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Why you should opt for a high health insurance cover

Rising healthcare costs must be looked at while buying health insurance cover.

December 02, 2015 / 12:27 PM IST
Adhil Shetty

Awareness of the need for health insurance has never been higher. Rising medical expenses, a bitter experience your uninsured neighbor had, the penetrated marketing campaigns of general insurance companies, increased tax rebates for health insurance—all these have contributed to the increasing popularity of health cover in India.

However, it is a fact that most people who take health cover are not making the decision after a careful analysis of the required sum insured. Many would like to keep the premium optimal and therefore opt for an average cover of Rs 3-4 lakh.

Is that sufficient for you? Or, should you opt for a higher cover, anticipating unforeseen circumstances that could command a small fortune in medical expenses?

Here are some scenarios broken down, to help you decode your needs:

Scenario 1: John is a salaried individual and his company offers him a health cover of Rs. 5 Lakh. John did not opt for an additional health cover. John had to switch his job after a year. Now, not only was he not covered during the switchover to the new job, but also his new employer had a different plan with a lesser coverage. The plan he had with his previous employer was not portable either. Now, John, who is in his late thirties, had to pay a heavy premium and undergo medical tests to opt for higher cover insurance.

Scenario 2: Mitesh has taken a family floater insurance with a coverage of Rs 3 lakh in addition to his employer insurance which provides a Rs 2 lakh cover. His family consists of his wife, child and his mother. His mother underwent a surgery, which costs around Rs 5 lakh. The expenses incurred were met by his employer’s insurance as well as by the personal cover he had. Now, suppose, in the same year, his wife is hospitalized and he incurs medical expenses of around Rs.1 lakh. As his covers under both plans have exhausted, Mitesh had to bear this amount out of his pocket.

Scenario 3: Aman, 56, has a health cover of Rs 7 lakh. He met with an accident. As a result, he had to undergo some critical treatments and his medical bill shot up to Rs 9 lakh. Does this mean that Rs 7 lakh is a low cover?

How does one decide whether the health cover he or she has chosen is sufficient or not?

The ideal health insurance one should have

The scenarios above do not automatically imply that one should always opt for a very high cover, expecting a possible high medical expense to be met.

Here are a few tips for choosing adequate coverage of medical expenses through health insurance:

•Do not rely on employer insurance alone. You should have a separate cover which has an equal coverage or more as required.
•Choose coverage based on several factors like your age, family history of diseases, lifestyle, pre-existing diseases and your location. If you are young, healthy, with less dependents and living in a small town, you may need not a high coverage.
•Coverage can be chosen based on your location as well. Medical expenses in small cities are lesser as compared to a metro city. So, someone living in a small city need not take a higher cover, unlike a metro denizen who would.
•Taking a top up plan in addition to employer coverage will help to save on premium and at the same time ensure a higher coverage.
•If your elderly parents are also included in the cover, it is always advisable to opt for a higher cover.
•A careful planning to opt for add-ons like critical illness cover, maternity cover, etc would be useful, based on your situations.

Things to note while opting for a high cover

•A large health cover does not necessarily mean the health insurance company will reimburse every expense you claim. Irrespective of your cover, the policy will offer exclusions depending on its terms and conditions.
•Many policies have a 10-20% co-payment clause. This means you will have to bear some cost of your medical treatment even with a high cover health plan. Taking up a top up policy with a higher cover along with your existing health plan or employer’s insurance is recommended in such situations.
•Look at the policy exclusions and waiting period for any pre-existing diseases. If the period is too long even a higher health cover would be of not much help.
•Most health insurance plans have a room category limit. This means that you are entitled to take a minimum category room in the hospital. So, even if you are planning to get treated in an elite hospital, your policy may not cover charges for wards or rooms in such a hospital.
•With a higher cover, if you intend to get treated overseas, remember that such treatments are only offered when medical facility for the same is not available in India.

There is no single fixed amount or limit on the amount you should have as health insurance. Also remember that rising medical costs in today’s world mean that unless you have a health cover that takes into account the inflation, your may be grossly under-covered.

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