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How To Choose Right Health Insurance

First let us know why you need medical insurance, its types and how to choose one from various policies available from different insurers.

So let’s get started,

Why do you need medical insurance?

  • Medical illness/injury does not come with a warning, it’s an unexpected situation which can have a massive impact on your finances if you are not prepared for it.
  • And also with increasing healthcare costs, hospital bills can have a massive impact on your pocket. So, having health insurance is a must for all members of a family as they cover all your hospital expenses.
  • But, there will be confusion when you have to buy policies for more than one member of your family, whether you should get separate health plans for each of them or a floater health insurance policy that covers the entire family.
  • So let’s see which plan is more beneficial under what circumstances and its merits and demerits.

Types of health insurance:

Individual health insurance policy

  • It’s a policy which covers only one person.
  • The yearly premium amount depends on the person’s age and the coverage amount.
  • Higher the age = Higher the premium.

Floater health insurance policy

  • This policy covers more than one member of a family.
  • It will provide cover to you, your spouse, children, and parents.
  • The premium amount will depend on the age of the eldest person covered under the floater health plan and the coverage amount that you seek.

Individual Health Policy

Floater Health Policy

You need to maintain each policy separately, understand its terms and conditions, remember different due dates for each premium. In this policy, your entire family can be covered under a single policy. It saves you from the inconvenience of maintaining too many policies.
It’s not cost-effective. It’s cost-effective If insured are in a similar age group.
The entire sum insured is meant for a single member. The entire sum insured is meant for all the members of a family.
No claim bonus is not nullified if a member does not make a claim on a particular year. No claim bonus is nullified if one member of a family makes a claim on a particular year.

Merits and Demerits:

Let’s see the advantages of buying a floater policy over buying individual health plans. 

1. Saves you from the hassle of maintaining too many policies.

  • In case you buy individual policies you need to maintain each policy separately, understand its terms and conditions, remember different due dates for each premium.
  • In case if you buy a floater policy, your entire family can be covered under a single policy. It saves you from the inconvenience of maintaining too many policies.

2. Floater plans are cost-effective in case the insured are in a similar age group.

  • If insured is in a similar age group, floater health insurance plans are much cheaper as compared to individual health insurance plans.

Now let’s see the disadvantages of floater policy against individual health plans.

1. The sum insured is not fixed for each member.

  • For individual health plans, each member has a separate sum insured.
  • Ex: If you have a Rs 5 lakh individual health insurance policy. On being hospitalized the bill amount was Rs 2 lakh which was covered by your health insurance. And, the rest of the Rs 3 lakh sum insured can be availed by you again in case you are hospitalized for the second time in the same year.
  • For the floater health insurance policy, the entire sum insured is meant for all the members covered under the same policy.
  • A particular amount is not fixed for each member.
  • If one family member makes a claim, the cover reduces on the rest by that much.
  • Ex: If you have a Rs 10 lakh floater health insurance policy that covers you, your spouse, and your two children. Now, you were hospitalized for certain treatment and the bill amount was Rs 5 lakh. Now, this entire amount will be covered by the floater health insurance policy. But for that year, the cover amount for your spouse and children will be reduced to Rs 5 lakh.

2. No-claim bonus is void if one member makes a claim on a particular year.

  • For every claim-free year, the health insurance company rewards you by increasing your coverage amount or decreasing your yearly premium amount. This benefit is called a no-claim bonus.
  • This benefit can be availed for both individual and floater health insurance policies.
  • Now, if one member covered under a floater health insurance policy makes a claim in a particular year, then the entire NCB would be nullified for the year.
  • But if each member had separate individual health policies, then the NCB would be nullified for the person who was hospitalized, while others would be able to avail NCB for their health policies.

3. Children cannot be included in a floater health policy after a certain age.

  • In a floater health insurance policy, once a child covered under the policy reaches a specified age (it differs from policy to policy), they are treated as adults and have to be removed from the policy
  • In that case, along with the floater health insurance plan, you will also have to buy a separate health insurance policy for your son or your daughter.

Which policy is better?

  • The premium amount for a floater health insurance policy is determined on the age of the oldest member covered under the policy.
  • So whether to buy a floater policy or an individual health plan should be decided according to the age gap between the elderly person covered under the policy and the other members in it.
  • It makes sense to buy an individual health insurance policy if you are single and your parents already have their health plans.
  • Meanwhile, if you are a young couple or you have a family together with young children, then buying a floater health insurance policy is beneficial.

Conclusion: 

Both individual and floater health insurance plans are good options, but which one to buy depends on your circumstances.

Check-list to compare different health insurance policies:

1. Sum Insured:

  • It is the maximum amount the insurer will pay for your medical expenses in a year.
  • Consider your age and health to select the sum insured.
  • Go for a higher sum insured if you are already suffering from a medical condition or looking for a family floater policy.

2. Premium: 

  • The premium of the policy should be in line with the sum insured and the benefits offered. Avoid selecting a policy only because it has the lowest premium.
  • It is the amount you’ll be paying for the sum insured.

3. In-patient hospitalization coverage:

  • When a person stays in a hospital for more than 24 hours, it is called in-patient hospitalization.
  • Look for a plan that will provide you with maximum coverage.

4. Day-care treatment: 

  • For some procedures like cataract, dialysis, etc. patient are not required to be hospitalized for 24 hours, these treatments can be completed within a few hours, they are termed day care treatment.
  • Look for a plan that covers the maximum number of daycare facilities.

5. Room rent allowance: 

  • Some policies have a cap on the room rent. It may be fixed like Rs 2,000/Rs3,000 or 1% of the total coverage amount.
  • Look for a policy that has a higher cap or does not have a cap on room rent.

6. Pre and post hospitalization coverage:

  • The expenses that are incurred before and after hospitalization are usually covered by health insurance as pre and post-hospitalization expenses respectively.
  • Check out the policy to understand what is the exact coverage in terms of pre and post-hospitalization.

7. Waiting period:

  • The waiting period is a cooling period during which you cannot make any claim for your health insurance policy.
  • There might be a one-year waiting period for certain illnesses/procedures like cataract, knee surgery, etc.
  • And there might be a 3 to 4 year waiting period for pre-existing conditions. during this period you cannot claim health insurance for these.
  • Go with a plan with the shortest waiting period.

8. Co-payment clause: 

  • Some health insurance policies come with a co-payment clause, in which the insurance company pays a part of the medical expenses, and the rest is paid by the policyholder.
  • Look out for a policy with lower or no co-payment.

9. Sub-limit:

  • Some policies have caps on certain procedures/illnesses/facilities, and these caps are referred to as sub-limits.
  • For Ex: Cap on room rent, child-birth, cataract for each eye, etc.
  • Compare these with different health policies.

10. Exclusion: 

  • When a health insurance policy does not cover certain procedures/illnesses they are referred to as exclusion.
  • Checkout for the exclusions that are mentioned in the policy.

11. No claim bonus: 

  • For every claim-free year, insurance companies reward the policyholders by increasing the coverage amount or decreasing the premium amount.

12. Restoration: 

  • If a policyholder exhausts his entire coverage amount during his/her treatment and requires more, then the insurer will pay the additional amount without charging any additional premium. This facility is called restoration benefit for increasing coverage.

13. Cashless hospitalization network:

  • When the insurer directly settles the medical expenses incurred by the policyholder with the hospital, it is known as cashless hospitalization.
  • So check whether the insurer has the cashless facility with the topmost/best hospitals in the city rather than looking for the total number of hospitals they have cashless facilities with.

14. Enhancement facilities of the coverage amount: 

  • Check whether your coverage amount can be increased through NCB and restoration facilities.
  • Because of an increase in healthcare costs, what is sufficient today, might not be enough tomorrow.

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