Buying health insurance is more than signing a dotted line
Buying a health insurance policy might seem as a small task of signing on the dotted line on a piece of paper, but it could be much more complex and difficult task once you bother to read the Term and Conditions specified in the policy document.
There are certain important Conditions and Exclusions under a Health insurance policy which you should keep in mind before buying it.
Some of the Conditions under the Health insurance policy (if it imposes sub limits, which some policies don’t) are as follows:
1. Pre Existing Diseases
These are those diseases which you have already been diagnosed with, at the time of taking the policy. Insurance companies do not cover such diseases from the time of taking up the policy; these diseases are generally covered after a waiting period of 3-4 years varying from policy to policy. Also in terms of waiting, most health insurance policies actually kick in 30 days after you buy them; only making exceptions in case of accidents.
Note that if you are switching insurers, and you have already served the waiting period for certain illnesses under your old insurer, speak to your new insurer about this, and make sure that the waiting period is discounted accordingly.
If you don’t have any pre-existing diseases, this clause does not apply to you.
2. Room, Boarding and Nursing Expenses
You might have taken a higher sum assured then your claim amount but still you might not be reimbursed with full expenses. The main reason is there is individual limits as well which restricts you from getting the full claim. Room, Boarding and Nursing Expenses are generally restricted to maximum extent of 1% of Sum Assured or Rs. 5,000 per day whichever is lower. So if you’ve taken a Rs. 3 lakh individual mediclaim policy, and your hospital room rent is Rs. 4,000 per day, you will be entitled to receive a maximum reimbursement of Rs. 3,000 per day. What’s very interesting to note is that all your other sub limits will also be proportionately reduced. So if you take a Rs. 4000 per day room, and your sub limit entitled you to Rs. 3,000 per day room rent i.e. 75% of your room cost, all your other sub heads will be proportionately discounted as well i.e. you will be eligible for a maximum 75% claim on your other sub heads. So everything depends on room rent.
3. ICU Expenses
ICU Expenses are restricted to maximum of 2% of Sum Assured or Rs. 10,000 per day whichever is lower.
4. Pre Hospitalization Expenses
Pre hospitalization expenses are those expenses which are incurred before getting hospitalized. These expenses are generally covered for 30 days prior to hospitalization.
5. Post Hospitalization Expenses
Post hospitalization expenses are those expenses which are incurred after getting discharged from the hospital. These expenses are generally covered for 60 days after the hospitalization.
Some of the important Exclusions under the Health insurance policy are as follows:
- Injuries/Diseases caused by Act of Foreign Enemy, War, Nuclear Weapon / materials.
- Intentional self-injury or injuries due to use of intoxication drugs / alcohol.
- Cost of spectacles and contact lenses, hearing aids.
- Dental treatment or surgery of any kind unless necessitated by accident.
- Expenses on vitamins and tonics unless forming part of treatment for injury or diseases.
- Treatment arising from or traceable to pregnancy.
- Treatment taken outside India.
- If you have opted for a rider (say personal accident or disability benefit) and you engage in sports such as hiking, mountaineering, scuba diving and so on, know that any expenses arising out of accidents related to dangerous sports (and each insurance company has their own definition of this) are not covered.
Knowing above conditions and exclusions will certainly help you in determining which Health insurance policy to go for. It will also help you to avoid getting into any disputes with the insurance company at the time of making your claim.
If you have recently bought a health insurance policy without looking at these conditions in your policy, you can still go through the policy document and in case it doesn’t meet your insurance requirement then you can return the policy within 15 days of receipt of the policy document.
This 15 day period in which you can return the policy is known as a FREE LOOK PERIOD. If you return the policy during this period, the insurance company has to refund the premium after deducting expenses towards stamp duty, proportionate risk premium for the period of cover and expenses towards medical tests.
So go ahead and take the right policy for you. It might seem like a waste of your time, but it is absolutely essential to read your policy document very carefully before agreeing to any one policy.
Also, insurance is part of your overall financial planning so be sure to speak with your Financial Planner of your existing insurance policies. You can also see our Human Life Value calculator to see your life insurance requirement.
PersonalFN is a Mumbai based Financial Planning and Mutual Fund Research Firm.