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10 practical tips to choose the right health insurance

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Raman was a young and enthusiastic 25-year-old. He had a new job and was on top of the world. His father suffered a heart attack and had to be rushed to the hospital. Raman din’t know what to do, and was left scrounging for money to pay the hefty hospital bills. He was not covered by any health insurance policy. Most people, like Raman, do not realize the importance of a good health insurance policy till they are in circumstances where they need it. Some of them who do have one, is thanks to the company group health insurance policy. Unfortunately, even these aren’t enough and most people don’t even know it.

Ok, you finally decide to get health insurance. But how do you decide which one to get? Here are 10 practical tips for you:

1. Choose your insurance company wisely:

Generally, companies that offer health insurance are either general insurance or life insurance companies. Experts say that it is better to pick a general insurance company over one that offers life insurance, because a company that provides life insurance is invested in policies that will reimburse the family members of the deceased, and will not be focused on health insurance. Another reason is that the policy usually costs more when taken from a life insurance company.

2. Plan for future needs:

You need to think of the needs that might arise in the future. If you have a family with ageing parents or are newly married and are planning to start a family in the near future, it is important to think of policies that will cover aged parents or possibly cover maternity costs.

3. Make an informed decision about the type of health insurance:

Read all that you can about the various options your health insurance company is providing you. Ask questions. Generally, if you have a family it is advisable to opt for a family floater plan. It is more economical and effective in the long run. Similarly choosing a cashless policy over a reimbursement type of policy may suit some but may not be beneficial to all.

4. Choose the right amount as ‘sum assured’:

‘Sum assured’ in simple terms is the maximum amount that a person who is insured can be reimbursed or covered for in one policy year. Basically, it is the base for all your future medical claims. Before you choose the sum assured, take into account the rising medical costs. At the same time, the amount shouldn’t be so high that it would be difficult for you to pay the premium.

For example, an insurance company assumes that the cost of a hospital bed for one day is one percent of the sum assured. Therefore if your sum assured is one lakh, hospitalization should cost you thousand rupees per day. If you were hospitalized for seven days and the hospital charges more than a thousand rupees per day, you will be left paying the difference. Hence choosing the right amount is imperative.

5. Check the empanelled hospitals:

Every insurance company has empanelled hospitals, with whom they have a tie up. These hospitals are instructed on how to settle the claims of a patient who has a particular company’s cover. Therefore it is best to check which hospitals are under the insurance company. Checking for their specialty, reputation and distance from your home is important. This is because in case of an emergency you are most likely to visit a hospital closest to your home.

Another consideration is that there should be hospitals with varied specialites under the insurance company– it is better to have a choice when it comes to certain illnesses rather than going to the same hospital that may not provide you with appropriate care.

6. Understand the premium calculation process:

A premium is the sum you pay to the insurance company while buying an insurance policy. Although the formula to calculate one’s premium usually has a common formula, there are a few factors that may change while charging a premium. Some of the main factors are — the ‘sum assured’, the number of times you have used the policy and for how much. Talk to your insurance agent about the amount of premium you will have to pay per year and how the company will charge for various services.

7. Read the fine print:

A health insurance policy has a number of clauses – what could be called the ‘fine print’. Reading them well is very important. And if you do not understand them, do ask questions.

For example: Read clauses related to the renewability of an insurance policy. This means that the policy will no longer hold good after a person attains a particular age. This could mean that you may not have a health insurance at the age of 70 or 75, when you need it the most. Here, choosing a policy that will cover you for life rather than one that will expire when you need it the most is adviceable.

If you have a pre-existing disease (for eg: diabetes), policies can be used only after a stipulated time period decided by the company.

If you are planning to start a family, ask the company about their maternity clause. Many companies do not cover costs of delivery or of any complications arising from that.

8. Read reviews and compare policies:

In the case of a medical emergency it is important that you and our family have complete peace of mind when it comes to money matters. Therefore, talk to your friends who might have the same policy, or read reviews about the policy you are about to buy. Another good tool is to compare policies. Knowing that the company takes care of your finances seamlessly is important for a smooth stay at the hospital and a stress free recovery.

9. Check flexibility of the policy:

In the case of an illness, it important that the company allows the insured person to have some flexibility in paying the premium for the amount used. A premium is recalculated at the end of a policy year and is increased depending on the amount the policy has been used. Therefore it is important that the policy you choose allows you the leeway of paying older premium amount for some time, after which you can start paying the increased premium without interest or other charges levied on it.

10. Check if the company offers a no-claim bonus or discount:

If you haven’t claimed any insurance in the policy year, some companies offer either a bonus amount or a discount on the premium in the next year. This is called a ‘no-claim’ bonus or discount. This is a good feature and also an incentive to keep yourself fit and healthy.

Written by admin

September 20th, 2009 at 11:06 pm

Posted in Insurance

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