Protecting Parents

You don't want your parents to age. But aging is inevitable. What you can do is provide them the best possible healthcare. With health expenses rising, especially due to Covid-19, medical expenses of parents can pinch your pocket hard. That is why you must buy a suitable health insurance policy for them. However, health insurance plans turn expensive with age. If your parents are 60-plus, covering both in a comprehensive plan (Rs 10 lakh cover) may cost you up to Rs 50,000-60,000 a year. The other option is senior citizen-specific policies, with lower premium but some limitations.

As you do your research to zero in on the best health insurance for your parents, note that the premium should not be the only parameter. The policy should provide decent coverage in case of hospitalisation. "Take a note of pre-existing diseases (PEDs). If these are minor, such as mild hypertension or diabetes, there will be a wide variety of policy options, but if the parents have chronic diseases such as diabetes that requires them to take regular insulin shots, your options will become limited. If money is not an issue and there is no major PED, comprehensive health plans will be the best. Buy senior citizen-specific plans if your parents have a PED, but such plans come with limitations such as 20-50 per cent co-payment, room rent limits, disease-specific limits and waiting period on PEDs," says Amit Chhabra, Head- Health Insurance, Policybazaar.com.

Key Features For Comparison

Co-payment: Co-pay means you share expenses with the insurer. So, if there is 30 per cent co-pay and the approved claim is Rs 4 lakh, you will have to pay Rs 1,20,000 (30 per cent of Rs 4 lakh). Note that the insurer will not cover the entire medical bill. It will deduct a few expenses such as consumables. The co-pay will apply on the approved claim amount, not the total hospital bill.

Room rent: If your policy has a room rent limit of Rs 5,000, but the hospital charges Rs 10,000 a day for the room, you will have to pay the remaining Rs 5,000 a day. There is no room rent limit in comprehensive policies.

Waiting period: Various insurers may have a waiting period of one-four years for PEDs. Go for the one with a lesser waiting period. "Our Senior Citizen Red Carpet policy covers PEDs after 12 months; this is the bare minimum in the industry for this age group," says Anand Roy, Managing Directors, Star Health and Allied Insurance. Some companies may offer Day One cover for PEDs if you agree to pay extra.

Disease-specific limits: There could be disease specific limits too. For instance, a policy may pay a percentage of the cover for diseases such as cataract and hernia. Max Bupa recently launched a 'Senior First' plan that has no sub-limit on cataract, joint replacements, etc. "In current conditions, one must also check Covid-related restrictions and if domiciliary hospitalisation is covered or not," says Adarsh Agarwal, Appointed Actuary at Digit Insurance .

Restoration benefit: This feature reinstates sum insured after you exhaust it during a policy year. For example, if you have exhausted the base sum insured of Rs 5 lakh in the first claim, you will still be eligible for Rs 5 lakh in the second claim the same year. The catch here is if only Rs 3 lakh was used in the first claim and the second claim amounts to Rs 6 lakh, the policy will pay only Rs 2 lakh. The restoration will start from third claim onwards. A few insurers offer restoration after partial exhaustion too. Besides, in most cases, it is applicable for different diseases. But Max Bupa's Senior First policy offers it for same illness too.

OPD Cover

Senior citizens may have to visit a doctor quite frequently. But a typical health policy does not cover outpatient department (OPD) expenses. Some insurers, however, have of late started offering OPD cover. This could either be a standalone policy or a feature in the main policy. Needless to say, having an OPD cover will add to your premium. Should you have it? "Ideally, it helps, but the trouble is that it is quite expensive. There are hardly any plans right now which offer good OPD coverage," says Chhabra.

Options to Reduce Payment

A policy with limitations will have a lower premium. However, there are also other ways to reduce the premium outgo.

Deductibles: Deductible is the amount you agree to pay yourself. The insurance company will take care of the rest of the amount. For example, if the policy has a deductible of Rs 35,000 on a Rs 15 lakh policy, you'll pay Rs 35,000; the rest will be paid by the insurer. "A 63-year-old senior citizen will pay Rs 2,000-3,000 per month on a normal policy, while the one with a Rs 35,000 deductible will have a significantly lower premium of Rs 1,400 per month," says Jayan Mathews, Co-Founder & Chief Product Officer, Vital.

Super top-up Plans: Super top-up plans also work on the concept of deductibles but these are standalone health policies with higher coverage. For example, a standalone super top-up policy of Rs 20 lakh with Rs 5 lakh deductible will cost Rs 9,705. The Rs 5 lakh deductible means claims worth Rs 5 lakh in a year will be borne by you. The Rs 20 lakh super top-up will be activated after that. Your office policy or a separate base policy of Rs 5 lakh can take care of the deductible. "If your employer covers your parents for up to Rs 5 lakh, you only have to buy a super top-up plan of Rs 20-25 lakh. Otherwise, you may buy a normal policy of Rs 5 lakh to cover the deductible amount," says Avdesh Mishra, Founder, Caterpillar Insurance & Investment Services.

"Star Health Comprehensive plan for two 60-plus adults for Rs 25 lakh coverage will be available at around Rs 80,000. If you take a base policy of Rs 5 lakh and a super top-up of Rs 20 lakh, you will be charged only Rs 55,489," he adds.

Wellness Discount: If your parents are fairly healthy and maintain a healthy lifestyle such as walking certain steps every day, you may get a discount on the premium amount. "If a customer is healthy, our Activ Care policy, a comprehensive plan, rewards the insured with up to 21 per cent of the premium as HealthReturn," says Mayank Bathwal, CEO, Aditya Birla Health Insurance. These HealthReturns can be utilised for buying medicines, diagnostic tests or paying the next policy premium.

Other Features

Some insurers offer a long-term discount if premiums are paid in advance. "In case a policy is purchased for two years, the premium is reduced by 7.5 per cent. We also have a family discount, which reduces the premium by 5 per cent if the policy is purchased on an individual basis," says Bathwal.

Star Health gives 10 per cent discount on submitting medical records such as Stress Thallium Report, BP Report, Sugar (blood & urine) Report. "These tests should have been done within 45 days prior to the date of purchase of the policy. If these documents are submitted at the time of purchase or at the time of renewal, the discount will be valid for all subsequent renewals," says Roy.

Agarwal of Digit Insurance says a few insurers offer zone-wise premium pricing. "If you are in Tier-II or Tier-III cities, prefer such insurers. You may opt for 30-60 days of pre- and post-hospitalisation instead of 60-90 days. In reinstatement of Sum Insured, you may go for once in a year restoration of SI instead of unlimited restoration."

Are Tests Mandatory?

After a certain age, the insured has to fill a questionnaire before the policy proposal is accepted or rejected. The underwriters decide whether medical tests are needed or not on the basis of these declarations.

"Under Star Sr. Citizen Red Carpet policy, we do not mandate any physical tests irrespective of the age and the sum insured opted. In case the customer discloses any pre-existing condition, we may ask for related reports (when required). However, on a case-to-case basis, the company may ask the insured to undergo tests. At present, the cost of such medical examination is fully borne by the company. Under all circumstances, the customer will be intimated in advance about the need to undergo pre-policy medical tests," says Roy.

Pre-policy medical check-up is compulsory at Aditya Birla. "The cost is borne by the company in case the policy is accepted. If rejected, 50 per cent cost is borne by the customer," says Bathwal.

Healthcare Fund Vs Insurance

If you are unable to afford insurance for your 60-plus parents, you may start investing for building an emergency medical fund. Instead of paying huge premiums, the same amount can be invested in suitable investment avenues. "We have seen that the premium can be over 10-12 per cent or even more of sum assured after a certain age. Hence, it may be more practical to invest in a contingency fund rather than looking for medical insurance," says Suresh Sadagopan, Founder, Ladder7 Financial Advisories.

"Any contingency fund needs to be invested in fixed interest investments to avoid volatility and illiquidity. I would suggest a combination of short-term as well as medium to long-term fixed-income investments," he says.

@apri_sharma