Being covered by the most suitable health insurance plan is a must for all Indian families, particularly since COVID-19 has highlighted the high cost of hospitalisation. However, finding the most suitable plan is a challenge for most of us, as we have to compare several plans with confusing terms and conditions.
This article does not have the complete answer, but it will provide some high-level guidelines, which our readers find useful. Even though we have identified over 150 parameters to differentiate between Indian health insurance plans, we find the following to be of higher priority:
Insurer Network: Insurers should have our usual hospital, as well as preferred specialty hospital in our town or city in their cashless networks.
Plan Type: Base plans cover our hospitalisation expenses from the start, while top-ups cover us after we contribute a minimum amount (deductible). Critical illness benefits plans provide a lump-sum amount if we are diagnosed with one of specified critical illnesses. For the rest of this article, we will focus on base plans.
Coverage Type: Plans for individuals cover the hospitalisation claims of each individual. Family floater plans jointly cover the members of a family included in the plan. We will focus on family floater plans, as they are more popular within Indian households.
Sum Insured: Benefits and conditions of base plans vary widely based on the sum insured. Therefore, it is better to decide on the sum insured before starting the comparison process. The right sum insured for a family floater is a personal choice, based on economic status, risk aversion and family size. However, a broad rule-of-thumb would be to have a sum insured that is roughly around our annual household expense.
Room Rent Limit: This is a very important feature, as hospital expenses (even beyond just the room rent) are usually linked to the room rent. If we get admitted in a room which has a room rent higher than the plan limit, we will have to pay out of our own pockets all the additional hospital expenses on a pro-rata basis, not just the additional room rent. Room rent limits are often linked to the sum insured, and therefore it is wiser to have a higher sum insured.
Waiting Period: Most plans have a waiting period for up to 4 years for pre-existing diseases. If we are starting our health insurance policy after we have reached “middle” age, we should look for plans with shorter waiting periods.
No Claim Bonus: This is the percent or amount by which the sum insured will increase without additional premium, after a year with no claims on the policy. This is useful as it allows the sum insured to keep pace with inflation. One caution about no claim bonus though. Some plans don’t increase the room rent limit in synch with increase of sum insured due to no claim bonus.
Restoration Benefits: These are useful as they provide additional cover for repeat hospitalisations within the same year.
Maternity Benefits: These covers are useful for families that are planning to have their first or more children. A word of caution about these benefits. Most of them have waiting periods of between one and four years, and so it is wise to purchase a policy with maternity benefits well ahead of time.
Premium Amount: Premium amounts for plans with similar benefits can vary quite a bit, based on the vintage and scale of the insurer. Recent entrants often charge lower premium as they want to gain market share. Some insurers charge lower premium for younger age bands, but the rise is steeper with age.
Comparing and selecting the right health insurance plan is a bit complex. Please do take the help of trustworthy advisers who will guide you with Integrity, Care and Expertise, our core values.
(Srinath Mukherji is Co-Founder, SANA Insurance Brokers Pvt. Ltd.)
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Insurer Claim Settlement Ratio: Shortlisted insurers should have high claim settlement ratios as it is an indicator of the insurers’ track record in settling claims.
