Complete Guide on HEALTH INSURANCE

A Thread

1/ Health insurance is an insurance product which covers risk for medical and surgical expenses of an individual policyholder.

2/ Should you buy health insurance or not ? According to me, buying any health insurance policies depends upon one criteria i.e., Are you capable enough to bear all the expenses incurred in any unforeseen events.

3/ Suppose, you get hospitalized because of some illness or accident, the expenditure is going to be in lakhs for the surgery, bills, tests, etc. and some people cannot bear these expenses.

4/ But, if you have a health insurance policy, then they will take care of all of these expenses for you by charging some premiums every year.

According to me, one should always buy health insurance as soon as possible till you die.

5/ How much cover is sufficient ? Ideally, one should take at least ₹10 lakh of sum assured (consider min. 6% inflation). Also, coverage to be chosen as one’s individual profile whichever amount he/she is comfortable with it. Keep it mind, every penny of life cover is important.

6/ UNPOPULAR FACT- The premium amt. gets increased when the insured crosses the age bracket such as 0-18, 19-30, 31-45, 46-55, 56-60 and 60+. The premium amt. remains the same every year but the premium will increase if you crosses the age bracket. It vary from comp. to company.

What are the different types of health insurance policies ? Following are the types of policies which are offered by insurance company :-

7/ Family Floater Plan :- It means instead of buying the separate policy, it covers the entire family on the payment of a single premium. The sum assured covers the entire family risk & can be used in different events. But, the maximum amt. can be claimed is the sum assured only.

8/ Example :- If you take policy for the entire family and sum assured is ₹10 lakh. It means the family can claim an amount up to ₹10 lakh only. But, if a person is diagnosed with a disease and he claims ₹5 lakh, then the entire family can claim only ₹5 lakh in future.

9/ UNPOPULAR FACT - Don’t include the person who is older (age 60-75) and has existing diseases because there are chances that the premium amount gets higher. Rather, buy separate policies for them.

10/ Individual Plan :- It means buying separate policies for individuals. For example, If you take policy for yourself and sum assured is ₹12 lakh, you can claim upto ₹12 lakh in future whenever diagnosed with the disease.

According to me, one should always have a separate individual plan and if he/she wants to have a family floater plan, they can consider it buying.

11/ Senior Citizen Health Plan :- It means buying separate policy for older parents in your family and it offers coverage to individuals whose age is in between 60-75 years.

12/ UNPOPULAR FACT - As per the IRDAI guidelines, the health insurance provider can give new policy to the individual till the age of 65 years.

13/ Critical illness Plan - This plan includes diseases which are life-threatening diseases like Cancer, major organ transplant, etc. These policies pay lump sum money to the nominee when the policyholder is diagnosed with the diseases mentioned in the policy.

14/ Personal Accidental Plan - It means when a person met with the accident, the insurance company provides lump sum money to the nominee. Many insurance companies offer benefits against these 3 events i.e., partial disability, total disability and death due to accidents.

15/ The above two plans have a disadvantage if chosen with the Health insurance policy i.e., the premium amount gets increased every year.

According to me, one should buy these plans as standalone (separately) or can be taken into consideration when buying a term plan because the premium amount will remain fixed.

16/ If you want to know everything about term plan, check this out :- https://twitter.com/ShubhamAggarwl/status/1319116941043265538?s=20

What are the parameters to check whenever buying the health insurance policy ? Following are the points to be taken into consideration:

17/ Claim Settlement Ratio - The claim settlement ratio of an insurance company is the no. of claims settled against the number of claims filed by the policyholders. Higher the ratio, better it is.

18/ Claim Incurred Ratio - It means the insured event has happened and the insurance company may be liable to pay the claim. The ratio of premium amount booked by the policyholder & amount paid by the insurance company. The ratio should be around 60-90%.

According to me, one should take both into consideration and give an utmost priority to Claim Incurred Ratio to look at while buying any health policy.

19/ Tie-ups with Hospitals - Whenever buying any health policy, always check the insurance company has tie-ups with the nearest hospitals in your area and also have facilities for Cashless payments.

20/ This is also called Cashless Facility, wherein if the insurance provider has a tie-up with the hospital that you’re admitted in, the hospital will directly send bills to the insurer and you don’t have to pay anything.

21/ But, if there is no cashless facility, then you have to pay the hospital bill first & then the insurance company will provide your money back. So, always check the insurer has a tie-up with a large network of hospitals & your nearest hospital is also covered in that network.

According to me, one should always take the advantage of a Cashless Facility as it will reduce the burden of cash on the policyholder and also, the insurance company has good tie-ups within your area.

22/ Hospital Room Eligibility - It means the cost of the type of room that the insurer provides to the policyholder. Always check that the insurer provides the single private room not the shared room.

23/ Also, check the full day room charges should be covered and DON’T have any clapping (means the insurer has the facility to not provide money upto a certain limit) on it.

24/ Example - If you’re living in Delhi NCR, the room charges of a private room is around ₹10-12k per day. But, the fun fact is that the majority of insurers provide capping of 1% on Sum assured ( SI ) which means if the policyholder has sum assured of ₹6 lakh.

25/ Then, the insurer will provide the room charges upto ₹6k, balance money will be paid by you (i.e., ₹4k) and the same happens with ICU charges.

26/ Many insurance policies provide a cap of 2% of SI on ICU charges which means if an insured has a policy of SI ₹5 lacs, the insurer doesn’t provide more than ₹10k & the balance amount to be paid by the policyholder. As everyone knows, ICU charges are more than ₹15k per day.

According to me, one should consider taking a single private room and also the insurance company doesn’t provide any capping on the room charges and room category, one should consider taking it even if there is a slight increase in premium.

27/ Pre and Post Hospitalization Expenses - It means that the insurance company doesn't provide a claim when the policyholder doesn't fulfill the pre and post period.

28/ Example - If the policyholder is diagnosed with the disease and you cannot go to the hospital directly, firstly the insured has to spend time in his home for let's say 3 months and then, the insured can be hospitalized.

29/ AND when the insured gets discharged from the hospital, sometimes the insured has to pay medical expenses like medicines, treatments, exercises if required.

30/ But, the catchy part is that sometimes the insurer doesn’t pay for the treatment before the insured gets hospitalized and after the insured gets discharged.

31/ Always check the policy which covers at least 30-60 days before being hospitalized & the next 2-6 months expenses after the insured got discharged. Also, the insurer will pay only when the expenses are incurred for the illness for which the insured gets hospitalized.

According to me, the policy should have a minimum of 60 days of before hospitalization and next 3-6 months of post hospitalization. It may differ from one insurance company to the other, so always verify it.

32/ Waiting Period - It means that the health insurance policies claim pre-existing illness after a certain waiting period passed away.

33/ Suppose, you have a pre-existing illness of knee replacement and the waiting period is 4 years and he gets hospitalized, the insurer will not provide any claim in this case. But, after 4 years of waiting period, you can claim any hospitalization due to knee replacement.

34/ Unpopular Fact - As everyone is aware about the waiting period of pre-existing diseases, but there is a 2 years of waiting period for a list of specified illness (apart from pre-existing) which are not covered for claim in the first 2 yrs like Skin tumors, Gall bladder, etc.

35/ First 2 years waiting period for a specified disease is applicable despite you not having any such pre-existing diseases when you bought the policy and you should be aware of it.

According to me, the maximum waiting period of any health insurance policy should be 3 years and if having a pre-existing illness, always check the waiting period of that disease. Also, read the waiting period exclusions carefully.

36/ Day Care Procedure - It means the diseases which are cured in one day like eye surgery, laser treatments, piles, etc. are done within 24 hours. Sometimes, the insurer misleads you by highlighting only the number of day care treatments covered.

According to me, one should buy that policy which shows ‘’All Day Care procedures’’ instead of a specified list of diseases.

37/ No Claim Bonus - It means that the insurer rewards the policyholder in the form of a discount on premium or increases coverage by 10-20% when they don’t make a claim in the initial years.

38/ But, what would happen if you make a claim after taking the benefit of a No-claim bonus ?

The extra bonus reduces to the previous year bonus amount. Each year if you make a claim, the coverage amount will reduce till it reaches its original coverage amount.

39/ UNPOPULAR FACT - Always check the insurance company provides no claim bonus to its policyholders. It is applicable only on individual & floater health policy.

According to me, it’s a good advantage for policyholders in the form of getting a discount on the next premium amount or increase in total coverage amount. But, the amount differs from policy to policy. So, always take the benefit of it.

40/ Co-Pay - It means you have to pay some fixed money to the insurance company. It is the biggest dis-advantage to policyholders as adequate healthcare will not be provided.

41/ For example, the insurance company has a co-pay structure of 80/20 which means if the bill amount is ₹1 lacs, the insurance company will pay only ₹80k and balance (₹20k) will be given by the policyholder.

According to me, one should NEVER buy any health policy which has the option of co-pay.

42/ Miscellaneous Charges - It means charges covered other than surgical expenses like Ambulance cost, OPD charges, health check-up charges, etc. should be covered in the policy. These expenses are mostly not checked by policyholders while buying any health policy.

43/ UNPOPULAR FACT - The rise in premium can be through Body Mass Index which means the person's weight in kgs divided by the square of height in meters. Higher the BMI, chances are the premium will increase. So, start exercising daily bcuz it will reduce your premium amount.

44/ This is because the policyholder is more vulnerable to serious health problems like heart diseases, joint problems, diabetes, etc.

Why do health insurance claims get rejected ? Following are the reasons, you should never do :-

45/ Hiding some vital information like hiding drinking and smoking habits. If you do these habits occasionally, please state in the policy. If you hide them, and are found in future, there are high chances that claim will get rejected.

46/ UNPOPULAR FACT - The premium amount is higher in case if the policyholder has a smoking or drinking habits as compared to the ones who don't have these habits. So, always tell the right details to the insurer. Even if you smoke occasionally, tell the insurer.

47/ Hiding medical history is negligence - Make full disclosure of any existing and previous medical conditions. If any material fact is not disclosed, the insurer has the right to reject the claim.

48/ Being careless about Proposal Form - When you buy a policy, the insurer agrees to take the risk of your future expenses purely based upon the information provided by the policyholder. If the information is incomplete or incorrect, the claim may get rejected in future.

49/ Details not added or delayed by the employer - In the case of an employer/company health insurance policy, the HR team can miss or make errors when adding your name or family's name. It can lead to rejection of claims.

50/ For this, the policyholder should do follow-up asking for the eCard or TPA card from the employer for each individual. AND check there are correct details of that member.

51/ Incorrect information provided to the doctor during admission - Always give correct information about the patient to the hospital/doctor and if having medical history, give that details too. Any wrong information about medical conditions/history can result in clam disputes.

Which top-up option is best ? If you find that the sum assured is not enough for yourself, there are only 2 ways, you can increase the coverage amount i.e.,

52/ Top Up Plan :- It offers an additional coverage amount to the policyholder who already has an existing policy and doesn’t require to buy the additional policy. This plan covers expenditure that may arise out of a single illness.

53/ The top-up plans operate on the concept of “deductible limit”. This means that the plan will not come into force until the hospital expenses exceed a particular limit also called the deductible limit. If the claim made by the policyholder exceeds the deductible limit, then

54/ the insurance company is liable to pay the excess amount.

Super Top Up Plan :- It means when the single claim doesn’t go beyond the sum assured but multiple claims do.

55/ I know there is confusion between them, so following is the example to better understand:-

56/ Suppose, Harshit has a sum assured of ₹3 lac & chosen a top-up plan of ₹6 lac, so, the deductible will be ₹3 lacs. Harshit got hospitalized which resulted in a ₹5 lac medical bill. Now, the insurer has to pay only ₹3 lac, the rest of the amt. is covered in a top-up plan.

57/ Now, imagine, Harshit got hospitalized 2 times in a year. The total bill for the first time is ₹2 lacs and next time is ₹2 lacs. The first ₹2 lacs is covered in the base policy but out of the next bill only ₹1 lacs will be paid in case Harshit has a top up plan.

58/ This is due to the fact that only when a single claim amount exceeds the deductible limit will the top up plan kick in. Thus, in this case despite having a health insurance plan for ₹6 lacs, Harshit will have to pay ₹1 lacs from his pocket.

59/ Now, Harshit has a super top-up plan of ₹6 lacs with ₹3 lacs as deductible but the sum assured is the same i.e., ₹3 lacs. The first claim of ₹2 lacs is covered by the base plan.

60/ However, next time when Harshit again runs a bill of ₹2 lacs then ₹1 lacs is covered by the base plan. The remaining ₹1 lacs by the super top-up plan. Thus, Harshit need not pay anything from his pocket.

61/ As you have understood the above example, according to me, one should always buy the Super Top-up plan only. Also, ensure that there is no room rent limit in your Super Top-up plan and make sure that you buy the super top-up from the same insurer.

62/ Unpopular Fact - Restoration Benefit, it means the insurer will provides the benefit of restoring the original sum assured (SI), after the SI gets utilised. It is the very useful benefit which is provided to the policyholder, following is the example to better understand it.

63/ Suppose, Rahul has taken a family-floater policy of Sum assured of ₹5 lacs and also, taken the benefit of restoration. If Pallavi (family member) is diagnosed with a Heart attack and the hospital bills are ₹4.5 lacs and so, the policy has left only ₹50k.

64/ Now, the next day, another family member i.e, Hardik is diagnosed with Diabetes and got hospitalized. But, we know that ₹50k is not enough for the hospitalization charges. Now, the benefit of restoration comes and the sum assured will increase by ₹5 lacs.

65/ So, now, the total sum assured is ₹5.5 lacs to help out the Hardik. The only time when the restore amount is not applicable is when Pallavi gets a Heart attack again or Hardik is diagnosed with diabetes again. It may vary company to company.

But, there are two types of Restoration benefit :

66/ (a) Full Coverage amount, which means the restore benefit will be given only when the policyholder used the full sum assured. So, if the Pallavi, first claim amount was ₹5 lacs, only then the Hardik will be able to claim the restore amount for himself.

67/ (b) Partial Coverage amount, which means the restore benefit can be availed even after partial exhaustion of Sum assured. Like in the above example.

According to me, if you have the family floater plan or the individual plan, you should consider taking the ADD-ON of partial coverage amount of restoration benefit. AND always check whether it covers the same illness or not.

70/ UNPOPULAR FACT - Insurance companies have a right to change in the policy benefits, conditions, PRICING subject to IRDAI (regulatory body of insurance sector). They can stop a product/plan completely and migrate you to another plan.

71/ However, the insurance company needs to give 3 months prior notice before making any changes.

72/ Taxation - Premiums paid towards health insurance plans and riders (if chosen) are eligible for deduction under Section 80D of Income Tax Act. Policyholders can claim a deduction up to ₹25k for any family members up to 60 years of age and above it, ₹50k in a financial year.

73/ Free Look Period - It means when the insured buys a health insurance policy, the insurer provides the period of 15-30 days, where the policyholder can cancel the policy (stating the reason).

74/ Also, the amount paid for the premium will get back to the insured. But, certain charges will get deducted like medical tests, stamp duty charges, etc.

75/ Honest Advice - After taking the policy, you should set the reminder for premium payment or avail the facility of auto-debit from your savings a/c. If a policyholder fails to pay the premium on time, generally insurers provide a 15-30 days grace period to continue the policy.

76/ If the policyholder fails to pay the premium within the grace period, the policy may get lapse.

77/ UNPOPULAR FACT - The insurance company provides refunds if there is no claim in initial years of policy after verifying the preventive health check-up and refunds sometimes depend upon the coverage amount too. So, make sure, you take advantage of it.

78/ Also, don’t get confused between no-claim bonus and preventive health check-up, both are different. No-claim gives a discount on premium or increases the coverage amount, but it gives refunds to policyholders.

79/ UNPOPULAR FACT - Never depend on employer policy and your health insurance shouldn’t be tied up with your job because the policy will lapse when you leave that company. So, rather, own a separated health insurance.

80/ Always read the POLICY BROCHURE and check which diseases are covered and which are not. READ the exclusions section carefully both temporary and permanent exclusions and their limits too.

81/ UNPOPULAR FACT - Read the Customer Information Sheet (CIS) because it will give you all major details at one shot, where you can easily take your call whether to buy the insurance or not from that insurance company.

82/ As you have now understood, all aspects related to Health Insurance. So, I have also made a detailed thread on Car Insurance. Checkout the following link https://twitter.com/FincademyIn/status/1328561698131742720?s=20

83/ I know you have liked the analysis very well. So, I have also made a broadcast list, where you will get some real good content. Make sure you subscribe to it, following is the link of it

https://wa.link/8la4i4 

84/ Ending up by a quote - Buying Insurance cannot change your life but it prevents your lifestyle from being changed.

~ Jack Ma

End of Thread. Stay tuned for another thread next week.

I'm tagging you not for follower count, rather to educate innocent & ignorant Individuals.

@Sanjay__Bakshi @dmuthuk @Rahul_J_Mathur @shyamsek @FI_InvestIndia @safiranand @Nithin0dha @iRadhikaGupta @porinju

Disclaimer- Read the full thread bcuz half knowledge is very dangerous.

What to know how to pick the best insurance company ?

Don't worry, We've got you covered.

Check out our new thread :- https://twitter.com/FincademyIn/status/1329405786762608641