You want to buy a health cover and call up your agent. He comes, fully equipped with brochures and forms, and starts explaining polices ranging from the simplest to more complex ones before going on to specific covers such as for surgery and diabetes. As you grapple with this flood of information, you start weighing the pluses and minuses of each policy, wondering what suits you best-cover for diabetes and cardiac care? Or maternity? Or cancer? Or the policy that covers treatments abroad? You are confused.
Selecting a health policy has never been easy. Things improved a bit after the Insurance Regulatory and Development Authority of India (IRDAI) issued guidelines for uniformity in basic health policies. As a result, several insurers re-launched their basic health policies. The new products had a higher entry age of up to 65 years, lifelong renewability and a long list of standard exclusions. While this made it easier for customers to choose a simple policy, it also forced insurers to develop complex products that benefit policyholders. For instance, they came out with in-built restore and medical opinion covers, which are not standard features but have great utility.
In such a scenario, zeroing in on the right policy is a challenge. So, how should one go about it?
To begin with, you must know that there are two kinds of health insurance policies-indemnity and benefit. While indemnity policies such as individual and family floater pay hospital bills, benefit policies such as critical illness pay a lump sum if you are diagnosed with a disease that you are covered for.
Your first policy should be a basic indemnity plan that covers hopitalisation. These policies reimburse room rent, doctor's fee and other hospitalisation expenses. After this you should look at specific plans such as critical illness and disease-specific covers.
Antony Jacob, chief executive officer, Apollo Munich Health Insurance, says, "In terms of products, there is an increased interest among customers in benefits customised to specific needs, in addition to the basic covers. Also, due to the growing incidence of lifestyle-related diseases, people are keen on purchasing separate policies for ailments such as diabetes, kidney failure, heart attack, cancer, etc."
M Ravichandran, president, insurance, TATA AIG General Insurance, says, "The hospital indemnity product will rightly continue to dominate the mind space of consumers as it is the base of a health insurance portfolio. Things like critical illness and hospital cash, which were erstwhile in the periphery, have started gaining traction. Going forward, insurers will also cover preventive care and offer products that promote health."
Yashish Dahiya, CEO & Co-founder, Policybazaar.com, says, "I see more game changing products being launched in the health insurance space that will challenge the old methodology of underwriting products, as insurers will look to tap any untapped customer base they see potential in." Here is a low-down on new health plans that have been launched of late and things you should watch out for while buying them.
COVER FOR SURGERIES
Experts say more people get admitted to hospitals for treatment of viral infections, diarrhea and digestive ailments than more serious things such as surgery. In order to reduce claims and pass on the savings to policyholders in the form of lower premiums, Bajaj Allianz General Insurance has introduced a surgical protection plan. It is a benefit plan where a fixed amount is paid on the basis of the grade of the surgery. The grading, from one to five, is done on the basis of the surgery's severity and complexity. It covers 600 surgeries and has 11 plans with sum insured ranging from Rs 1 lakh to Rs 10 lakh.
For example, if one opts for Plan 10 (sum insured Rs 9 lakh) and undergoes appendicectomy (Grade 3 surgery), the amount paid is Rs 1.5 lakh, irrespective of the hospital bill.
The good part is that such segregation makes the cover cheaper than indemnity plans. For instance, the plan offers a cover of Rs 5 lakh for a 30-year-old male for Rs 2,994. On the other hand, a basic indemnity policy (Bajaj Allianz's Health Guard) with the same parameters costs Rs 6,917.
"Surgery-based plans, which are benefit plans, act as a back-up to the base plan given the rising cost of surgeries. They can also be used without disturbing your regular health insurance plan." says Suresh Sugathan, head of health insurance, Bajaj Allianz General.
Similarly, Star Health has introduced plans that differentiate between medical management and surgery cases. For example, the silver plan of Cardiac Care covers any cardiac related complications necessiating surgery while the gold plan covers benefits under the silver plan plus cardiac medical management cases. Along with silver and gold plans, it also covers illnesses other than cardiac. It is a win-win as it lowers claims as well as premiums. For example, for those below 60, a cover of Rs 4 lakh costs Rs 22,000 (silver) and Rs 30,000 (gold).
Watch out: The surgical protection plan by Bajaj Allianz is a benefit cover that pays different amounts for different surgeries according to the plan type and disease grade. So, don't expect to cover all hospitalisation costs.
COVER FOR SPECIFIC DISEASES
It is not easy to buy insurance when you are suffering from serious diseases. In such a case, you are asked to undergo tests. Despite that, your application may be rejected.
Disease-specific plans fill the gap. Apollo Munich, for instance, has a plan called 'Energy' for people with diabetes. "It is a unique health cover that not only indemnifies against medical exigencies but also takes the policyholder towards a lifestyle management programme to monitor and control diabetes through wellness tests and coaching. The plan has been on a growth track since launch," says Jacob.
Star Health also has plans for diabetics and heart patients. It covers people suffering from diabetes mellitus, including people on insulin. Apollo Munich's Energy is for people with Type 2 diabetes mellitus, impaired fasting glucose, impaired glucose tolerance and hypertension. As it is not easy to break down these complex terms, take help from your doctor before buying the policy.
The premium in disease-specific plans is, however, high. Therefore, many experts advise people to go for a basic policy instead of these plans. Atrey Bhardwaj, head, insurance, Probus Insurance Brokers, says, "Though there are plans for specific ailments, they are not very well-perceived due to high co-payment. If a diabetic person has a healthy lifestyle, I would advise him to go for a normal policy as everything gets covered after a period of four years." Co-payment requires the insured to pay a part of the medical bill.
Sanjay Datta, chief, underwriting and claims, ICICI Lombard General Insurance, says, "Disease-specific covers have not done very well. Prices are much higher and, therefore, people tend to buy standard policies."
Manasije Mishra, CEO, Max Bupa, says, "We have seen some activity in the space. We are watching it. We have not seen big customer interest in this space."
Watch out: Note the benefits, exclusions and waiting periods. Jacob says, "Look for treatment-respective limits which cap the amount you can claim for a particular surgery. These will cap the claim amount even if the sum insured under the policy is big. You need to weigh this in before signing up." Most important, buy these plans as early in life as you can, so that the premium is low.
Medical costs have been rising at 15-18% a year, double the inflation rate. This calls for large covers. But not everyone can afford to pay high premiums. This is where top-up plans are useful. These reduce costs through in-built deductibles. Let's see how they work. The deductible is the amount that must be paid for treatment before the insurer pays.
While in a regular plan the insurer pays up to the sum insured, top-up plans do not pay until the bill crosses a threshold. For instance, if the hospital bill is Rs 6 lakh and the deductible is Rs 2 lakh, you have to pay the deductible amount (Rs 2 lakh) from your pocket; the insurer will pay the rest.
You can use your individual/group policy to pay the deductible. This is helpful as a combination of basic and top-up plans is much cheaper than a standalone indemnity cover. For a 30-year-old male, a regular policy with a cover of Rs 5 lakh will cost around Rs 6,900. If he were to increase the sum insured by Rs 15 lakh (with a deductible of Rs 5 lakh), the additional payment will be just Rs 5400.
Watch out: In case of hospitalisation, use your regular health policy before the top-up plan. But before buying a top-up plan, clarify if it is cumulative deductible or covers only single incidence. This is because in cumulative deductible, losses of the entire year are summed up until the deductible level is reached. In single incidence, expenses are covered on a per-case basis. The policy is triggered only after the hospital bill crosses the threshold, irrespective of the previous claims. Also, remember that the higher the deductible, the lower the premium.
COVER FOR MATERNITY EXPENSES
It is not that insurers have started offering maternity covers only now. These have in the market for years. But now, they have started reducing the waiting period. For example, Religare Health Insurance has launched a policy called Joy, where the waiting period is as less as nine months. The claim amount, however, is limited to Rs 35,000 for Rs 3 lakh cover and Rs 50,000 for Rs 5 lakh cover. For new-borns, the limit is Rs 30,000 and Rs 50,000, respectively.
Watch out: The waiting period in Joy may be just nine months but it is a three-year policy. This means you have to pay premium upfront for three years. This way the insurer manages to give the benefit at the start of the policy whereas others give the benefit at the end of three-four years. Moreover, these policies cover expenses of between Rs 25,000 and Rs 50,000. Beyond this you have to pay from your own pocket.
COVER FOR TREATMENTS ABROAD
Going abroad for treatment can make a big dent in savings. Besides the high cost of treatment in most developed countries, the money spent on travelling, food and accommodation of the attendant can be huge. The option of worldwide care is, therefore, generally offered to those who buy large covers. For example, Religare Health's Care is offered with Rs 50 lakh and Rs 60 lakh sum insured plans. Similarly, in Max Bupa, the option is available with the Platinum plan, which starts at Rs 15 lakh. Still, this is a big step considering that most health plans are for treatment in India.
The benefit covers hospitalisation for some critical illnesses. For example, Max Bupa offers international cover for nine critical illnesses, including cancer, heart attack, organ transplant and brain surgery. Cigna TTK's ProHealth covers treatments that have been certified as an emergency by a medical practitioner. Religare Health's Care covers five illnesses-cancer, tumour, major organ transplant, heart valve replacement and coronary artery bypass.
The benefit is offered as an in-built feature with the basic policy. For a 41-year-old male and Rs 50 lakh sum insured, the premium for the Max Bupa policy is Rs 70,474. In Religare Health, it is Rs 40,646. Premium rates, however, should not be the sole point of comparison. Before buying, compare policy features, including waiting periods and applicability.
Watch out: Pre-existing illnesses are covered only after the waiting period. So, if one has been diagnosed with a critical illness at the time of buying the policy, he will have to wait for the waiting period to end before he can file a claim. The waiting period may vary from insurer to insurer. You also need to see if the country where you are planning to go is covered by the insurer. For example, Max Bupa provides international coverage through Bupa's network in 190 countries. For countries that are not on the panel, for instance USA and Canada, it charges an additional premium.
You should also know if the treatment is covered on a cashless or a re-imbursement basis. For example, Max Bupa's Heartbeat provides the cashless facility. In Religare Health and Cigna TTK policies, you need you to first pay from your pocket.
Consider this. You exhaust the plan's sum insured and pray that the rest of the year passes smoothly. It does not, and you have to get admitted to hospital again. Since you have used the sum insured, you wonder how you will foot the bill. This is where health insurers have come out with an innovation called 'restore'. Under this, if a customer exhausts the sum insured during the year, it is automatically restored. But there are exceptions. Anuj Gulati, MD & CEO, Religare Health Insurance Company Ltd, says, "The feature restores the entire sum insured but only if the current treatment is not for the same ailment for which the person was hospitalised earlier."
Star Health offers twin features-restore and recharge-in Family Health Optima Plan. While restore is only for illnesses unrelated to the disease for which claim has been made, the recharge benefit can be used even for illnesses for which the person has already been paid earlier in the year.
Watch out: You need to ask your insurer if the feature restores sum insured for all illnesses or excludes diseases for which you have been paid earlier in the year. There could be other restrictions as well. For example, in Star Health, the option is only with policies where sum insured is Rs 3 lakh and above.
FREQUENT MEDICAL CHECK-UPS
Policyholders are generally paid the cost of health check-up once after four continuous claim-free years. Many companies have now started offering the benefit every year. For example, Religare offers a comprehensive health check-up every year. You need to check after how many years you are entitled to the benefit.
The things covered include consultation and routine medical tests such as ECG, complete blood count, fasting blood sugar, lipid profile, urine test and chest X-ray. The package rates are mostly negotiated with empaneled diagnostic centres. They may, however, vary from insurer to insurer and product to product. Many companies offer a comprehensive package for higher sum insured.
Watch out: As the cost of medical tests varies, it is advisable to check up to what limit expenses are covered. The health policy of Oriental Insurance states, "The cost so reimbursable shall not exceed the amount equal to 1% of the average basic sum insured during the block of four claim-free underwriting years." Some insurers specify tests instead of the amount. There is no limit on the amount you can spend.
Insurers have started offering discounts on medical tests and consultation as value-added services. These are offered to all customers without extra charge. V Jagannathan, chairman cum managing director, Star Health Insurance says, "We can expect more wellness and customer-package products to suit the needs of every customer."
Watch out: The plan may cover pharmacy bills and diagnostic tests but it could be expensive. Weigh the discounts against the premium paid.
The health insurance industry is evolving with the society. But there are a few problems that are still unaddressed. Absence of regulation of medical service providers and diagnostics has led to inflated bills. Increasing instances of fraud is another cause of concern.
As the industry evolves and more innovative products hit the market, it is important for insurers to make the claim process more smooth.
10 QUESTIONS TO BE ASKED WHILE BUYING HEALTH INSURANCE
Q. What does it cover?
A. There are many types of health plans ranging from basic hospitalisation and critical illness to disease-based, top-up and daily cash. Buy a basic hospitalisation policy first. Others such as critical illness and disease-specific ones should be the next level of protection.
Q. Is it an indemnity or a benefit plan?
A. While indemnity plans cover hospitalisation expenses such as room rent, doctor's fee, etc, benefit plans pay a lump sum on diagnosis of the disease.
Q. What does it exclude?
A. You need to carefully read policy papers to know what is not covered by the plan.
Q. How long do you have to wait for the coverage to start?
A. It is important to understand what the policy will not cover, whether for a stipulated period or forever.
Q. What additional covers can you take with the policy?
A. If there is a need, additional covers such as international treatment, maternity and critical illness should be considered.
Q. Are there sub-limits?
A. You need to check expense limits for different heads such as room rent and consultant fee to avoid last-minute surprises.
Q. Are there any treatment-specific limits?
A. There can be treatment-specific caps which restrict the amount of money you can claim for a particular treatment even if the sum insured is big.
Q. Is the policy portable?
A. Ask your agent if the policy can be ported. This means you can transfer the policy to another insurer without losing continuity benefits such as coverage of pre-existing illnesses after completion of four years.
Q. How good is claim paying ability of the insurer?
A. Check the claim ratio of the insurer and compare it with that of its peers.
Q. Can you extend the coverage later?
A. As your responsibilities grow you may need to increase your sum insured. Ask your insurer as to what extent it can be done.