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How To Choose The Best Health insurance plan?

Health Insurance

Health Insurance is very much essential in today’s world where medical care costs are rising steeply with every passing day, where a week in the hospital can cost as much as many earn in an entire year - but even the cost of simple doctor's visits and prescriptions can empty your wallet faster than you can fill it.

With the importance of health insurance comes the necessity to pick the best individual health insurance plans for your needs. How are you supposed to find the best health insurance plans in India? Well, the best health plan in India and company for you will vary tremendously based on the level of coverage you want, your budget, and your location also.

Because there is no “best” health insurance company for everyone, we’ll instead focus on the key things you need to focus for comparison of health insurance plans.

What Is Health Insurance?

A basic Health insurance plan covers the cost of hospitalization expenses for all the insured members, so that they don’t have to pay large medical bills out pocket. Some plans offer additional customization to cover the cost of medical tests, doctor visits and pharmacy bills as well. Typically, if the insured member is admitted to a hospital for more than 24 hours, cost of medicines, oxygen, ambulance, blood transfusion, hospital room rent, various medical tests and other treatment related costs are covered under the plan.

What are the major benefits in a Health Insurance Policy?

Cashless Facility: All health insurance companies tie up with a large network of hospitals to provide the facility of cashless health insurance plans. If you are admitted to any of these network hospitals, the insurer shall directly pay the treatment cost to the Hospital, ensuring that you do not have any out of pocket expenses. In case the hospital is not a part of the network, you will have to pay the hospital and the insurance company will reimburse you later.

Pre-hospitalisation expenses: In case you have incurred treatment costs for the illness for which you later get admitted to a hospital, the insurance company will bear those costs also. Usually the insurers shall pay for the costs incurred between 30 to 60 days before hospitalisation.

Post-hospitalisation expenses: Even after you are discharged from the hospital, you will incur costs during the recovery period for medicines, follow up visits, diagnostic tests etc. Most insurers cover such expenses incurred 60 to 90 days after hospitalisation.

Health Check-Up: Some policies have a facility of free health check-up for the well being of the individual. Some plans offer this annually and some others offer it once in a certain number of years.

Tax Benefits: The premiums paid for a Health Insurance Policy are exempted under Section 80D of the Income Tax Act. You may claim a deduction of up to Rs. 25,000 per financial year as medical insurance premium instalments. The premium paid should be for you, your spouse, and/or dependent children. On the other hand, if either you or your spouse is a senior citizen (60 years or above), the limit goes up to Rs. 30,000.

No-Claim Bonus: If there has been no claim in the previous year, a bonus benefit is passed on to the insured, either by reducing the premium or by increasing the sum assured by a certain percentage of the existing amount.

What are the key points to check before buying Health Insurance?

Only the coverage and premium are not enough to find the best health insurance. Finding a policy that meets all your needs is a time-taking process, what adds to the trouble is the unfamiliar and confusing terms and conditions in the policy brochure.

To make your comparison easy, we are listing here for you the most vital factors you should consider before purchasing a health plan.

Sum Insured Limits:
The main benefit in health insurance is the sum insured, it is the maximum amount paid by the insurance company to meet your medical expenses. Any expenses incurred over and above the sum insured will not be paid. Choose the correct sum assured considering your current health condition, the kind of city you live in (hospitalization costs are more in metro cities as compared to non-metro locations) and any family history of critical illness.

The biggest mistake one makes when buying Health Insurance, is when one factors today’s costs and decides the insurance coverage, whereas you are likely to make claims around 10 years from now. Hospitalization costs today would be ranging from Rs. 50000 to Rs. 3 Lakhs. Assuming you are 30 today, at a modest average healthcare inflation of 7.5% for the next 10 years, single hospitalization bills will range at around Rs. 5 Lakh when you are 40 years old.

So, choose the sum insured keeping in terms of the long run. It is advisable to take adequate cover from an early age, particularly because it may not be easy to increase the sum insured after a claim occurs or when the age increases. 

Individual / Floater Policies:
Most buyers often struggle to decide on whether to buy an “individual” policy for each family member or a “family floater” policy. While an individual policy works best in all situations, it can be an expensive option. The family floater plan on the other hand offers savings by allowing you to utilize a single insurance cover to meet the medical expenses for you and any of your close family members. However, when you opt for a family floater cover, make sure that the sum insured is sufficiently high to cover a situation where more than one person in a family needs hospitalisation in the same year.

Waiting Periods
Health insurance plans have a waiting period, which is the time, starting from purchase, when you cannot claim certain benefits till a given time. Insurers have different waiting periods for different benefits. The most common ones are

  • Initial Waiting Period:  After purchasing a policy there is an initial waiting period clause ranging from 30 to 90 days (as per different insurers).  Any claim against your health insurance policy will not be admissible during this period except for hospitalization expenses due to accident.
  • 2 Year Waiting Period: Some medical treatments will typically not be covered until 2 years from date of purchase. Most common treatments that do not get covered are treatments for Cataract, ENT disorders, hernia, osteoporosis, etc.
  • Pre existing Conditions: There are waiting periods ranging from 2 years to 4 years to cover any medical condition which you might have had before taking the plan. The waiting period depends on the severity of the condition for which you require treatment, be sure to check the policy brochure for more details.
  • Maternity Benefit: The waiting period to get maternity related expenses covered ranges from 9 months to 4 years between insurers. You should plan early and make sure that you purchase your insurance well in advance to cover all treatment costs. Some group health policies offered to employees of corporate organisations do not have any waiting period for Maternity, be sure to check with your HR for details.

Co Payment Clause:
Some insurers offering you health insurance plans will have a mandatory co-pay clause where you are required to bear a certain percentage of the claim amount for all claims. It applies to all the claims you file in the policy period. Usually, plans with a higher co-pay have lower premiums or shorter waiting periods.

For Example, if the co-pay clause says 10% to be borne by you, for a claim of Rs. 10000, your insurer will only pay Rs. 9000, and you must pay the remaining Rs. 1000 irrespective of the available Sum Insured.

It is advisable to go for plans that come without restrictive options, such as co-payments, limits on room rents and treatment-specific limits. They may cost a little more but offer complete financial protection during emergencies.

List of Network Hospitals
Insurers offer cashless hospitalization in case you get admitted to any one of its listed network hospitals. Before buying a health insurance plan, it is important to look at this list and check whether the best hospitals in your area are part of the insurers network or not.

In case of planned hospitalization, distance from your home to the hospital may not matter, but in case of emergencies, it might be unavoidable to go to the nearest hospital. Having a good network nearby will ensure that you can always afford the best healthcare with minimum out of pocket expenses.

Lifetime Renewal:
Most health insurance policies do not have any age limit for the renewal. Discourage plans with limited renewability, as it will become difficult as your age advances to find new health plans of your choice, premiums will also typically be higher if you need to find a new plan when you are older.

This is an extremely important factor to consider if you’re planning to cover your elderly parents in your policy.

Finally, go through Policy Wordings
Ensure you go through the Customer Information Sheet/Terms & Conditions yourself. This summarizes all the key conditions you must be aware off. Every health insurance product needs to file this with the Government (IRDA) and this document is publicly available for download. Ask our team all your questions until you are satisfied that you are making the right choice.

Top Health Insurance Companies

The below tabular data helps you to compare health insurance plans in India.

Net Claims Incurr Status of Grievances
Earned Premium (Rupees. In Lakh) Incurred (Rupees. In Lakh) ed Claims Ratio (%) Opening Balance Reported during the year Resolved during the year % Resolved during the year Pending at the end of the year
Star Health 151387 81455 53.81 166 7093 7166 98.72 93
Religare 28773 16472 57.25 2 564 560 98.94 6
ICICI Lombard 107460 88212 82.09 372 4974 5256 98.32 90
Apollo Munich 77490 50065 64.61 13 978 987 99.6 4
Bajaj Allianz 79332 59450 74.94 204 1756 1911 97.5 49
HDFC Ergo 63809 32542 51 23 2879 2886 99.45 16
Reliance 54948 52679 95.87 67 1500 1521 97.06 46
Max Bupa 39311 23402 59.53 0 620 620 100 0
SBI General 38893 21161 54.51 317 1136 1392 95.8 61
Bharti AXA 9987 8531 85.41 105 4198 4266 99.14 37
L&T 4940 2298 46.52 5 335 340 100 0
Cigna TTK 7096 5582 78.66 4 334 332 98.22 6

** Source : IRDA Annual Report 2015-16

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