Feb 15, 2017 04:06 PM IST | Source:

Common medical insurance mistakes & steps to correct them

While many informed individuals go for health insurance, they are exposed to the risks associated with errors while picking the health insurance.

Naval Goel

Health insurance or medical insurance is a kind of insurance that covers the insured’s healthcare expenses, including surgery. The fees are paid in two ways: the policyholder pays the hospital or clinic first, and the cost is reimbursed to the insured. In most cases, the insurance company pays the medical facility directly.
Though a lot of information is floating around about health insurance, as of March 2014, only 17% of Indian population had a financial tool to cover their medical expenses. This study, prepared by the Insurance Development and Regulatory Authority (IRDA) of India, shows a lesser estimate than that of WHO. With the rising cost of healthcare services, paying from personal savings or funds is no longer an option for the common man. It is a wise decision to invest in health insurance to save you from unnecessary pressure and stress.  

While many informed individuals go for health insurance, they are exposed to the risks associated with errors while picking the health insurance. One such wrong move may force them to exhaust their savings to pay for the expensive medical bills, or you might have to compromise on the quality of healthcare.

Listed below are some frequently committed grave errors while choosing a health insurance policy and ways to overcome them.

1.Concentrating only on the premium amount and deductible

Most people commit the error of choosing a policy with lowest monthly cost and a high deductible. The feasibility factor of such policies attracts several customers. However, if the settlement covers only a portion of the bills during times of emergencies, the policyholder will have to spend an enormous amount from his pockets. While choosing a plan, the policyholder will have to consider his or her ability to cover the deductible during an emergency. If it is not possible, it is wise to choose a policy with a lower deductible.

2.Blindly deciding to buy what a friend or colleague suggests

When it comes to health insurance, there is no one size fits all theory. Your needs will vary from others even if you have the same medical conditions.
Before deciding on the policy, check if it fulfils your medical needs, compare it thoroughly with other plans in the same bracket or different amounts.

3.Buying only for tax benefits

In a survey held by ICICI Lombard, in the year 2015, 1400 youngsters in the age group of 25 to 35 years were questioned on health insurance. According to the survey, 75% of the people confirmed having a medical insurance policy. 46% of the male respondents and 64% of the female respondents said that they bought the health insurance coverage purely for tax benefits.

Though purchasing a health insurance policy does give you benefits on tax liabilities, the sole intention of buying a health insurance policy should be to save you from medical emergencies and cover your health needs. When you focus only on tax, you might end up buying a policy that does not meet your needs, and that might give you insufficient coverage.

4.Concealing health defects while purchasing the policy

Some customers take the liberty to provide false information or conceal pre-existing conditions on their health in the proposal form. People do this to prevent themselves from paying high premiums, or they fear cancellation of insurance cover.

Insurance companies check medical records intensively before approving the insurance. Even if they miss it, a doctor will understand that the condition was prevalent while purchasing the insurance. This will lead to a steep rise in the health insurance coverage, and the customer might even lose his protection.

It is crucial to disclose all your medical conditions in the proposal form and choose the policy accordingly.

5.    Co-pay and fine print

The part of the expenses that the policyholder has to pay to the hospital from his pocket is called co-pay. Co pay terms are not uniform. While some products charge a flat co-payment, some charge it only in case of senior citizen insured persons. Some products encourage co-payment in non-network hospitals. Never jump to buy a policy that charges you higher premium just because you are keen to avoid any co-pay. Also evaluate the percentage of increase in the premium for co-pay amount and choose wisely.

Ignoring the fine print will throw some shocking revelations while claiming.  Do read through it to understand exclusions, limits and caps.

Health insurance is primarily purchased to save yourself from the burden related to medical expenses. The cost of insurance varies according to the plan and the insurance provider.  It is tricky, and one can easily become over insured or under insured. An insurer must first analyze his needs and the risk factors associated with the product. Then the product should be chosen only after in-depth research.

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