In the last few posts, we’ve been talking about insurance and the financial security that it most definitely provides in this day and age. We have tried to really stress upon the fact that, as a country, we are severely below the curve when it comes to our adoption of health insurance products and that this adoption needs to be ramped up.
Experts believe that a considerable number of people who do buy health insurance do it just to save on their taxes and consider it a money-saving instrument. Most people don’t invest in insurance at all because they think they don’t need it or because they don’t understand what to look for. Firstly, you do need health insurance (read our previous article if you don’t believe us). Secondly, we understand the need to know how to evaluate these health insurance policies, grasp the intricacies of the insurance product that covers you and know whether it is sufficient to fulfil the medical needs of you and your family.
So here are some important factors to keep in mind as you explore the numerous health insurance products out there so you can make the most of them:
1. Value of sum assured: One thing we never keep in mind while purchasing an insurance policy is the time value of money (TVM). As you might already know, inflation erodes the value of money as years go by. Medical procedures that are carried out today are bound to more expensive due to medical advancements. Policies which assure a smaller sum may not be enough to cover your medical costs when the time comes. It is always advisable to choose a policy which provides a higher sum assured to cover the cost of inflation.
2. The extent of coverage provided in the policy: Whenever you purchase any insurance policy, there will be several terms and conditions that apply. These terms and conditions have been put in place by insurance companies to deter customers from misusing the policy as well as to dilute the risk taken on. The most common terms pertain to hospital room-rent cover, pre-existing illnesses, as well as the kind of conditions the policy covers. As such, you must be careful when choosing policies; these conditions are very stringent and may cause unnecessary confusion when the policy needs to be used.
A note to service class employees: chances are that your employers have insured you under a group health care plan. Most employees don’t tend to buy a separate health plan due to the sense of security provided by this insurance. Here are some facts: though this is a great safety net for smaller medical emergencies, time and again such policies have fallen short in covering crucial medical requirements. This can leave you feeling lost and rudderless when things are difficult. Make sure you get your own health insurance policy to complement the plan you get from your employer.
3. Age of the insured person: Financial experts believe that health insurance should be bought as early as possible since insurers have to take on a larger risk when they provide coverage to elderly individuals (since they’re more vulnerable to ailments). The older you become, the less ‘insurable’ you are; the premiums are higher and conditions are even stricter. Early insurance adoption provides benefits like lower chances of rejection for the plan, maximum coverage as well as ease of renewal.
4. Family plans and restoration of benefits: It is generally better to purchase a single plan that covers you and your family members just because a single premium is less expensive than multiple premiums for different plans. The claim amount for an individual in a family plan is higher than that for an individual policy. The restoration of benefits plays a vital role in reinstating the insured sum once it gets exhausted from usage in a given period of time. Restoration is bound to several terms and conditions but adds a booster to the policy and should be taken into consideration at the time of purchasing.
5. Co-payments and sub-limits: Insurers have put co-payments and sub-limits in place to prevent the insured individual from misusing the sum assured as well as making unreasonable claims. If the policies include a co-payment clause, the insured individual has to pay a pre-decided percentage of some or all bills, depending on the policy. The insurers also introduce caps on medical treatments, meaning the policy would not take care of the expense beyond that amount. Ideally, you should select plans with no or minimum levels of co-payments/sub-limits.
6. Insurer’s claim-settlement ratio and coverage of hospitals: We invest in insurance so we can have some help when we need it so it’s best to avoid fussy technicalities. Just so you can avoid your claims getting randomly rejected, you should check the claim settlement ratio of the insurer; you can get an idea from the amount of claims settled or claims pending. Health insurance companies’ tie up with various hospitals so their customers can avail cashless treatment. These hospitals are in the insurance provider’s network and are known as network hospitals so make sure you check the network of hospitals the insurer is affiliated with.
At the end of the day, insurance is a financial product, and like all financial products, if you’re buying it, you should make the most of it. Though we always hope and pray that we may never need to face a situation where we have to visit a hospital, life happens; today’s world is proof of that. Making the financially responsible decision here safeguards your interest and keeps you physically and mentally protected.
Health insurance is not only a tool to provide a safety net for you and your loved ones, but it also gives you a sense of peace and security because you know that, should the worst happen, you’re covered.
