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Last Updated : Dec 18, 2017 08:55 AM IST | Source:

What consumers need to know before purchasing a health insurance policy

The health insurance has become much more a need today with the healthcare costs raising day by day and severe health issues like diabetes and cancer are getting somewhat more common.

Manav Bajaj

In the world of high scale uncertainties, health insurance is one of the basic needs of the contemporary world that a smart and erudite person can never skip albeit living in affluence and comfort.

It is a common observation that people who don’t have any insurance policy are quite often deprived of on-time quality medical care that worsens the problem and even deteriorates their family and social life.


Health is the real wealth but to preserve this wealth; one always needs to spare a part of the liquid wealth. Here, nonstrategic saving or money accumulation is never a good idea because rising inflation causes holes in the piggy bank – i.e., depreciation. Ergo, a mediclaim policy is always a smarter idea, once it guarantees complete transparency, minimum exclusions, and adequate returns.

Need and importance of health insurance

Statistics reveal that more than 80 percent of the financial crises are a result of medical emergencies only thus, clearly indicating the severity with which such emergencies can damage one's finances. Health emergencies are much more of an issue than others as they not only involve funds for treatment but also hurt the ability of the holder to earn.

The health insurance has become much more of a need today with the healthcare costs raising day by day and severe health issues like diabetes and cancer are getting somewhat more common. There’s nothing more satisfying than paying a small price at short intervals and enjoying stable finances even when the worst of health issues hit upon.

Things to keep in mind before buying mediclaim

Health insurance is indispensable, especially for middle-class families, but it’s better to buy a policy from a reputed company only even if it costs a few more bucks instead of getting it done from a cheaper option that in the latter stages starts making troubles when the illness already pains one.

One should also avoid buying online policies quickly as one never knows about hidden clauses that reveal themselves after paying a few initial premiums. Instead, it’s better to go through and compare the policies online and then schedule meetings with executives of different insurance companies one by one. Hurriedness often causes an abysmal decision; so, don’t leave any doubts unclear because. There are many previous cases when the insurer repudiated the claim on the basis of exclusion policy.

‘The New India Assurance Company India vs. Rakesh Kumar’ case is an example which helps to understand that how cautiously an insured must have to deal with an insurance company. In this case, the insurance company used exclusion policy as a pretext for the defense to dismiss claim request against the coronary artery bypass surgery that Rakesh Kumar underwent on October 23, 2012. After a thorough investigation, the Court of Union Territory Consumer Disputes Redressal Commission SCDRC UT Chandigarh reached the conclusion that Rakesh Kumar wasn't aware of his coronary artery disease at the time of renewing the policy. On the basis of all facts, the commission directed the insurance company to reimburse the mediclaim amount of around Rs 2.25 lakh and Rs 50,000 as compensation for mental agony and harassment and Rs 7000 as litigation charge with interest @ 18% PA. Hence, seeking court’s help is imperative to protect consumer rights for every individual.

Get early protection and choose the right amount as sum insured

Early investment and that too before the age of 40 is key to enjoy the most of the health cover benefits without much pain to the pocket. The earlier one starts with healthcare policies, the more they get to enjoy the no-claim bonus on the original coverage that adds up to quite a significant amount benefitting the person in every claim-free year.

When selecting the sum insured, one needs to keep a tab on costs prevailing at that particular period of time, in case, the insurance holder lives in a small city, the minimum cover range should be between Rs 3 to 5 lakh. If it involves a metropolitan resident, then the cover should be nowhere less than Rs 5 to 10 lakh. Also, if one is shifting from one city to another, then they can port the benefits of the old plan into the new one in the new city instead of, canceling it and then buying a new one. It is also necessary to keep increasing the health cover from time to time to keep pace with the rapid speed of medical inflation.

Pay heed to every detail and stick to honesty

Mutual transparency and trust must be established between the buyer and seller of the policy, the breach of trust brings losses to both the entities. So, before signing the documents, it’s the responsibility of both the parties to provide complete and fair details which may greatly affect the deal in the future. Being a conscious consumer one should take a substantial amount of time in enquiring the details, cross-checking them with the help of experts such as insurance consultants, lawyers, and subject matter experts.

Finally, making the right decision based on a thorough cost-benefit analysis. On the other hand, the consumer should also react honestly and must refrain from hiding any fact related to him/her.

One should declare every problem and ailment in the application form; otherwise, the problem created by undeclared illnesses will not be covered in the medical cover. Make sure to get the ailments one wants in the medical cover even if it requires a waiting period. But today, in most of the plans all preexisting diseases get covered after a time span of 3 to 5 years depending upon the plan. Before investing in such policies, it’s better to check the waiting period and invest in the ones that come up with the minimum of it and maximum of preexisting diseases.

How important is to read exclusion clauses

Majority of denied medical claims have been because of non-disclosure of prior condition. Insurers and insurance brokers need to be aware that many exclusion clauses in policies won’t have the effect that may have been intended when they are tested before a court or tribunal. In the majority of cases, customers remain unaware of the diseases covered in the mediclaim and what procedures they need to comply with to avail maximum benefits from the policy. A complete knowledge of the policy one holds protects the insured of getting cheated by the insurer. Here, the best thing to do is to have a full checkup before subscribing/renewing the policy, so that the insurance company is also assured about the details mentioned in the forms submitted to them.

Never buy a health insurance policy which has a claim loading

If you get a critical illness which requires long-term cure then with a claim loading your premiums will keep on increasing and soon may become unaffordable. So, don’t fall into that trap. Besides, one should always invest in a policy that can be renewed any time during the overall lifetime. The aim of health cover is mostly to secure the people in their old age when they are at the risk of facing many severe ailments and are also not capable enough to adequately fund such healthcare treatments.

Buy a plan with no or minimal sub-limit

Be especially careful of plans which offer a cap on the room rate. You can’t decide the category of the room if you or your family member is carried in an emergency situation to the hospital. Watch out for sub-limits; means that your insurer specifies a limit for an expense and anything above that needs to be borne by you; room rent, diagnostics, and doctor’s fees are the most commonly introduced sub-limits. You need to check the limits while choosing a policy.

And, always try to hook up with the policies that provide one with the benefits of restore limit or super top-up just in case the medical problem needs much more than the amount assured. In such times, this will act as a buffer stocks to meet up and sort out the costs of the unforeseen critical illness like that of cancer and diabetes.
(The writer is CEO, Consumer Sathi, an affordable Legal help for Indian Consumers)

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First Published on Dec 18, 2017 08:55 am

tags #insurance

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