What you should know when buying insurance for your parents

In recent years, life expectancy has been increasing thanks to medical advancements. With inflation however, these medical advancements have also been becoming more expensive.

As it is not uncommon to find that as senior citizens, we are often no longer in the pink of health, hence it is important to assess the opportunities available to save on medical costs, by way of taking health insurance .

As a senior citizen, a key question in your mind would be “Can I buy health insurance above the age of 60?”

And the answer is Yes, you can.

Mediclaim for senior citizens is certainly not as easily available nor is it as comprehensive (as a policy) as mediclaim for someone who has not yet crossed the age of 60, but it is still available. Certain insurance companies such as National Insurance, Oriental Insurance, New India, United, Apollo Munich, Max Bupa and others do offer health plans for senior citizens.

These plans are sometimes limited or restricted when compared to regular health insurance plans, so it is important to read the policy document very carefully, so you understand exactly what the policy offers you, and exactly what it does not offer you.

Here are some of the main features associated with the policies offered by these companies:

Entry Age:
Most of the PSU companies are providing Mediclaim for senior citizens between the ages of 60-80 years. It means that if you have not taken this policy and have crossed 60 years of age then you can still approach PSU Mediclaim insurers and get yourself insured. However some companies limit entry age to 69 years of age i.e. once you cross 69, you are not eligible to take the policy.

There are also private insurers, such as Max Bupa and Apollo Munich, to name a few who offer health insurance with no maximum entry age. This means that the policies are not specifically for senior citizens, they are for all individuals, and even senior citizens can apply to become policy holders.

Renewal Age:
Renewal age is the time till which you can renew your Mediclaim policy. This age limit is generally 90 years but it might differ from one insurer to another.

Pre-Existing Diseases:
Pre-existing diseases are those diseases which you might already be suffering from; such diseases are typically covered after 1 or 2 years from the date of taking up of the policy (differs from company to company). However, certain policies, such as National Insurance’s Varistha Senior Citizen Policy categorically states that it will never cover a pre-existing critical illness, under its critical illness rider, it will however cover hospitalization expenses under its health insurance cover.

Premium:
The most important factor which comes to your mind before taking up the policy is the premium which you have to pay out of your pocket. The premium for such policies is generally high as the age of the life to be insured is above 60 years and if there is any pre-existing disease then the insurance company will charge an extra premium to cover that particular disease. The additional premium is to compensate for the additional risk taken on by the insurance company to cover a policy holder who has a pre existing disease.

Sum Assured:
Sum Assured is the amount of insurance cover you get at the time of taking the policy. Public insurers that are providing Mediclaim for senior citizens offer coverage of about only Rs. 1 or 2 Lakhs which is pretty low keeping in mind the increasing medical cost.

Private insurers offer more, going as high as Rs. 15-20 lakhs under family floaters, but keep in mind premium and co-payment both.

Co-payment:
Co-payment means the fixed percentage of total bill which you have to pay in case of a claim. This percentage is already defined in the policy document while taking up the policy. Co-payment clause is around 10% or 20% for such policies. For some policies, it can go as high as 40%.

Tax Benefit:
The premium paid by you for such policies are deductible from your income u/s 80 D of Income Tax Act, 1962.

No Claim Bonus:
If you buy this policy and do not claim anything during the year than in your subsequent renewal of the policy your sum assured will be increased by 5%, upto a maximum limit of 50% or 30% (differs from company to company).

What should you do?
As a senior citizen looking for a health insurance policy, you currently have the following options:

It is up to you to decide which policy best suits you, depending on your current health and specific health requirements.

For example, there are certain policies which will cover things such as ambulance charges up to a certain limit, or which will provide you a critical illness cover as a rider to your health insurance. But you should note that there is a limit on ambulance charges (up to Rs. 1,000) and that it is only the specified critical illnesses that will be covered.

You can also opt for a health insurance which will cover certain specified diseases (Oriental Insurance: Senior Citizen Specified Disease Insurance), such as knee replacement, cardio vascular disease, stroke and so on, but keep in mind that while you are paying a premium for the full sum assured, you will only be eligible to receive a part of the sum assured in case of certain specific diseases, under this policy. Additionally, pre existing diseases are only covered after the policy has been in force for 2 continuous years.

In case of some policies, such as National Insurance Varistha Mediclaim for Senior Citizens, pre existing diseases will never be covered under the Critical Illness rider that it offers, however it will cover your hospitalization expenses, under mediclaim cover. Additionally, while critical illness policies typically pay you a lump sum upon diagnosis, this policy does not. It will however reimburse you for the expenses incurred.

It is vitally important to go through the details of the policy before you opt for it. You might find that the feature of the policy that appeals to you the most is restricted to a certain limit or has certain clauses attached to it which make the policy itself infeasible.

Conclusion
Before you opt for any policy, be sure to read the fine print and ask your insurance agent as many questions as you can. Having a Mediclaim policy in place for your age beyond 60 years is important, but it is equally important to have a policy that is beneficial to you specifically.

If you need assistance with your Insurance, or with knowing how much insurance you require from a Financial Planning or tax planning perspective, simply call us at 61361200. As part of your financial planning exercise, your insurance requirement will be ascertained, and your existing insurance portfolio would be assessed. You can then know which policies to keep and which to surrender. This exercise saves premium that would otherwise have been spent on a policy that may or may not have been useful for you.

At PersonalFN, along with insurance planning, we strongly believe in the importance and benefits of Asset Allocation , for which we have brought in Ajit Dayal, our founder, to be the guest speaker at our first Websummit ‘The Ideal Asset Allocation in Current Market Conditions’.

Do keep in mind asset allocation and insurance planning as part of your overall financial planning exercise!

PersonalFN is a Mumbai based Financial Planning and Mutual Fund Research Firm