I am writing a content to address most important questions regarding health insurance policies in India. I faced this question almost every week from different forums, investors, friends and family.
I faced lot of hard times dealing with illness and hospitalizations of my immediate family members. There is nothing to boast about it but this is what we dealt in between 2014 to 2020.
| # My father died of cancer [ Synovial Sarcoma ]. At least 5 – 6 hospitalization and lot of day care procedures for him. # My son diagnosed with PUJO [ Pelvic Ureter Junction Obstruction ] at birth with severely inflated kidney. He underwent kidney surgery at 6 days age and 45 days age. # My son admitted to hospital multiple times post surgery for a recurring Klebsiella pneumoniae infection which is not responding to most of the standard antibiotics. # My daughter needed hospitalization at 1 month age due to a bad infection in her thigh which requires surgical intervention. # I admitted twice in hospital for unknown fever and then gall stone operation. # My sister got admitted twice for gall stone surgery and acute pancreatitis. # My mother undergone cataract surgery as a day care procedure but it is relatively a small & insignificant medical treatment. |
I understand – How important health insurance is and what are the questions that bug you when you think about health insurance.
Hence I consolidated the questions, which I is very typical before you consider buying a health insurance. I will answer these questions in the next sections one by one.
A practical guide for your health insurance
#1 Is it ok to delay taking health insurance ? Should I take personal health insurance if my employer is providing a corporate health insurance plan or health scheme ?
#2 Should you take a small sum insured for your health insurance ?
#3 What is not covered in your health insurance plan ?
#4 Should you take a super top up policy ?
#5 Understanding co-pay, deductible, capping, permissible room types, waiting period.
#6 What are non-payable items in a mediclaim policy ? How to manage it ?
#7 How to raise reimbursement claims effectively ?
#8 What is health insurance porting and does it make sense ?
#9 How to manage high premium of health insurance policies in your elder age ?
#10 What is the best health insurance policy in India ?
Is it ok to delay taking health insurance ?
#1 So, here is the first question – Should we delay taking the health insurance ? Should we wait till we grow little older ?
#2 What if my employer provides me health insurance ? Still, should I take personal health cover or can I skip taking a health insurance ?
Let me answer this question with a practical example. Let’s talk about a common blood cancer known as CML.
If you are not aware about ‘CML’, it is a type of blood cancer which grows little slowly but if untreated it can often become fatal. ( CML – Chronic Myeloid Leukemia )
Prior to year 2001, CML was a fatal disease with poor prognosis. Often patients die within 3 – 5 years of diagnosis.
But in 2001, a new drug Imatinib changed the whole situation.
Imatinib which can be taken as an oral pill works as a targeted therapy for CML and study shows better prognosis with prolonged life span with longer disease free time period.
Imatinib was a game changer for patients who were suffering from CML. Till today this drug is considered to be a first line of treatment for CML. But to survive, often a patient need to take Imatinib life long and generally there is no break in treatment.
‘Novartis’ a pharmaceutical company marketed Imatinib in multiple countries across world. Initially Imatinib costs around few lakhs per month outside of India.
In India, Novartis started India Program – A special program to sell Imatinib for INR 20K per month.
A drug which is essential for survival and needed life long is still very costly at 20K per month.
Now, if someone has a corporate insurance [ insurance cover by employer ] then the monthly expenses for the oral chemo are covered under Oral Chemotherapy.
But the bad news is, if this patient wants to take a personal mediclaim, he or she can not take any personal health insurance because no insurance company will be ready to issue fresh insurance cover as the patient is suffering from CML.
You can claim the expenses of oral chemo from corporate insurance. But post retirement the corporate medical insurance will not be there and you have no personal insurance to claim for the life long treatment.
More importantly the patient or his family can suffer from many other diseases after retirement but there will be no medical cover to support that.
What if someone taken a small personal health insurance cover of 5 Lakhs after he joined his first job ?
Is this personal medical cover continue life long and provide the family with claim for medical insurance ?
Absolutely yes.
Once he purchased the cover, with a yearly renewal he will be entitled to get life long treatment support for cancer.
Please remember, insurance is a process of risk transfer from one entity to the other in lieu of a premium.
The most important factor is – to take an health insurance policy before you or any of your family members are diagnosed with a difficult disease.
So, when an insurance company is getting into a contract with you to insure you with a sum insured, then in case of a treatment they are liable to pay the cost.
You never know whether you are fortunate to live life healthy or anything bad is going to affect you. Why take a chance ?
Bad health with mental agony to support high cost of treatment is the last thing that we wanted.
Getting ill is not in your hand but insuring treatment cost is absolutely within your control.
Never delay buying a health insurance. If you do not have enough fund to buy a policy, then buy a small one. But buy it today, to avoid unexpected negative surprises in life.
How much medical insurance is enough ?
When you are considering to buy a health insurance & want to know the right amount of sum insured, then look at the following metrics –
#1 How much premium you can afford to pay ? Thumb rule – Your life & health insurance premium should be around 5% of annual income. So, if you earn 10 lakhs a year, then purchasing life & health cover of premium 50K per year, should not be a concern to you. If the life cover comes at 15K premium, then you have 35K at your disposal to purchase a health insurance.
#2 The health insurance premium will increase as you grow older. So, please consider whether you will have enough cash flow at age 50, or 60 or 70 to support a high sum insured.
So, be balanced. Try to maximize your cover with the “5% of income rule”.
Please understand, when your risk is low & unknown – you are a good life and when your risk is high & known – you are a bad life in the eye of the insurance company.
So, please do not be in a false impression that you can take a small sum insured till you are fit and then you can increase the sum insured when you are very old or physically not doing well.
Insurance does not work in that way. The insurance company may not accept your proposal to increase the sum insured. Because after a life threatening event or dreaded disease, you became a bad life in the eye of the insurer.
You spend money in movies, vacation & discretionary spending in puja. Then why are you so skeptical about spending 5% of income in insuring the well being of your family.
| How much health insurance one should purchase ? |
| #1 Do not think you are smart that you purchase a small sum insured now and when you are ill, then you will purchase more. Your request to increase the insurance amount can be outright rejected by the insurer. #2 Look at your present income and it’s prudent to spend 5% of annual income in insuring life & health. So, do not try to find out – how much sum insured is right for health insurance rather find how much premium you can afford ? #3 Find out future cost of your present sum insured and whether you can afford to pay the higher premium in older age. Please create a separate fund to pay the premium in your elder age. |
What is not covered in your health insurance plan ?
In the last section, I talked about how much medical insurance you need. I mentioned that you should take maximum cover which you can afford in your elder age. You may use “5% of annual income” rule to calculate how much premium you can afford.
In this section, let’s focus on few things which your health insurance generally do not cover.
First of all let us divide the exclusion list in two sections.
One is non-medical exclusions and the other one is medical exclusions :
| Non medical exclusions are below |
| #1 Injury or medical condition due to war or war like situation. #2 Attempted suicide or intentional self injury. #3 Injury during an act which is broadly related with breach of law with criminal intent. [ Act is performed by the insured person ]. #4 Injury due to participation in hazardous or adventure sports. |
| Medical exclusions are below |
| #1 Treatment for alcohol or other drug abuse. #2 Attachment or detachment of any prosthetic without surgery which requires anesthesia. #3 Treatment in abroad if not insured by any international health care policy. #4 Treatment in a facility which is not recognized as a hospital legally. #5 Obesity or weight control [ There are some exceptions ]. #6 Correction of eye sight due to refractive errors. [ There are some exceptions ] #7 Cosmetic treatments / Plastic surgery [ If the treatment is an essential part of a broad treatment regime, then it is covered – Example – Cancer ]. #8 Circumcisions [ Exception – If it is required for treating any injury or other illness ]. #9 Change of gender. #10 Non-allopathic & unproven treatments. #11 Investigation & evaluation without any hospitalization for treatment. #12 Cost for rehabilitation. #13 Vaccinations & immunizations. #14 Cost of spectacles, hearing aids, treatment of baldness, wigs, diabetic test strips or similar products. #15 Dietary supplements unless it is prescribed by a medical practitioner during hospitalization. #16 Sleep-apnoea. #17 External congenital disease, defects. #18 Growth hormone therapy. #19 Treatment for sterility & infertility. #20 Expense of organ donation if the insured person is the donor. #21 Dental treatment [ Very few medical insurance started giving some coverage for dental treatment ]. #22 HIV / AIDS – Complications from HIV infections, AIDS. [ Few insurance plan recently started offering some coverage for HIV. But as a general rule still HIV infection is a permanent exclusion in medical insurance. ] #23 Pregnancy – Pregnancy is generally not covered under personal health insurance. Many group corporate insurance though provide cover for pregnancy. |
The list is long and there could be some more exclusions which is mentioned in your health insurance policy wording.
If you do not know how to check it or how to validate the details, then take help of an expert to guide you.
I hope you will find this list as a ready reckoner to check exclusions in standard health insurance policies in India.
Please understand the above list is a standard one. In your policy there could be some special exclusions or inclusions. So, read your policy wording carefully before come into any conclusions.
The truth behind top up medical policies
Initially I thought, I will write an detailed section on top up / super top up medical insurance policy. But I was skeptical whether I will do enough justice to my readers.
The article that I read in ‘JagoInvestor’ is probably one of the most authority & comprehensive article on top up policies in India.
I was not sure whether I will be able to add any more value beyond what is written in ‘JagoInvestor‘. So, I thought instead of writing it, let’s share a truly amazing content on top up policy.
I am sure you will learn something new out of this article. Also you will get to know the difference of taking a base versus a top up one. So, click on the above link to read what JagoInvestor is explained on Top up mediclaim policies in India.
Now let’s talk about few health insurance jargons which is very commonly used in insurance policy documents to describe the features of the products. These terms are – Co-pay, Deductible, Capping, Permissible room types, Waiting period. Let’s dig deeper into the technicalities of these terms.
Co-pay, Deductible, Capping, Permissible room types, Waiting period
Co-pay – Co-pay is a percentage amount that you agreed upon to share with insurance company whenever there is a hospitalization. It effectively means that your insurer is not taking the 100% burden of the claim. A portion of the claim is paid by you.
Generally if you opt for co-pay, your insurance premium will be less. But in some situations, opting for co-pay is not a choice rather you have to take co-pay. Many times new entrants in elder age has no other choice than taking co-pay. The insurance company put co-pay as mandatory if you are taking insurance at the elder age.
Deductible – Deductible in a policy is a fixed absolute amount which you are agreed to pay in a policy year if there is a claim. After this amount, your insurance policy will kick in. In case of deductible the insurance company will only start paying you, if the claim amount is beyond the deductible amount.
Now you will hear about deductible more often in case of top up medical policies. This is because top up medical policies kick in after a certain amount or expenditure exceeds. Now you can pay this initial amount from your pocket or from a base health insurance policy. But essentially deductible means a certain amount after which the policy benefits kicks in.
Capping – Capping is a common word in the health insurance field. It essentially means the maximum ceiling value of a procedure, treatment cost of certain health conditions or room rent permissible.
Example – If your policy wording says that INR 60,000 for a single eye cataract surgery, then it means for a cataract surgery the maximum amount that you can claim is INR 60K.
If your policy wording says that maximum per day bed charge permissible is 2% of sum insured and you have a base policy of 5L, then you can get admitted into a bed with maximum INR 10K bed charges. Anything beyond that and you need to pay from your pocket.
Permissible room types – Recently in some policies you might find a mention like -“Single occupancy AC standard room is permissible”. Now there is lot of confusion about what is permissible and what is not. If you have confusion, you should drill down your insurance company and get a written clarification from them. But as per industry norm, generally “Single occupancy AC standard room” means a no frill single room and not a premium suite room.
Please remember, if your policy only provides a standard single room and you are admitted into a suite room, you need to pay the difference of room rent and other costs of the treatment in pro-rated basis. So, be aware about the fine prints. Take help of someone who is knowledgeable and trusted.
Waiting period – Waiting period simply means that the time period you need to wait before you claim the insurance after taking the policy. Please remember – not all the medical conditions are covered from day one. There are exceptions. Some diseases are slow growing and there are diseases or illness which is declared by the policy holders. So, automatically these illnesses are classified as pre-existing diseases and comes with standard waiting period.
Example – Knee replacement or gall bladder stone treatment has a mandatory waiting period of 2 years. Ask your insurer to provide a comprehensive list.
If you disclose any illness on your own, then you will get 3 – 4 years of waiting period on that particular illness. Example – High blood pressure, Asthma etc.
Cancer / Tumor has generally a waiting period of 30 days.
Covid19 is a well known illness now and most of the insurer is presently putting a 30 days waiting period on it.
Please remember any accidental hospitalization is covered from day one. For example, if a person meets an accident and because of the accident that person requires knee replacement, then it is covered from day one.
What are the non-payable items in a medi-claim policy ?
In the last section, I explained few important topics such as waiting period, co-pay etc of a mediclaim policy. In this section, I will write about a very common difficulty, patient parties faced when a mediclaim is raised.
The insurance company does not pay each & everything that you claim in a hospital bill. There could be few items, procedures, non-medical items which come under non-payable items and those are not paid.
In my personal experience, I saw that these non-payable items can be 5% to 15% of the total bill value. But it depends on the hospital where the patient is admitted. In corporate tertiary care provider hospitals, generally the bill has much more non-payable items than a small town nursing home. This is my personal experience.
Now here I can not give you an exhaustive list of non-payable items. Please talk with your insurance company to know more about the non payable items. But here I am giving you some examples of which are not covered.
| Non Payable Items In Mediclaim Policy : |
| #1 Baby food / Baby bottle / Brush. #2 Hand wash, Towel. #3 Buds, caps, comb etc. #4 Eye pad, Eye shield, Disposable razors. #5 Mineral Water. #6 Sanitary pad, Diapers. #7 Tooth paste & Tooth Brush. #8 Weight control programs / Supplies & services. #9 Hearing Aids, Contact lens. #10 Infertility or Assisted conception procedure. #11 Hormone replacement therapy. #12 Treatment of STDs. |
And there are many more such non-payable items. Do not wait. Ask your health insurance provider to share a copy of non-payable item list with you.
Now let’s discuss how to tackle the non-payable items in a health insurance policy.
There are two way.
#1 If you know that there is an ongoing illness which requires multiple hospitalization, then maintain a separate fund to pay the non-payable items.
#2 The other prudent option is to consider buying a rider to cover non-payable items if your insurance provider supports anything like that. Insurance rider is just an add-on which you can buy with relatively small price to get some extra facility. Some insurance companies have such a rider which covers most of the non-payable items and your health insurance claims can become fully covered under such policies.
There are few policies as well which has full coverage for non-payable items and you do not need to buy a separate rider for that.
Next time when you renew your health insurance, do check about this rider. If you are considering to buy a fresh policy then seriously think about non-payable items and how to mitigate the cost of that.
How to raise medical reimbursement claims effectively ?
In the last section I mentioned about non-payable items in a medical insurance. In this section, let’s focus on reimbursement claim.
In my personal experience in last 10 years, I understood that many people get nervous when raising a reimbursement claim with health insurance provider. Everyone wants hassle free claim and cashless medical insurance is the best option. But there are situations where you need to raise reimbursement claims.
For example –
#1 You rushed to a hospital in an emergency situation and the hospital is not approved as a cashless benefit provider under your insurance.
#2 Any pre-hospitalization or post-hospitalization claim which never comes under cashless process.
So, how to deal with such cases –
Today I will give you exact step by step process of filing a reimbursement claim in this email. If you follow these steps, you should be able to file a claim without the help of any agent / service provider.
# Always remember raising a reimbursement claim is like telling a story.
# Also remember each step of the story needs to be supported by a proof.
If you remember these two points, then your claim should be processed without any issues. [ Disclaimer – You need to be truthful about your past medical history, pre-existing diseases if any during the life time of your policy ].
Now for simplicity, I am considering an hypothetical situation. Say, one patient was diagnosed with brain stroke during hospitalization and after receiving 12 days treatment the patient was released. The hospital expenses was covered through cashless facility.
But after returning home the patient needs to take some medicine, visit the treating doctor regularly as advised during discharge. Also the patient needs to do some pathological tests [ Fasting sugar, Lipid profile, Sodium, Potassium ] and repeat a radiology test [ MRI Brain ].
Now how to raise this post hospitalization claim. Let’s see below –
| Documents to raise a reimbursement medical insurance : |
| #1 Copy of hospital discharge summary where medicines to be continued is mentioned and also a repeat visit to the treating doctor after 15 days is mentioned. #2 Medicine bills in original which are prescribed in the discharge summary [ Exhibit – 1 ] #3 MRI report in original which is mentioned in the discharge summary [ Exhibit – 1 ] #4 Original MRI examination money receipt. #5 Original pathology reports as mentioned in the discharge summary [ Exhibit – 1 ] #6 Original pathology examination money receipts. #7 Original doctor’s prescription of repeat check up after 15 days. [ Advised in the discharge summary – Exhibit – 1 ] #8 Original money receipt of doctor’s fees during repeat checkup. #9 Medicine bills / money receipt in original which are prescribed during the repeat check up [ New prescription – Exhibit – 7 ] #10 Original pathology test reports which are done after 1 month of repeat check up as advised in the repeat check up prescription [ New prescription – Exhibit – 7 ]. #11 Original money receipts of pathology tests which are done after repeat check up as advised. #12 Duly filled & signed claim form of the insurance company with some basic details of the post hospitalization case. |
During any medical emergency if you keep all the records inside a file and just put those documents serially as a time line events [ Story ], then the work of the claims department gets easier.
Always remember in a claim, 3 things are important to submit.
i> Proof that a medical practitioner told you to take a medicine or do a test or come for a check up [ Here proof is prescription or discharge summary ]
ii> Proof that you did the pathology or radiology test [ Here proof is original test report ]
iii> Proof that you bought a medicine or did a test by paying some money [ Here proof is the original money receipt ]
If you submit these documents in a chronological manner with a duly filled form then the reimbursement claims process should be smooth & quick. I hope that the hypothetical situation I mentioned above, is helpful for you to understand what needs to be done.
Let me know without any hesitation if you need anymore details of the claims process.
What is health insurance porting and does it make sense ?
Health insurance porting is a process where you can change your health insurance provider and can also carry forward your benefits from the earlier insurance company.
Here benefits are pre existing health conditions or waiting period on that. Let me explain with two examples below –
#1 Say you have a 2 lakhs insurance coverage from ICICI Lombard and after 3 years of policy continuation you ported the policy to HDFC Ergo.
#2 When porting to HDFC Ergo you took increased cover of 5 lakhs.
#3 After porting to the new policy, within 3 months you are diagnosed with gall bladder stone and requires gall stone removal surgery.
What will be the claim benefit if the gall stone surgery claim is raised to HDFC Ergo.
Let’s understand –
A. First of all, Gall stone surgery is covered in medical insurance after 2 years of policy issuance. Though you recently migrated to HDFC Ergo, but your policy is actually ported from ICICI Lombard after 3 years. Hence the waiting period clause is in your favour. There should not be any claim settlement issue.
B. If the gall stone surgery & related treatment cost is more than 2 lakhs, then you will get claim settled up to 2 lakhs as your older policy [ ICICI Lombard ] has the maximum limit of 2 L. You can claim beyond 2 lakhs once your new ported policy is 2 years old.
So, porting is very beneficial if you understand how to apply for it and what is expected.
Porting becomes important if you are not satisfied with your present insurance company & wants to go to a different insurer but carry forward your privileges.
How to manage high premium of health insurance policy in your elder age ?
In this section let’s talk about how to manage growing health insurance premium in elder age.
First of all, we agree that health insurance as a product is a must in our financial planning. But there is an unique problem with this product. In case of life insurance the premium is designed as level premium. That means almost 99% product has a premium which is flat in nature.
So, if I purchase a life insurance with an annual premium of 10,000 then after 15 years, I will be still paying annual premium of 10,000. The good part here is after 15 years, the time value of 10,000 is much reduced. That means not only the premium is staying same, it is easier for me to pay 10,000 as the actual monetary value is reduced after years.
Where as health insurance premiums are stepped up premium and with years the premium increased many folds.
Example – Someone paying 8,000 for 5 lakhs cover at age 25, going to pay around 45,000 at age 60 – 70. The other difficulty is that person at age 60 or 70, will not actively work and may be retired with reduced income. But health insurance can not stop at that point because in elder age the necessity of having a health insurance is much more.
So, continuing the health insurance at elder age is a challenge because you need the product most. But the product becomes costly for you and you probably have reduced income due to retirement age.
The other problem is at 25 years of age, you are fine with a 5 lakhs insurance. But you might not be ok with the same sum insured at age 60. Because after long, 25 – 30 – 35 years the cost of medical treatment is going to be much higher.
Recently an industry study published by care insurance shows that medical treatment inflation is rising pretty fast in India with a rate of 14% per year.
Some of the common treatment cost in private setup is going to be much higher in coming decades and make us vulnerable without a insurance coverage.
Now as we talked about the challenges in details, let’s find out what is the solution.
How to pay ever growing health insurance premium ?
#1 Understand how much you need to pay as health insurance premium till age 80 – 85. Take help of a planner to calculate the approx cost in present value. [ May be at age 55 or 60 when retirement kicks in ]
#2 Invest systematically in equity oriented asset classes in a separate manner to make an accumulation till your retirement age. This separate kitty will pay your yearly health insurance premiums in elder age.
#3 You might consider taking a deductible or co-pay clause in your existing health insurance scheme to reduce the yearly premium burden. But take this option judiciously considering all the pros & cons.
#4 In your elder age if your income reduces significantly and your kids are staying separately then you can consider an unique option such as reverse mortgage. If you have own house and it is in your name, then you can put the home in reverse mortgage to get a better monthly pension to better your life style & pay higher premiums.
| Reverse mortgage as a product is not very popular in India because of our culture and parents are reluctant to put their house in reverse mortgage due to emotional and other factors. |
What is the best health insurance policy in India ?
First of all, this is not the best product review article that you get to know from internet and other sources. This article is written in a different way. I am more inclined to write about the truths after my personal research.
Everyday I talk with at least one person who asks me this question – “What is the best health insurance plan in India ?”
Let’s bust the myth.
There is almost nothing called best health insurance plan. There are couple of very good insurance brands which offer decent health insurance plans. It is rather you & me who makes the insurance plan looks shoddy.
To explain better I will try to find out one independent source from internet which talks about best health insurance products in India. First of all, I will refer to basunivesh. I found the following recommendations from their research –
Now I will be doing a simple thing. I will pick up the first 3 insurance company from the above list and try to find the customer feedback about these health insurers from public domain.
For this I will use a well known platform ( mouthshut.com ).
#1 Let’s find out what people said about hdfc ergo health insurance –
#2 Let’s find out about ICICI Lombard General Insurance –
#3 Let’s find out about Royal Sundaram Health Insurance –
You can see all the top 3 health insurance provider have very terrible review in public domain.
Why ? Now here is the irony.
If a well known & respected financial planner like Basunivesh pick up top 3 products and all of them get terribly bad review in public domain, then you need to sit back and ponder what is wrong about the whole thing.
Before analyzing further, I will ask you a simple question. How many times in your life you appreciate good things in life. Or particularly, you buy a product and it is working without a problem. How many times you go ahead and tell everyone the product is really good ?
We seldom do this.
Now think about the opposite situation. You buy a product but disappointed due to some issue.
Many of us start giving negative review. Started posting in facebook, twitter and other social media sites. Started giving negative review in the review sites.
It is just a way to vent out our frustration. Nothing change in the ground level. Now coming back to the health insurance review.
People who mostly gave negative reviews in mouth shout ( in fact 95% people who reviewed there ) are frustrated due to some reason.
The problem with financial products and particularly health insurance is – many practical facts & figures were never discussed with the buyer ( policy holders ) during sales pitch and product briefing. And when actual need arise some of the policy holders get a negative surprise.
In my view health insurance companies are not outright good or bad. They are professional in most of the cases.
It is “WE” who make mistakes and do not learn the basics.
We are more happy with believing the insurance agent and quick in completing the transaction. We are more focused on knowing how much coverage the product offers rather than knowing situations where the insurance may not work.
We are focused on positives and do not want to know the NEGATIVES.
Insurance products are designed to act as a safety valve in worst situations in life. So, always ask questions and get knowledge about negatives of an insurance product.
There is nothing called the best insurance product in India. All these are eye wash. Most companies are managed in professional way and it is our fault that we are not focused to understand the product.
But still, if you want to know about the best health insurance product in India, then you may check the Basunivesh reference I posted above.
I hope you loved the details I shared here. By the way, never forget to share your thoughts and ideas over my blog. Looking forward to connect with you.