What to look for before you buy a health cover policy?

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PLANNING to buy a health insurance policy? Well, all health insurance products have gone for a makeover from this month in line with the new regulations introduced by the insurance regulator in February. Health insurance products are now offering lifelong coverage, allowing entry up to 65 years, offering a free look period of 15 days, grace period of 30 days and paying 50 per cent of the pre-insurance medical check-up if your proposal has been accepted.

So while many product features that were earlier used to differentiate between products have now become mandatory, customers can look at some other factors to choose the right policy.

Room rent cap:

 In case you stay in an urban city or semiurban place, consider a policy that does not cap the room rent cost. But in case you stay in a small town, a product with a room rent cap can be considered as such policies come with lower premiums. Several charges such as the surgeon's fee, anaesthetist fee, consultant's fee, operation theatre charges are linked to the cap on the room rent. While many health insurance products cap the room rent at one per cent of the sum insured per day, a few policies pay a room rent that is two per cent of the sum insured per day. Assuming you have chosen a sum insured of Rs 3 lakh, your insurer will pay you not more than Rs 3,000 as room rent per day.

Top hospitals in Mumbai and Delhi charge between Rs 8,000 and Rs15,000 for a single room. If you have a Rs 5 lakh policy, you will get only Rs 5,000 from your insurer and will have to shell out the remaining cost from your pocket. However those staying in tier 4, 5 and 6 towns will not be affected with a product that caps room rent, as the cost of healthcare is less in such places.

Go for plans that don't have a co-payment:

With rising losses in health insurance, several non-life insurance companies have introduced co-payment which means that the policyholder has to pay a portion of the claim amount. Avoid a policy that has co-payment.

Some products have co-payment of 10-20 per cent if the treatment is taken in a nonnetwork hospital. While a few others have a co-payment after the policyholder turns 65 years. Policies that have a co-payment element should be avoided." Benefits being offered: Look at the benefits that the policy offers such as hospital cash on contracting a critical illness or in case of an accident, cash for the attendant, ambulance charges and noclaim bonus. Though many insurers offer 5 per cent of your sum insured as noclaim bonus, there are others who offer 10 per cent or more. Also, check the number of daycare procedures and critical illnesses that will be covered in the policy.

Premium rate:

 

Most prospective health insurance buyers compare products based on the premium rates and opt for the cheapest policy. However, since insurance companies revise the premium rates based on their loss ratios, this factor should not be the only factor for deciding your health cover. Now with the new reg ulations, insurers will not be allowed to change the health insurance premium rates every year, nor will they be allowed to load your premium while renewing your contract in case you have claimed during the year. See if the premium commensurate the benefits.

 

According to industry officials, most non-life insurers have revised the features of their existing products in line with the regulations without changing the premium rates, but they agree that raising the premium rates is inevitable. Public sector insurers such as New India Assurance and National Insurance have already launched products with higher premium rates a few months ago.

Since my claim ratio is comfortable, we have not revised the premium rates as of now. We will be watching the impact of the regulations on our loss ratios for the next three to six months and then decide on increasing premium rates. However, I feel that health insurance penetration will increase due to the new norms. Higher volumes will help us break even in this business.

Consider past claim settlement record of the insurer:

Look at past track record of the insurer in settling claims. What were the number of claims outstanding at the end of the year, number of claims repudiated and the number of claims settled?

There are a few insurers which have priced their products low, but have a track record of repudiating higher number of claims compared with their peers.
Such insurers are risky and should be avoided.

Network hospitals:

You should also check if the hospitals close to your residence are there on the insurance company's list for providing cashless hospitalisation.

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