Jun 10, 2009

Health (Mediclaim) Insurance policy - 10 Practical Tips

Buying a health insurance is like making any other purchase. There are different types of health insurance policies available depending on your requirement and your budget.

Photo by Lakeland Chamber

It is important to choose a suitable policy as per your needs the first time around because unlike motor insurance, as of now, the portability (switching from one insurer to other without losing the renewal and no-claim benefits) of health insurance is not there. Therefore, a little research at the buying stage itself can save you a lot of money and hassles later. Besides, knowing exactly what you’re buying gives you peace of mind. Thus, before buying the health policy, do remember these finer points / tips:

How to buy Health (Mediclaim) Insurance: A Guide

1. Have a valid reason
No doubt, health insurance is becoming as important–if not more–as the life cover. However, keeping in view your individual circumstances and requirements, you should have valid reasons for buying the health cover. Don’t buy it just for the sake of having one or to claim section 80D tax benefit under IT Act.


2. Amount of health coverage
You need to have adequate coverage and avoid either over-insurance or under-insurance. But there’s no best way to decide the optimum coverage. The total amount of coverage required depends on many factors like number of family members to be covered, your estimate of medical costs (which depends on factors such as your life-style, the kind of hospitals you generally prefer, the city of residence etc) your existing health coverage, if any (such as employer provided group health policy).


3. Cheapest or lowest cost policy may not be the best policy
With a wide array of health insurance products available in the market, choosing the best product as per your requirement is really difficult.

However, remember that cost isn’t the only criteria when buying health insurance. In addition to affordability of the premium you need to consider many parameters before finally choosing your health policy. For example, you have to take into account factors such as inclusions and exclusions, no claim benefits offered for every claim free years and TPA (Third Party Administrator) hospital network.

It is very important for you to make sure that your family hospital or clinic (where you seek medical advice and treatment) and also the hospital near your home (for seeking emergency medical help) are part of the insurer’s network of hospitals for cashless settlement of claims.


4. The first health Cover
The first health cover you require is an indemnity cover (which reimburses the expenses actually incurred) because the basic premise of health insurance is to take care of medial expenses in case of hospitalization.

Therefore, if you’re a first time buyer, go for a normal health or mediclaim policy and thereafter, if required, increase the coverage through various specific health insurance policies.

After having a basic indemnity policy (also called mediclaim policy), you may go for defined benefit plans such as Critical Illness and Daily Cash Hospitalization (DCH). However, buying a health-cum-investment plan is strictly no-no.

Furthermore, don’t buy a regular mediclaim policy with a sum insured greater than Rs 2 to 3 lakh or, at the most, five lakh. Why? See point no 7: Top-up health policy.


5. Better to opt for a family floater
Floater policies are cheaper than individual policies. Chances of all the family members falling ill at the same time or with in the same year are low and therefore combined higher limit can be used by any individual member. Unlike individual mediclaim plans, in case of Family Floater mediclaim plans availment of sum insured is not restricted to one individual. Put simply, anyone or all members of the family can avail the benefit simultaneously within the limit of total sum insured.

For example, rather than buying an individual mediclaim of, say, Rs one lakh each for three members of a family, it is better to buy family floater plan of Rs 3 lakh. Even floater plan of Rs two lakh will do because while overall cover would be reduced by 1/3rd, individual coverage is doubled.


6. Have a separate cover for Parents
While opting for floater mediclaim plans it is better to have a separate policy for your parents because in case of floater plans age of the eldest member is considered for the purpose of calculating the premium. So by avoiding clubbing your parent’s health cover with your own cover, you can save a lot of premium.


7. For Increasing the Coverage, go for Top-up Policy
It is always better to buy a top-up policy for any coverage beyond two to three lakh or, at the most, five lakh. By combining your regular mediclaim health policy with a top-up or super-top up policy, you can save considerable premium without compromising your total coverage.


8. Know the exceptions
Do you want to wait until you’re sick to discover that your mediclaim health policy doesn’t cover the particular ailment? Therefore, it is very important that you understand the level of coverage available under the mediclaim health policy. It’s essential to know about the inclusions and exclusions of the mediclaim policy.


9. Group policy vs Independent policy
Most companies provide health covers to their employees under a group health plans; however, it still makes sense to sign up for an independent policy because you’ll no longer be covered in case of job loss or job transition (your new employer may not provide it) or withdrawal of cover by the employer.


10. Filling up the form correctly / Disclosure of health particulars
Finally, it is utmost important that you fill up the form correctly. Fill it carefully, particularly the health declaration part and ensure that you don’t lie about your existing health status. Disclose your existing health details HONESTLY because non-disclosure or false declaration can lead to rejection of a claim in the future. For this, don’t even rely on your agent or the company because it happens that sometimes they don’t advise you properly since they fear losing out a new customer. Therefore, always go by the written word.


At last, your job doesn’t end with the buying of the right health policy. You also need to ensure that you renew it every year before time because otherwise all your hard work will go down the drain. For details, see: Why you need to renew your health policy before time.

If you think, I’ve left out anything important, please mention in the comment section.


Also see:

1. Difference between Mediclaim and Critical illness
2. 5 Reasons for Timely Renewal of Health / Mediclaim Policy
3. Inclusions & Exclusions of Health / Mediclaim Policy
4. Understanding Life Insurance

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