How to buy the right health cover?

Buying health insurance is not easy. And the quantum of complaints indicate that consumers are not getting the deal they are looking for. Clearly, either the insurers are not doing a good job of delivering what they have promised, or consumers are confused about what they need and what they are getting.

In short, there is a huge gap between what consumers are looking for and what is delivered. The situation is not made easy by the terminology pertaining to the range of services available from insurance companies. There are many different health covers available, each with a different name and a claim to be different and superior to all others.

That is why it is extremely important to get your basics right before buying a health cover. Here is a primer.

Individual Health Plans: These are the 'traditional' health insurance covers, known as 'mediclaim' policies informally. These generally cover hospital treatment expenses provided the treatment is on in-patient basis and lasts for at least 24 hours. The expenses covered include hospital bed/room, nursing, surgeon's fees, consultant doctor's fees, blood transfusions, oxygen and operation theatre charges. Some plans come with sub-limits for each of these heads. They usually do not cover pre-existing diseases or complications arising from them for the first three to four years of the policy. Besides, there are specific conditions that may not be covered for a certain initial period. There is generally an enhancement for every year during which no claim is made.

Family Floating Policies: These consist of a shared Individual Health Plan (for a family). The benefits are mostly the same, but the sum insured can be used for the treatment of any or all members of the family and not a single person. Rather than buying a Rs 2 lakh health cover for each member of the family of four by spending for a total cover of Rs 8 lakh, if you buy a Family Policy for Rs 8 lakh, each person covered under it can avail benefits up to Rs 8 lakh as opposed to Rs 2 lakh in the earlier instance. This reduces the need for you to pay from your pocket. Also, it comes at a lower premium than individual policies. A Family Policy can be bought by an individual who becomes the proposer along with spouse, dependent children up to 25 years or even unmarried, divorced, widowed daughters and dependent parents.

Critical Illness Plan: This is not a substitute for the basic individual or family policy, but designed to be added as an addition to the former. The fact that these have to be bought separately is a major flaw in the way health insurance is sold in India. An illness plan provides financial assistance if the insured develops a serious ailment, such as cancer, or has a stroke. Each cover has a list of ailments, usually 9-12 of them. One can get it in the form of a rider attached to a life insurance cover, or as a standalone policy from either a life insurer or a non-life insurer. If critical illness occurs, it pays the entire sum insured and terminates and can happen only once for any particular illness. To get the payout, the insured has to survive for 30 successive days after the diagnosis. No claim can be made during the first 90 days of the inception of the policy. However, both these conditions may differ from insurer to insurer.

Senior Citizens Health Plan: Most basic mediclaim plans cap the starting age at around 60 years, while SCHPs are generally for the age group of 60-80 years. Most can be renewed lifelong or up to the age of 90, and have a fixed coverage. Besides looking for sub-limits, those buying these plans should watch out for certain illnesses as many ailments are excluded from the plan. These plans could possibly have an option of a critical illness plan.

Top-up health insurance
These plans come with a mandatory deductible and are comparatively cheap to buy. Deductible is the initial amount which shall be met either from your own pocket or through any other health insurance policy to avail the benefit of the top-up plan.

Suppose you have a top-up plan of Rs 5 lakh with a deductible of Rs 1 lakh and the hospital bill amounts to Rs 1.5 lakh, the top-up health plan may be availed only for Rs 50,000. The initial Rs 1 lakh will have to be met from your own pocket or with the help of a basic health insurance policy. Top-up plans can be used in a combination of a basic health insurance policy for an enhanced coverage at a lower rate. However, one should thoroughly go through the fine print to understand all conditions.