Buying And Maintaining Health Insurance

In this section, we will discuss the different platforms through which we can buy a health insurance policy and also study the important factors to consider while buying a policy. So let us begin.

Buying patterns have largely changed in the past few years. From the brick-and-mortar showrooms, people have moved on to virtual platforms that allow them to shop from the comfort of their homes. Payment methods have also changed, which means that the strain of having to carry cash and fear of losing it has been replaced with online banking methods and payment gateways that ensure immediate payment with just the click of a button.

In addition to buying insurance plans offline, interested customers can now log on to the sites of the insurance companies from which they wish to buy or search for the various insurance plans listed on the websites of multiple insurance web aggregators including Policy Bazaar, Bank Bazaar, Cover Fox, Policy X, etc. With so many platforms offering multiple benefits to people looking to buy insurance products, one could not have asked for more. 

Factors to Consider While Buying Health Insurance Policy:

The uncertainties of life have always prompted people to rely on technological innovations and medical advancements for better living. Along with expectations, expenses have also gone up as is evident from rising healthcare costs, thus, explaining the relevance and importance of including health insurance as an essential financial tool. An increasing number of insurance companies have now come up with innovative health insurance products that promise multiple benefits in lieu of nominal premiums. Those looking for added benefits over and above what they are already getting can easily apply for the same by agreeing to pay over and above the basic premium rates. 

“Insurance” is not a new concept, especially, in the Indian context. However, most customers continue to be ignorant about the various terms used in insurance and their significance in today’s living. With a multitude of health insurance plans to choose from, customers are sometimes confused and unable to choose the health insurance policy that would serve their needs and defray their medical costs in the long run. However, a careful look at certain essential factors can help to make the right health insurance policy. These include:

• Price of the product: Most customers get attracted to insurance companies selling cheap health insurance plans. What they fail to realise is that the price of any health insurance plan is subjective and has a lot to do with the quality of the product that is being sold. The relationship between price and quality is fine and intricate and must be looked into collectively instead of considering each separately. For any insurance company selling health insurance cover, the price of the product has a lot to do with the underwriting efficiency of the insurer in addition to its operational efficacy. Similarly, the price of an individual plan will always be different from that of a family floater. This is because the price of the latter depends on the number of members covered and the quantum of cover selected. 
   
• Incurred Claims Ratio: Now that one is aware of the various product prices, it’s time to look at the Incurred Claims Ratio (ICR) of each insurance company. The ICR is nothing but the ratio of the total amount paid in claims to the total amount collected as premiums by the insurance company. Ideally, the value of ICR must be between 50 percent and 80 percent. While having an ICR on the higher end does highlight the company’s efficiency in settling the claims made by their customers, an extremely high ICR value also implies that the company is giving away more than it has earned. This may mean that the company may introduce new rules to clamp down on the claim settlement to restrain its capital outflow. Ignore companies with an ICR below 50 percent as this means greater chances of your claims getting rejected when needed. 
   
• Co-payment Clause: The co-payment clause means that policyholders would be required to foot a portion of the medical expenses themselves. Most insurance companies have introduced this clause to refrain their customers from opting for unnecessary surgical procedures or fancy treatments even if they may not be required. Policyholders may be required to opt for co-payment that may vary from zero to 10 percent. While this may seem that accepting the co-payment clause allows policyholders to pay low premium rates, it is equivalent to bearing a part of the medical costs in the long run. Refrain from accepting policies with a co-payment clause. 
   
• Policy Exclusions: While choosing a health insurance plan, most customers look at the policy inclusions only. However, a careful look at the policy exclusions is similarly important. This is because most health insurance plans are embedded with a waiting period, thus, relieving them from paying for claims towards the treatment of pre-existing disorders. This waiting period may vary from 30 days to 4 years depending on the seriousness of the disorder and the amount of money expended in their treatment. In addition to the exclusions for the pre-existing illnesses, some insurers may exclude paying for certain hospitalisation expenses within the first few months of their customers buying the policies. Basic health insurance plans include sub limits for specific treatments that must not be ignored. 

Customers opting for family floater plans that would cover their aged parents too must find out if their choice of policy pays for OPD charges and ambulance expenses too. 

• Waiting Period: No health insurance plan comes without a waiting period for diseases that the customers had been diagnosed with before buying the policy. The idea is to opt for a plan with a lesser waiting period or that plan which has fewer exclusions corresponding to the waiting period clause. 
   
• Cashless Hospital Network: Statistics by the IRDAI in the past have revealed how the average claim payout in the case of reimbursement settlement is only half the amount settled by cashless claim settlement. Prefer to opt for a cashless settlement claim. Scan through the insurer’s network of hospitals that offer the cashless settlement. One can find the list of network hospitals on the insurance company’s network. Find out if your choice of hospital falls within the insurance company’s cashless network. 
  
  Though there is no harm in choosing the reimbursement option, cashless settlement fares better as the policyholders simply have to show the health card issued by the insurer and seek necessary treatment. Also, in the reimbursement option, policyholders would be required to pay for the treatment first and seek claim later. This may put undue strain on their finances, thus, affecting the quality of treatment. Also, opting for the cashless route saves the policyholders the trouble of collecting and collating the medical bills and documents for submission to the insurance company before making the claim. 
   
• Insurer’s Track Record: Never opt for an insurance company that has just entered into business. Experience matters, especially, a company that enjoys the reputation of a sound financial strength and has a good business track record. Apart from the claim settlement ratio of each insurance company, study its solvency ratio as the latter highlights the company’s ability to pay out the claims. Find out if the company has earned enough in premium amounts during the past financial year. High premium growth registered by the insurance companies depicts the growing faith of the people in this company. Expertise comes with experience, which means that longer the company has been into the insurance business, greater is its credibility. This apart, any insurance company with a wider range of insurance products catering to every section of the society is always preferable.