Annual Health insurance review: Tackle medical inflation, upgrade coverage

A 13-14% medical inflation rate makes upward revision of sum insured essential

Policyholders must review their health insurance plans regularly to ensure that their coverage remains adequate and useful. While changes can take effect only at renewal, the review should be done along with other year-end financial checkups. 

Measuring adequacy of cover 

With medical inflation hovering at around 13-14 per cent annually, policyholders must reassess their sum insured once every two years.  “Adequacy should factor in medical inflation, changing financial capacity, family size, and evolving health needs. City-wise treatment costs also matter, with hospitalisation in metros such as Delhi and Mumbai costing 30-50 per cent more than in smaller towns,” says Amarnath Saxena, chief technical officer–commercial, Bajaj General Insurance. 

Look beyond the big number 

A high sum insured can create misplaced comfort if restrictive clauses limit its usability. Review the policy for room

rent caps to avoid proportionate deduction. “Since several other hospital charges are linked to room category, these limits

can significantly dilute actual coverage,” says Venkatesh Naidu, chief executive officer, BajajCapital Insurance Broking.

Policyholders should also check for tight sub-limits on specific treatments. 

Life-stage triggers 

The adequacy of sum insured should be checked at the time of marriage and the birth of a child. “A job change, especially a move away from employer-provided insurance, also warrants a revi­ew,” says Naidu. Reduce health insurance coverage only in limi­ted situations, such as when consolidating overlapping polic­ies or managing short-term financial stress, as doing so can back­fire. “Small premium savings today can turn into large out-of-pocket expenses later. Moreover, options to enhance coverage become limited with age,” he says. 

Modern policy features 

A basic cover no longer suffices in today’s high-cost healthcare envi­ronment. “Modern policies shou­ld offer no-claim bonus (NCB) protection, unlimited restoration of sum insured, and coverage for outpatient department (OPD) expenses and consumables. Shorter waiting periods for pre-existing conditions and domiciliary treatment add flexibility. Coverage for mental health, day-care procedures, and modern treatments has also become essential,” says Siddharth Singhal, business head, health insurance, Policybazaar.com. 

Qualitative checks 

Only through a detailed scrutiny can one ensure that the policy is usable. “Check exclusions to understand which treatments or conditions are not covered. Review waiting periods, especi­ally for pre-existing conditions and maternity. The insurer’s claim settlement record also matters, as it reflects how smoo­thly claims move. Finally, verify the hospital network, as access to cashless treatment at reputable hospitals is crucial,” says Saxena. 

Low premiums often hide res­t­r­ictive clauses. “Limited or po­o­rly defined day-care coverage, we­­a­k restoration benefits that ap­p­ly on­ly once or under restrictive conditions, and long waiting per­i­ods for common or pre-existing illnesses can make policies ineffe­ctive when needed,” says Shilpa Arora, cofounder and chief operating officer, Insurance Samadhan. 

Mental health cover with low limits, vague exclusions that invite disputes, and NCB structures that offer only premium discounts without increasing cover also reduce long-term value, according to Arora. 

Special checks for senior citizens 

Ageing brings its own risks. “Geriatric care often involves longer hospital stays and expensive treatments,” says Saxena.

“Seniors should opt for senior-specific plans with co-payment waiver riders or a low co-payment, capped at 10 per cent. Policies sho­­­­uld not have sub-limits on com­mon geriatric surgeries, sho­uld offer lifetime renewability, an­d carry short waiting periods for pre-existing conditions — one year or even day one,” says Singhal. 

 

The writer is a New Delhi-based independent journalist