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Terms to know about before buying a health insurance policy
18 March 2020
When investing in any insurance plan, it is essential to get familiar with some of the terms most commonly associated with it. This way, you can stay on top of the benefits you are set to receive and will not end up being overwhelmed by all the paperwork. Even when buying health insurance for children, who are dependants; the responsibility is left with you to cater to all their needs.
While it may sound like a mammoth task right now, the trick is to learn some of the most common terms used in the industry. Don't know where to start? Here is our compiled list of terms that every health insurance novice/ buyer must know.
One of the first things you need to decide when you buy health insurance is the "sum insured". Sum insured is the maximum coverage amount for the health cover under your medical plan. The sum insured comes into play when you are hospitalised, i.e. it is the maximum amount which your insurer will pay to the hospital. If the medical expenses/ hospital bill ismore than this amount, the remaining cost will have to be borne by you. Hence, the higher the amount, or the "cover", the higher is your premium. However, keep in mind the rising costs of healthcare when deciding on the sum insured.
If you are single/living alone, you will only have to buy health insurance for yourself. However, if you are married and have a family; an all-encompassing family floater health insurance plan can take care of all your family members. Typically, such a plan will cover yourself, your spouse, and children. Max Bupa's Heartbeat plan covers up to 4 children, with the cover ranging from ₹ five lakh to ₹ One crore.
Co-Pay & Sub-Limits
When you go to buy health insurance, you will inevitably come across terms like co-pay (co-payment) and sub-limits. Policies with co-pay clauses require you to pay a part of the expenses mentioned in the hospital bill, irrespective of what the sum insured is. So, for a hospital bill of Rs 50,000, a 10% co-pay policy means you shell out Rs 5,000, and the insurer pays the remaining Rs.45,000.
Sub-limits, on the other hand, are caps on particular types of diseases/ expenses (For example: Rs.20,000 per eye sub-limit on cataract surgeries will mean the insurance company will only pay up to Rs.20,000 for cataract surgery in one eye). Most commonly used sub-limit is the room rent capping.. These are usually mentioned in your policy wordings/ Certificate of Insurance.
With rising costs in the healthcare industry, the need for larger health insurance covers is also increasing. However, this often means higher premiums which everyone cannot afford. This is where a top-up health insurance plan comes to save the day.
These plans essentially provide higher cover age at a nominal fee as opposed to buying a separate plan.. Basically,, if costs cross the deductible limit, then that extra expense will be covered by your top-up health insurance plan. Insurance providers such as Max Bupa offer top-up plans such as Health Recharge can take care of your higher coverage needs. Under this plan, you can avail more coverage on hospitalization expenses, hospital accommodation, day-care treatments etc.
Restoration/ Re-fill Benefit
Another term to know when you buy health insurance is the restore/re-fill/restoration benefit, which restores your coverage amount if it has been exhausted during the policy year. This feature ends up being very handy in family floater plans, where it is possible for one member to exhaust the entire sum insured due to a medical emergency.
One of the perks you need to know about when you buy health insurance is the no-claims bonus clause. This benefit is offered to the policyholder if they have made no claims in the previous year and lets them avail a discount on their premium or increases their sum insured for the following year. This is generally upward of 5% of the basic sum insured (the upper limit varies with different insurers).
When getting a new health insurance plan, any "pre-existing disease ", i.e. a disease you are suffering from before buying the policy, usually needs to be disclosed. This occurs as the insurer would usually have a waiting period ) for such illnesses and will not be able to cover you for those illnesses immediately. They may also come under "exclusions" of the policy which are provided to you at the time of buying the policy.
If you are unhappy with your current health insurance provider, you would probably want a different one. However, if you buy a new health insurance plan from another insurer, you may stand to lose benefits such as the waiting period served and no claim bonus attained, and have to start all over again. To avoid this, you can "port" or transfer your health insurance to the new insurance provider wherein all your waiting period credits and no claim bonus are considered if the new insurer accepts your proposal for insurance.
Health insurance can end up being tricky work for many if they aren't vigilant consumers. So take an active interest in this investment and make sure you know what is up for grabs so that you are never left in the lurch again.