Health insurance: Things to know before buying a policy

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Health insurance is an indispensable part of financial planning. It protects your savings from being washed away due to any sudden medical emergency. The financial backstop at the time of crisis helps you and your family to meet hospitalisation expenses saving your financial goals from going off the rails.

However, before buying a health insurance plan you need to check the following points:

Coverage

You first need to understand what type of plan do you have, as there are different kinds of health insurance plans in the market ranging from basic indemnity cover, a critical illness plan, daily cash hospitalisation to disease-specific plans. The first plan in your health insurance portfolio should always be a basic indemnity plan that covers hospitalisation expenses. After having a basic plan, you can consider buying a critical illness plan, disease-specific plans for strengthening your insurance portfolio.

Exclusions

Before buying a policy always ask if your policy has certain exclusions. The good part is from October 1 onwards, the insurance regulator has directed insurance companies to offer policies to HIV, Alzheimer’s, mental illnesses, internal congenital, genetic diseases, among others. In addition, the policy might have time exclusions for certain illnesses such as knee replacement. One needs to check out these details before buying a policy.

Co-payment

Many policies have an in-built co-payment clause and therefore have low premium rates. Co-payment is the percentage of the bill that policyholders have to pay off the hospital bill. Co-payment varies from insurer to insurer and can range from 10 to 30%.

Sub-limit

If the policy has a room rent sub-limit then your insurer will pay only upto the specified limit of sum insured for room rent and other expenses that are included in the room rent.

Waiting period

Pre-existing illnesses are covered after a waiting period of 2-4 years depending on your insurance company. It is always advisable to disclose any ailment you ever had in the past while filling the application form otherwise any concealment of information can lead to rejection of the claim at a later stage.

Survival clause

After buying the policy you cannot make a claim for a certain period of time. For example, a basic health insurance policy does not offer coverage for the first 60 to 90 days of buying the policy. Similarly, a policyholder has to survive for at least 30 days after diagnosis in case of a critical illness policy.

Before buying a health insurance policy, do ask your agent all these questions so that you know fine prints of the policy in advance.