Higher coverage would mean additional cost as well, depending on the city you live in and the kind of medical facility you would like to treated in choose your coverage limit. Super-top ups are a good way to get higher coverage at a low cost.

3) Low Premium policy: Do not choose a policy based on premium alone. It is much better to pay a little extra premium and have peace of mind that your claim would be passed in full during hospitalization. A small 10 to 20% rejection of claim amount could be a lot more than what you end up saving on premiums.

4) Policy choice: If you are buying through an agent, remember he is allowed to associate with only 1 or 2 insurance companies. Hence you would not know what other options exist that would be more relevant for you. There are more than 20 health insurance companies now and private health insurers are offering plans with multiple features. Please explore various plans rather than just looking at 2 companies that an agent is associated with.