Why you need to have hospital cash cover in your portfolio?

Saji George

In today’s world the essentials are Roti, Kapda, Makaan and Health Insurance. Galloping medical inflation means that treatment costs for any illness will soon leave you out-of-pocket. Therefore it goes without saying that everyone must have a health insurance policy.

A basic health insurance plan will reimburse (within your cover limits) all your treatment related expenses if you are hospitalized. However there may be no provision to cover incidental expenses or the loss of income due to your inability to pursue your employment. This is where stand-alone hospital cash policies step in.

A hospital cash policy provides for a fixed payout of money based on number of days spent in a hospital. A typical policy will cover anywhere between 30 and 90 days of hospitalisation. Some policies can cover up to 180 days of hospitalisation in a policy year. These policies can be purchased by an individual or by him for any or all of his family members. Each providing insurance company will have a set of exclusions to the cover offered, the most common ones being pre-existing diseases, dental related expenses, pregnancy and so on. All policies have a waiting period and would exclude reimbursing any expense for hospitalisation within say 30 days of purchase of this policy.

A claim can be made only if you or your family members who are covered in the policy are hospitalized.

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Different insurance companies have different features in such plans. Some of the plans are so elaborate, with so many added features that they begin to resemble standard health insurance plans. The larger the number of added features, the greater will be the premium.

Many standard health insurance policies have hospital cash and convalescence benefits built-in as additional covers. However these covers will provide reimbursements for shorter durations, mostly about 10 days in a policy year, unlike the stand alone Hospital Cash policy that will provide for reimbursements for 30 days and beyond.
We feel that the purchase of an additional separate Hospital Cash policy is justified only if you are concerned about additional, incidental expenses getting covered, or if you do not have enough sick pay, or would struggle financially if you were in hospital for a long period of time. We also recommend that it be purchased only after you have purchased a standard health insurance policy with hospitalisation benefits.

The writer is founder of policylitmus.com