World Health Day: Conduct a thorough checkup of your health insurance

Ensure the policy offers adequate sum insured to deal with even critical illnesses, and move out of policies with sub-limits

April 7, observed as World Health Day, is a good occasion for policyholders to re-evaluate their health insurance policies. If the existing policy has glaring inadequacies, port to a more comprehensive plan.

 

Inadequate cover 

Many individuals who bought health insurance a decade or so ago, continue with a sum insured of ₹2–3 lakh. With medical inflation averaging 14–15 per cent annually, this amount is now grossly inadequate. “The average cost of hospitalisation for 2.5–3 days can come to ₹1.5–1.75 lakh. The cost in metros tends to be even higher,” says Ashish Yadav, head of products and operations, ManipalCigna Health Insurance. 

Treatment of critical illnesses can be prohibitively expensive. “The cost incurred on treatment of cancer, kidney or lung transplant could be ₹20-30 lakh or more,” says Siddharth Singhal, head of health insurance, Policybazaar. 

A single member of a family floater could exhaust a small cover, leaving other members vulnerable. 

Singhal suggests combining a ₹10 lakh base policy with a ₹90 lakh super top-up for an individual or even a family of three. However, managing claims across two policies can be more complex, so buy both base and super top-up from the same insurer. Yadav adds that the policy should also take care of inflation by offering no-claim bonus. 

Room rent and treatment sub-limits 

Policies often have sub-limits on room rent and specific treatments. A one per cent cap on room rent in a ₹5 lakh policy means one can stay in a room that costs up to ₹5,000 per night. Choosing a higher-cost room triggers proportionate deduction. “The other expenses—doctor consultations, treatment costs, etc.—are linked to room rent,” says Singhal. So, if a person with a ₹5,000 room rent cap stays in a ₹10,000 per night room, he may receive only half the total bill from the insurer.   

Certain policies impose sub-limits linked to specified ailments, such as cataract, hernia, knee replacement, etc. 

Copayment and deductible 

A copayment clause requires the insured to pay a fixed percentage of the bill.  

For example, if the copayment is 20 per cent, a ₹1 lakh bill means the policyholder pays ₹20,000. 

A deductible is a fixed amount borne by the insured; the insurer pays only above that threshold. “Customers should go for a deductible where their liability is limited. In copayment it keeps increasing with the bill amount,” says Singhal. 

If you can pay the premium, then avoid both copayment or deductible. To make premiums manageable, seniors may go for a deductible they can afford. 

Claim settlement track record 

Ideally, select insurers with claim settlement ratio above 90 per cent. “Even though this data from the regulator is not available by line of business or product, and is not segregated for retail and group insurance, nonetheless it is a very important parameter one must review,” says Kapil Mehta, co-founder, SecureNow. 

He also recommends checking grievance-related data from the regulator and insights from industry bodies like the Insurance Broking Association on the performance and credibility of various insurers. 

Waiting periods for ailments 

The regulator now caps the waiting period for pre-existing diseases (PEDs) at three years. For a higher premium, you can now get policies that offer day-one coverage for PEDs. The waiting period for specified ailments like cataract and hernia has been capped at two years. Again, many products are now available where this type of waiting period also does not apply. 

Short-duration procedures 

Today, many surgeries, such as laparoscopic procedures, cataract removal, tonsillectomy, etc. do not require 24-hour hospitalisation. “Such surgeries are typically categorised as daycare procedures and are covered in most policies,” says Shilpa Arora, co-founder and chief operating officer, Insurance Samadhan. 

Mehta adds that all insurers must cover a list of such procedures issued by the regulator. Review your policy carefully for what is excluded. “It is possible that some insurers place a cap on modern-day treatments,” says Mehta. 

Restore benefit 

Restore benefit automatically reinstates the sum insured if it is exhausted during the policy year. “This benefit is crucial to ensure access to quality treatment, especially for individuals with chornic or multiple health concerns,” says Arora. 

Check the finer nuances of this benefit. “Sometimes, insurers may replenish the sum insured, but may not allow it to be used for the same disease for which it was used earlier in that year,” says Mehta. 

To avail cashless facility, Arora recommends periodically checking the insurer’s website or app to track network hospitals, as they can change. 

What should you do? 

Study your policy to identify missing features and exclusions. Consider adding a rider or shifting to a better plan within the same company. “Whether one is able to do so depends on the insurer’s underwriting philosophy,” says Yadav.

If shifting within the company is not possible, port to a better policy from another insurer.

 

• Key points to know about porting 
  Consider porting if premiums rise sharply or the benefits offered by the policy are inadequate
   
  Don’t choose new policy based on lower premium alone; check benefits, exclusions, claim-settlement ratio, and willingness of insurer to offer a high sum insured
   
  Avoid plans with sub-limits on treatment methods
   
  Start porting 45–60 days before policy expiry
   
  Disclose all health conditions, especially recent ones
   
  After porting, go through new policy document to ensure that thecontinuity benefits are intact