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Health Insurance: Going beyond features & benefits!

Posted by - Sanjay Datta, Chief - Underwriting, Reinsurance & Claims
April 12 2014
Buying a health insurance is an extremely important activity to ensure security and well being for our family. However, while choosing the best features and benefits, you need to also pay equal attention to the exclusions, policy terms/ clauses. This is because the true value of your health insurance policy will be realized at the time of settling a claim. There are instances when the insurance company rejects a claim due to policy terms not being met by the insured. Given below are some of the important policy terms and clauses - understanding them and adhering to them will ensure that you have a hassle free claim experience should the need arise.

  • Waiting Period: Check the Waiting period of the policy you are evaluating. It refers to the window of time post taking the policy, when the insurer is not liable to settle claims. Generally there are different types of waiting periods that apply in a policy e.g. cooling period, waiting period pertaining to Exclusions and Pre-existing disease.

    After the purchase of the policy, usually no claim is payable for the initial 30 days except in case of an emergency or an accident. This waiting period is also referred to as 'cooling period'. The duration of the same may vary from company to company. Similarly there are certain specific illnesses which are covered after a waiting period of one/ two years. These are referred to as 'Exclusions'. Waiting period also applies to Pre-existing diseases (PED) declared by the customers, provided the declared PED is an acceptable risk. The PED waiting period may again vary from company to company.
  • Pre-Existing Disease: A pre-existing disease is an ailment that exists before the customer applies for or enrolls in a new health policy. The same needs to be declared by the customer while applying for a health insurance policy. If the PED is accepted by the company then it is covered after a specific waiting period. Pre-existing diseases are generally not covered in the first four years of the policy depending on the policy terms. Thus any claim arising from the pre-existing condition will not be covered during the PED waiting period. The customer must clarify the pre-existing disease clause to avoid any disappointment related to rejection of claim later.
  • Exclusions: Apart from pre-existing diseases, you need to know about diseases which are excluded. Injuries resulting from war, cosmetic surgery, abortion, treatment for pregnancy, diagnostic charges are generally not covered in health insurance policies. Do check this to avoid rejection of claim at a later stage.
  • Sub-Limits: Sub-limits refer to an upper limit placed on specific expenses heads that can be incurred. Sub-limits are generally applied on room rent, specific procedures/surgeries etc. For example a policy may have a sub-limit of say Rs. 20,000 per eye on cataract surgery. It means that even if the total expense on the cataract surgery is more than Rs. 20,000, the maximum liability of the insurance company towards cataract surgery would remain limited to Rs. 20,000.

    Similarly , if the sum insured (SI) of your policy is Rs. 10 lacs and room rent sub-limit is 2% of SI per day, the insurer will reimburse only 2% or Rs. 20,000 of room rent per day. In case you have availed of a hospital room that charges higher than this, the difference would have to be paid by you.
  • Co-Pay: It is also necessary to be aware of the term 'Co-pay'. As the name suggests, it refers to the payment component that needs to be divided between two parties i.e. the insurance company and you (insured), though not necessarily in equal proportions. Under this clause, you as the insured is required to bear a certain percentage of expenses incurred on the treatment of the illness when hospitalized. This ratio generally ranges from 10-25%. For example is the Co-pay in the policy is 25% and your claim amount is Rs. 10,000, then you would need to pay Rs. 2500, while the insurance company would pay Rs. 7500.
  • Deductibles: Most health insurance policies have a deductible clause as well. As in the case of Co-Pay, Deductible is the amount of expense that you need to pay before the insurance company will pay for the balance amount. In most cases, it is provided as a voluntary option for the insured to choose, including the amount of Deductible that you as a policy holder would be willing to pay from your own pocket. The insurance company on its part charges a lower premium to the policy holder availing a deductible.

Equipped with information on these intricacies of health insurance, you can choose a policy that will work at the time of claim settlement. Today, most insurance companies provide detailed information on health insurance policies including their features, exclusions, terms and conditions etc. You can also specifically ask for this information in case you are purchasing the policy offline through the company or agent.

So don't choose your health insurance policy merely on benefits, but look at the exclusions and policy terms as well. These may turn out to be more important during Claim settlement than the policy features.

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