BT Insight: Why individual health insurance policy matters

An individual health insurance policy is a standard health insurance product that only covers a single person (the policyholder) for expenses on medical exigencies. If you get hospitalised due to a sudden illness or accident, the policy will cover the expensive medical treatment (pre and post hospitalisation), ambulance charges, diagnostic tests, room rent, medicines and daily cash benefits, etc. against the maximum sum insured defined in the policy. There could be sub limits on some expenses, though. Some health policies also cover domiciliary treatment, that is, treatment at home under medical supervision.

Individual health insurance is a must-have product for young people who are yet to start their families. Coverage to other family members can be extended in the following years. A family person with serious health risks should prefer individual health policy over family floater because of higher coverage requirement. Individual health insurance assures substantial sum rather than floating sum assured in a family floater plan.

When it comes to buying a health policy, most people may do it as a formality focussing more on tax benefits under Section 80D of the Income Tax Act than on details of the policy. The main purpose of buying a health policy, however, should always be to get a sufficient health cover lest you opt for a wrong policy having insufficient coverage.

Sum Assured

A health cover of at least Rs 3-5 lakh is must for individuals looking for a health plan. Naval Goel, CEO & Founder of PolicyX.com says since there are low chances of you registering a claim at an early age, you are highly probable to enjoy the no-claim bonus or cumulative bonuses. "It means your sum insured may rise year-on-year up to 200 per cent," he says.

All health policies come with a waiting period of two-four years for pre-existing illnesses and certain ailments such as cataract, hernia, sinusitis may not be covered under first year of the policy. If you buy an individual policy at a young age, it will help you pass through the waiting period during which you are unlikely to claim for any such illnesses.  

Besides, if you are only relying on corporate health policy provided by your employer, you must consider buying a separate plan. "Even if you are covered in a group mediclaim policy by your employer, it is always a good idea to go for a separate policy as the employer-provided policy will no longer be effective when you will leave the job and when you will retire in the future," says Amit Chhabra, Head- Health Insurance, Policybazaar.com.

How to select a policy

You must know that low premium should not be the only criterion to zero in on a policy. Reputation of the insurer and its claim settlement ratio are much more important because you are in it for a long haul. Besides, it is important to check the renewability of the plan. You must choose a plan that offers lifetime renewability because buying a new policy in old age is difficult than renewing the existing one.

Among other features, you must run a comparison on available health policies on the basis of value of cover, hospitals included/excluded in cover, limit on hospital ward rent, cashless facilities, waiting period, pre-existing diseases, ambulance cover, genetic related diseases coverage, mental health coverage and outpatient coverage et al, says Varun Gera, CEO & Founder, HealthAssure.

"OPD coverage, hospital ward rent, mental health inclusions and genetic diseases are some of the lesser known features that insurers offer," he adds.

A few health insurance plans offer cover against allopathic treatments such as Ayurveda, Unani, Siddha, and Homoeopathy (AYUSH), says Goel of PolicyX.com. He adds that some health insurers may pay you a lumpsum to cover additional costs - such as loss in income or compassionate visits by family members - resulting from prolonged hospitalisation, as defined in the policy document.

Earlier this month, the Insurance Regulatory and Development Authority of India (Irdai) mandated general and health insurers to offer a standard individual health insurance product 'Arogya Sanjeevani' with a maximum sum insured of up to Rs 5 lakh. Insurers are supposed to make it available from April 1, 2020.

Popular individual health insurance plans:

Mistakes to avoid

If you are a person living in tier-II or tier-III cities, the premium should comparatively be lower than that for a person living in a metro city on the same policy. This is because many health insurers price their policies according to city zones. "City-specific health insurance makes sense if insured have restricted income and if their city of residence has reputed hospitals, well-equipped for treating the majority of ailments and diseases," says Indraneel Chatterjee, Principal Officer & Co-Fouder, RenewBuy.com. 

"What they must keep in mind is that some insurers restrict coverage if a policyholder from a lower zone moves to zone-one city for advanced treatments," he cautions.

Secondly, you must always disclose lifestyle habits that you might have such as smoking and drinking and also your medical history while buying a policy. Non-disclosure of existing medical conditions or lifestyle habits may lead to the rejection of the insurance claim at the time of need.

Gera of HeathAssure advises that cashless claim is the best option to get your claim settled. "For a reimbursement claim one has to source all documents from the hospital and submit to the insurer or third-party administrator. It might cause delays and require additional documents along with answering to many queries," he says.

How to earn discounts on health policies

There are three ways through which you may earn discounts or additional benefits on the policy:

Opting for multi-year policy: Usually, a health insurance policy is for a year, but there are many insurers who provide health plan for a policy term of two-three years. "Buying a policy for longer policy term will allow the insured to avail discount on the premium along with being insured for a wider span," says Sekhar of Renewbuy.com.

Opting for voluntary co-payment: There is a compulsory and voluntary co-payment clause under various health insurance policies. "On opting for a voluntary co-payment, the insurer offers discount on premium. Higher the co-payment share, higher will be the discount offered on the premium," Sekhar says.

Wellness benefits: Most insurers now offer discounts on premium if you achieve a set number of steps in a year. Some insurers provide a fixed sum of money annually for wellness or fitness services such as a gym membership. In fact, Irda recently came up with 'Exposure Draft on Guidelines on Wellness and Preventive Features/Benefits'. It says that insures will provide the policy holders redeemable vouchers for yoga centre, gym memberships and even for buying protein supplements.

Also Read: Sensex, Nifty close at record highs; IT, consumer durable stocks lead gains

Also Read: Retail inflation touches 7.35% in December, highest since July 2014

Also Read: Sebi extends deadline to separate roles of chairman, MDs by two years