How to Select a Health Insurance Policy?

Over the years, medical costs in India have risen tremendously. Although the quality of medical care has also gone up, the costs have also risen. Thankfully, you can protect yourself from the financially draining effects of medical treatments by purchasing a health insurance policy. That said, how do you choose a health insurance plan that meets your needs and requirements? Here’s a comprehensive guide that can give you some clarity. 

What is a Health Insurance Policy? 

Now, before we look at how to choose a health insurance policy, let’s quickly go through the concept of health insurance and how it works. 

A health insurance policy is a legal agreement between you and an insurance company where the insurer agrees to pay for or reimburse the costs associated with your medical treatment. In exchange for the coverage against medical costs, you’re required to pay a fixed sum of money, in the form of premiums, regularly to the insurer. 

When you undergo treatment for an illness or a disease, you can simply lodge a claim with the health insurer, who, after verification, will cover the costs involved with the treatment. Depending on the type of health insurance you have, the insurer may cover the entire cost or only a portion of it. In the case of partial coverage, you will have to bear the uncovered portion of medical expenses out of pocket. 

How to Choose a Health Insurance Policy? 

As you’ve already seen, it is crucial to select a health insurance policy that meets your requirements to ensure that you get proper and adequate coverage against medical expenses. If you’re unsure of how to choose the right policy, here are some factors you can consider. 

1. Choose the Right Sum Insured

The sum insured is the maximum amount that the health insurer is legally obligated to pay. If your medical treatment costs exceed the sum insured by your policy, the uncovered portion will have to be borne by you out of pocket. 

Therefore, you need to choose a health insurance plan with a high sum insured amount if you don’t wish to pay for medical expenses. That said, you should also keep in mind that choosing a high sum insured amount will increase your premiums. 

2. Check the Coverage Offered 

Not all health insurance policies offer the same level of coverage. Some might cover a wider range of diseases and illnesses, whereas others might cover pre and post-hospitalisation expenses and ambulance costs. It is important to select a health insurance plan that covers a large number of diseases in addition to other major and minor medical expenses. 

3. Look into the Waiting Period 

Some health insurance plans have a waiting period clause built into the policy. The policy coverage only starts after the specified waiting period expires. This waiting period is applicable for regular coverage as well as for pre-existing conditions and may vary depending on the type of policy and the health insurer you opt for. Ideally, it is advisable to choose a plan with a short waiting period. 

4. Check if the Plan Allows You to Add Family Members

Health insurance plans must be flexible enough for you to be able to add new members to it, especially if it is a family floater policy. The ability to add family members to an existing plan without lowering or losing the benefits is crucial if you’re planning to get married soon or if you’re expecting a child. 

5. Pay Attention to the Co-Payment Clause

Co-payment is the percentage of medical expenses you’re legally bound to bear out of pocket. For instance, if the co-payment clause in your health insurance policy is 15% and your total medical expense comes to about ₹50,000, you will have to pay ₹7,500. The remaining ₹42,500 will be borne by your health insurer. 

Most health insurers allow you to modify the co-payment clause to either increase or decrease your contribution percentage. Increasing co-payment will lower your premium and vice versa. Therefore, when you choose a health insurance policy, if you select a higher copayment percentage, your recurring premiums can decrease.

6. Examine the Claim Settlement Ratio 

The claim settlement ratio (CSR) is a metric that indicates the number of claims that the health insurer has settled. It is expressed as a percentage of the total claims lodged with the company. 

For instance, if an insurer has a CSR of 96%, it means that 96 claims out of every 100 claims lodged with the company are settled. As a policyholder, a high claim settlement ratio is favourable to you since it increases the chances of your claims, if any, being settled without any disputes. 

7. Check the Number of Network Hospitals

Every health insurer has a network of hospitals. When you undergo treatment at a network hospital, you get to utilise cashless claims. When you make a cashless claim, the insurer pays the medical expenses directly to the hospital. 

However, if you undergo treatment at a non-network hospital, you only get to lodge reimbursement claims. In a reimbursement claim, you’re required to pay for the medical expenses out of pocket and then lodge a claim for reimbursement with the insurer.  

Cashless claims can be very useful when you don’t have the funds necessary to pay for your treatment. Therefore, when you select a health insurance plan, make sure to choose one that has a large number of hospitals in its network. 

Conclusion

In addition to considering these seven factors when purchasing a health insurance policy, remember to also compare multiple plans with each other. This simple exercise can help you easily identify the plan that fits your requirements better. Also, read through the health insurance policy documents thoroughly and carefully. If you have any queries regarding the terms of the plan, reach out to the health insurer and get them clarified before purchasing. 

FAQs