Is it better to buy a health insurance policy that covers all your family members, including parents? Should you buy a critical illness (CI) rider that covers 30 types of illness? Should you pay higher premium for a policy that offers a higher no-claim bonus (NCB)? Or buy a policy that has a high sum assured or, instead, go for a top-up?
Insurance experts agree customers today have many options to choose from and that can be a problem. You may customise your health insurance policy by deciding not only the sum assured or the number of family members to include but which city you want to be treated in, number of critical illnesses you want coverage for, a higher NCB, benefits like maternity cover, hospital cash, etc.
Before buying a policy, one must do a need analysis, based on the current situation and future requirement. Look at your family size, where you stay, income, lifestyle and existing coverage through employer insurance before deciding, says Sandeep Patel, chief executive officer (CEO), Cigna TTK Health Insurance. "If you are single now but planning to get married in some time, you can choose a policy that offers maternity cover because there is a waiting period of two to three years. Or if responsible for your parents, you can choose a combination of two plans," he says.
Split policy if including parents
Today, you can cover several family members in a single plan. For instance, Max Bupa Health Insurance's Heartbeat and Health Companion plans cover up to 19 relationships. These include spouse, children, parents, brother-in-law, sister-in-law, grandparents, nephew and nieces. "It is not necessary that all share the same address; they can be covered under the same policy. There is no limit on the number of people that can be covered. One of our customers in Bikaner has 28 members covered in a single policy," says Ashish Mehrotra, managing director, Max Bupa.
This might seem a good idea, as it is difficult for senior citizens to buy health insurance. However, the premium can be high, as it will be based on the age of the oldest member. "We get a lot of requests for covering a joint family, along with self, spouse and children. Instead, we advise splitting it into multiple policies. Sometimes, the price for two separate policies are less than that for a single plan,'' says Varun Dua, CEO, Coverfox Insurance Broking.
In case of policies for senior citizens, there could also be delays because the company may ask for medical tests to check pre-existing disease. Due to this, a policy for the entire family could get delayed, Dua adds.
Some like Cigna TTK offer differential pricing for geographical zones. So, if your parents are in a tier-II city and you live in a metro, it does not make sense to buy one policy, as you will end up paying higher premium. "Most people prefer getting treated in the city they live in. So, if your parents live in a tier-II, including them in your policy will mean you end up paying higher premium - one for their age and two for the city,'' says Patel.
Today, you can choose a sum assured from as low as a few thousand rupees to Rs 1 crore. With benefits like NCB, it could even cross Rs 1 crore. Max Bupa, for instance, offers a guaranteed renewal benefit to all customers, irrespective of claims, under its Heartbeat policy. Heartbeat customers are entitled to a 10 per cent increase on the base sum insured, on each renewal. This can go up to a 50 per cent increase of the initial sum assured, after five continuous renewals. "So, if a customer has a Rs 1 crore cover, our highest sum assured, this can further increase to Rs 1.5 crore, after five years,'' says Mehrotra.
There are NCB options which offer a higher (than the usual 10 per cent) addition to the sum insured. For a nominal additional premium, this option could increase the sum insured by up to 50 per cent for every claim-free year, says Anuj Gulati, CEO, Religare Health Insurance. "Ensure your cover is in line with rising medical expenses. A Rs 5-lakh sum insured cover bought today might seem adequate but that will not be the case five years down the line,'' he notes.
But it will be cheaper to buy a policy of Rs 25-30 lakh and supplement it with a Rs 1 crore critical illness (CI) rider. "We would recommend a Rs 1 crore policy only in the case of someone like a businessman because the CI rider will provide income replacement, while the health insurance can take care of treatment costs,'' Patel says.
Riders, like maternity covers, always come with a waiting period. Some, like Cigna TTK, offer to reduce the waiting period on paying of a higher premium, a useful option if planning a family, but not for others. Then there are products available to cover additional expenses other than hospitalisation, especially in case of CI. These pay a fixed amount for every day of hospitalisation.
Some companies also offer these as a top-up. For instance, Future Generali offers Future Health Surplus which can be bought as a top-up on existing coverage under an existing policy or even on a standalone basis. "For example, a person having a basic health cover through another insurer or through employer can opt for these products on a standalone basis, which actually will complement the existing covers,'' says Shreeraj Deshpande head Health Insurance, Future Generali.
Today, companies cover up to 30 CI. You can choose anywhere between seven and 30, depending on the plan. The premium varies, depending on the illness you choose. There are also policies for specific illness, such as cancer. Depending on your family history and existing health condition, you can choose the number of CI you want to cover.
Top-ups with deductibles
Top-ups and super top-ups are useful for those who have employer-provided health insurance, as it can help to save costs. "Ideally, a family of four in a metro city should have a cover of Rs 20-25 lakh. It is better to buy a base policy of Rs 5 lakh and a top-up for the remaining Rs 15 or Rs 20 lakh, with the base policy amount as deductible. This is because Rs 5 lakh will take care of most ailments, except CI. Since insurers know will not be too many claims above the base policy amount, they price top-up plans very cheaply,'' says Dua.
HOW TO SELECT A COVER
Look at family size, where you stay, income, lifestyle and existing coverage
Opt for maternity rider only if there is time before starting a family, because of the waiting period
Include senior citizen parents if they can't get a separate policy, but premia can be high
Instead of a high base cover opt for top-up, super-top or critical illness cover
- Follow the same rule if already insured by employer