Moneycontrol PRO

What's OPD? What about 30-day waiting period? Health insurance nuances still vague to most policyholders

A survey by ICICI Lombard showed that about 48 percent of policyholders were unaware of the features of their own health insurance policies, like out-patient cover, pre-post hospitalisation and so on.

February 07, 2023 / 11:00 AM IST
(Representative image)

(Representative image)

Health insurance is slowly getting popular but many policyholders are still unaware of all its benefits.

A survey on financial literacy undertaken by ICICI Lombard General Insurance, one of India’s largest general insurers, found that a large number of policyholders do not know about their insurance policies beyond that they pay for hospitalisations. The survey also found that even vehicle policyholders, which mostly comprise millennials and Generation Z, are unaware of what a vehicle insurance policy entails.

The survey, which was carried out with 732 respondents from the metro and tier-1 cities of India, concluded that lack of awareness and accessibility are the major reasons for a meagre 4.2 percent penetration of insurance in a country over 130 crore people.

Knowing your health insurance benefits helps

The survey found that 48 percent of health insurance policyholders were unable to explain any of the common terms like out-patients department (OPD), 30-day waiting period, and so on.

Less than one in five health insurance policyholders were able to correctly explain terms like sub-limits, daily cash, OPD cover and reset benefit, to name a few.

The lack of awareness is disturbing because the key to choosing a good health insurance policy is to check what expenses are included and what would be excluded. For instance, a good health insurance cover has the least waiting period (for existing illnesses), comes with an OPD cover, has lower, or preferably nil, sub-limits and so on. A lack of awareness of this shows that while many people would have health insurance, the cover itself might be inadequate.

Only 26 percent of the people who bought health insurance surveyed claimed they are fully aware of the details of the health insurance product they own.

And, what if your health policy doesn’t live up to your expectation, doesn’t pay your claims fully and you wish to complain?

Less than 40 percent of insurance policyholders know that the Insurance Regulatory and Development Authority of India or IRDAI is the regulator for the insurance industry. Not knowing who the regulator is, means you probably wouldn’t know where to complain.


Confident about buying the right health cover?

While only 46 percent of the health insurance owners claimed that they bought their policies themselves without relying on friends or family, 51 percent of the customers who intend to purchase a health insurance policy are very confident about being able to choose the right insurance themselves.

Younger people (21-30 years) who are about to make their initial insurance decisions are more aware of the insurance-related terms. They are also more likely to engage in comparative evaluation between brands while buying an insurance policy.

That bike you own must also have insurance

Owning a two-wheeler, or better still a four-wheeler is on top of most millennial minds. But are you aware of the vehicle insurance that you need to buy? Both to protect your vehicle from damage as well to insure yourself against accidents that you might cause and damage other vehicles.

Owning a third-party insurance cover for your vehicle - the cover that protects you against damages you cause to a third party - is compulsory. Less than half (49 percent) of motor policy owners know this, as per the survey.

It’s important to know how your vehicle insurance works, including terms like Insured Declared Value (IDV), zero-depreciation cover, and so on. Just less than 20 percent of the policyholders understand the nitty-gritty of a motor insurance policy.

What should you do?

If you are a fresher, you can look at buying a health insurance policy of at least Rs 5 lakh to start with, even if your employer extends group health coverage to you and your parents. Every individual must review this cover every five years to account for healthcare inflation and change in lifestage requirements. A metro-dwelling couple in their forties with kids, on the other hand, should buy a cover of at least Rs 10 lakh and enhance it at regular intervals.

It’s not enough to just buy a health insurance policy. It’s crucial to buy the right policy. A good policy is not just the one that comes with the least premium. It must also come loaded with features.

Here’s where Moneycontrol – SecureNow Health Insurance ratings come in handy. Our ratings sifted through 27 insurance companies and more than 130 health insurance policies to identify those that are not only comprehensive but also have a good track record as far as the claims experience goes.

Bhavya Dua