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Health Insurance Checklist for First-Time Buyers in India

Q: 1) What are the different types of health insurance?

There are five different types of health insurance , and they are: Individual Family Floater Critical Illness Senior Citizen Group Health Insurance

Team AckoNov 7, 2024

With the multitude of health insurers and policies available, choosing the right plan can be overwhelming. A health insurance checklist offers clarity by posing essential questions. It enables individuals to assess coverage comprehensively, considering factors like premium costs, deductibles, network providers, and coverage for specific medical needs.

By systematically evaluating these aspects, individuals can make informed decisions to select a plan that maximises benefits and meets their healthcare needs effectively.

As a first-time buyer, use the medical insurance checklist in the article to have all important areas covered and find a policy that is suitable for you.

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Contents

Basics of Health Insurance
Health Insurance Checklist in India:
Common Misconceptions About Health Insurance
Diversity of Health Insurance Plans
Importance of Preventive Care Coverage
Strategies for Managing Health Insurance Costs
Checklist for Things to Do After Buying Health Insurance:
Frequently Asked Questions

Basics of Health Insurance

Health insurance is a crucial financial tool that provides individuals and families with access to necessary medical care while mitigating the risk of exorbitant healthcare expenses. At its core, health insurance functions through a contractual agreement between an individual and an insurance provider. In exchange for regular premium payments, the insurer agrees to cover a portion of the individual's medical expenses as outlined in the policy. Understanding the basics of health insurance involves familiarity with key terms and concepts.

Premiums are the regular payments individuals make to maintain their coverage. Deductibles signify the sum individuals need to cover from their own pockets before their insurance benefits come into effect. Copayments and coinsurance refer to the portion of medical expenses that individuals are responsible for after meeting their deductible. Health insurance typically covers a range of medical services, including doctor visits, hospital stays, surgeries, prescription medications, and preventive care. The specifics of coverage can vary widely depending on the type of insurance plan selected and its associated terms and conditions.

Health Insurance Checklist in India:

The health insurance industry, in India has transformed in recent years with a focus on simplifying health insurance plans by digitizing the entire purchase journey. With new-age technology and numerous plans in the market, the below health insurance checklist will help you to buy the right health insurance policy:

1) Individual or Family-Floater Policies

Understanding your requirements goes a long way in helping you find the right health insurance plan. One of the primary requirements is if the health insurance scheme is for you or your family as well. You can buy an “individual” health insurance policy for each of your family members, or you can buy a “family-floater” policy to include all members in a single plan.

The individual policy is an excellent resource during all situations; however, it is expensive compared to the family-floater policy. The family-floater policy is an excellent cover since it offers the flexibility of using the entire coverage among the family members as a group. Additionally, when an individual chooses the family-floater plan, the sum insured is higher compared to the individual policy.

For Example: If you are single, then you may consider buying an individual health insurance policy. However, if you have dependent parents and/or a spouse, it is advisable to get the family-floater instead of buying a separate individual insurance plan. This will reduce the insurance cost and increase the coverage as a group.

2) Coverage Amount (Sum Insured)

The amount that you are eligible to claim against your policy is an important factor in determining a suitable health insurance plan for you. The insurer will pay only up to the sum insured. Ensure that you choose the ample coverage amount because it may not be possible to increase after a claim has been submitted.

While a higher coverage amount offers the comfort of adequate coverage, it will attract a higher premium. Hence, it is important to buy a Health Insurance Policy with the right amount of coverage and not go beyond your financial strength.

Typically, the sum insured should be ten times your income if you are planning to buy the family-floater insurance. If you are single and do not have to include dependent family members, then the sum insured can be five to six times your income.

For Example: If your salary is Rs. 50,000 per month, and you want to buy family-floater insurance. In this care, your health insurance coverage should be a minimum of Rs. 5 lakhs. If you are single and do not have dependent family members, then the sum insured amount can be Rs. 3 lakhs.

3) The Extent of the Coverage

Whether you are buying an individual or Family health plan, a low-cost insurance plan should not be the only priority. When you are buying an all-inclusive health insurance plan, ensure that you get comprehensive coverage. You should analyze the policy based on the benefits it offers for the premium that you pay.

There are useful benefits such as Out Patient Department (OPD) cover, pre and post-hospitalization, teleconsultations, maternity coverage, day-care procedure, wellness programmes, alternative treatments, rewards for keeping fit, among others which are useful during the policy period. Consider a policy that provides coverage beyond the regular hospitalization coverage that traditional companies continue to do so.

For Example: If a health insurance policy with a sum insured of Rs. 5 lakhs costs you Rs. 12,000 and there is another policy that offers Rs. 5 lakhs coverage for a premium of Rs.12,500 along with additional benefits such as teleconsultations, OPD cover, discount on pharmacy, pre and post-hospital coverage, it is beneficial to buy the second type of policy.

4) Cashless Health Cover

The cashless medical cover offers a cushion during an unplanned hospitalization that may require urgent funds. Whether it is a planned or unplanned hospitalization, cashless hospitalization provides a hassle-free and paperless experience. Find the right digital general insurance company that offers services online instead of the traditional form-filling exercise for a hassle-free experience.

Digital-first general insurance companies such as ACKO provide all services through the robust digital infrastructure. You can opt for the cashless hospitalization or opt for the reimbursement claim for paperless claims. For reimbursement claims, just log into your account through the website/app to register your claim, add all the required documents and details online and the claim will be settled without any paperwork.

5) Waiting Period for Pre-Existing Conditions

Health insurance comes with a waiting or cooling period before any critical illnesses can be covered under the policy. Apart from comparing the health insurance premium, you also need to compare the waiting period for pre-existing diseases or conditions.

Some plans specify the waiting period of two years and in some cases, it can be three years. While this may delay your decision to buy health insurance, you need to understand the importance of health insurance and how it can help you during hospitalisation, especially during emergencies.

The country’s insurance sector regulator, Insurance Regulatory and Development Authority of India (IRDAI) has defined pre-existing disease as any ailment, condition, injury or illness that has been diagnosed up to 48 months or 4 years before buying the health insurance plan. Select a policy that does not have sub-limits on critical illnesses for comprehensive coverage. Here are some of the examples of pre-existing conditions that usually have a waiting/cooling period before the policy offers the coverage:

Diabetes
Hypertension
Thyroid
Cataract
Hernia
Non-infective Arthritis
Osteoporosis
Osteoarthritis
Varicose veins
Psychiatric illness

6) Room Rent Restrictions

All health insurance policies offer different restrictions on room rent. While some offer 1% of the sum insured, others offer 2% or a cap on the room rent. Depending on the type of hospital, the room rent varies, and you need to buy a plan that is suitable to your budget.

New-age digital insurance companies are disrupting the industry with new features and higher room rent cap. Opt for a plan that does not have sub-limits on room rent so that you do not have any surprises during the time of claim settlement.

There are other sub-limits that you need to consider as well. These include restrictions on specific procedures. To discourage inflated room charges, certain policies have a cap on room rents and this becomes one of the critical checklists before you buy the plan.

Example of Room Rent Calculation: If the sum insured of the policy is Rs. 5 lakhs and the room rent is capped at 1%, then the maximum room rent that the insurer will pay is Rs. 5,000. If you have opted for a room that costs more than Rs. 5,000, then you have to pay the remaining proportionate amount for room, doctor visits, and such charges from your pocket.

7) Deductibles/Co-Pay

Opt for a policy that does not impose any restrictions in the form of deductibles or copayments. Copayments are where the insurance provider pays only after medical costs is beyond the set limit.

Policies that do not feature copayments or deductibles might be expensive; however, they offer the advantage of medical coverage during emergencies. It is better to select a plan that does not come with any limitations so that you get the maximum during claims.

Example of Deductible Calculation: If your claim amount is Rs. 2,00,000 and the policy has a deductible or copayment of Rs. 50,000, then you have to bear the medical costs up to Rs. 50,000 and the remaining Rs. 1,50,000 will be paid by the insurer.

8) Exclusions

All types of insurance policies come with certain exclusions. You must know about the list of exclusions before you choose the plan. This will avoid unforeseen medical expenses for a service that is already covered or after the treatment you realize that the policy does not cover the treatment of the specific illness.

For Example: There are health insurance policies that offer regular coverage for planned and unplanned hospitalization with the right sum insured, it may not provide coverage for maternity benefits, and you may not be able to include it in the future as well. Ensure that you prioritize your needs so that you select the plan that does not exclude the benefits you need the most.

9) Reputation of the Insurer in the Industry

While shopping for a health insurance policy in the market, you may find policies that are low in cost and offer wider coverage. However, the sum insured and the premium is not the only criteria while selecting the policy. You need to know the reputation of the insurance provider and how they service their clients.

Study about the insurer’s claim settlement process and how many genuine claims have been settled by them. This gives you more information about how well-efficient and well-networked the insurer is. You can research the services of the insurer online. The reviews and ratings of the company’s policyholders will help you know more about the reputation of the company among existing customers.

10) Network Hospitals

Hospitals should not be far away from where you live. It is easier to reach a hospital nearby and get the required medical treatment. Find a policy that provides cashless hospitalization at a preferred and nearby hospital. This will be useful, especially during emergencies. Additionally, it will be beneficial if multi-speciality hospitals are part of the insurer’s network of hospitals. This way you have the benefit of getting superior medical care for specialized treatments.

11) Option to Enhance the Sum Insured

Medical costs are on the rise, and you need to adapt to new and rising costs. You must opt for a policy that covers each member of your family. What is adequate for today may not be sufficient for tomorrow. Policies that have the option to upgrade the coverage amount in the future offer you the flexibility to increase the coverage amount when medical costs are on the rise.

Common Misconceptions About Health Insurance

Misconceptions about health insurance abound, often leading individuals to make uninformed decisions or forgo coverage altogether.

One widespread myth is that health insurance is only necessary for the elderly or those with pre-existing conditions. In reality, unexpected accidents or illnesses can affect anyone, making health insurance vital for all age groups.

Another misconception is that health insurance is unaffordable. While premiums can vary depending on factors like coverage level and location, there are often options available to fit different budgets, including subsidies or employer-sponsored plans. Additionally, some may believe that they don't need health insurance because they are healthy. However, insurance provides essential financial protection in case of unforeseen medical emergencies, offering peace of mind and mitigating potential financial burdens.

Diversity of Health Insurance Plans

There's a common belief that all health insurance plans are the same. In truth, plans can differ significantly in terms of coverage, network providers, and out-of-pocket costs. It's essential for individuals to carefully review plan details to ensure they select one that meets their specific needs.

Some may think that they can enrol in health insurance at any time. However, there are usually specific enrollment periods, and waiting until an emergency arises may result in uncovered medical expenses. Understanding these misconceptions is crucial for making informed decisions about health insurance coverage.

Importance of Preventive Care Coverage

Preventive care coverage is crucial in health insurance policies because it focuses on keeping individuals healthy and catching potential health issues early. This coverage includes things like

Regular check-ups and screenings
Vaccinations
Counselling aimed at preventing health problems or catching them before they become serious.

By including preventive care, insurance companies encourage people to take care of their health proactively.

This can lead to better health outcomes and can help avoid more significant health issues down the line, which can be both costly and harmful to one's well-being. Additionally, emphasising preventive care aligns with the idea of promoting overall health rather than just treating illnesses. It's about promoting a culture of wellness and empowering individuals to take charge of their health.

In the long run, this approach can save money for both individuals and the healthcare system by reducing the need for expensive treatments and hospitalisations.

Strategies for Managing Health Insurance Costs

Strategies for managing health insurance costs are essential for individuals and families looking to maintain financial stability while ensuring access to necessary medical care.

One effective approach is to carefully compare different insurance plans, considering factors like premiums, deductibles, and coverage options.
Opting for a plan with higher deductibles and lower premiums can help reduce monthly expenses, especially for those who don't anticipate frequent medical needs.
Additionally, utilising health savings accounts (HSAs) or flexible spending accounts (FSAs) can provide tax advantages while earmarking funds for medical expenses.
Taking advantage of preventive care services, such as routine check-ups and screenings, can help detect potential health issues early, ultimately reducing long-term healthcare costs.
Moreover, staying within the provider network, seeking generic medications, and negotiating medical bills can further lower out-of-pocket expenses.

By implementing these strategies, individuals can effectively manage health insurance costs without sacrificing quality care.

Checklist for Things to Do After Buying Health Insurance:

The benefit of buying health insurance for you and your family provides you with financial security, especially during emergencies. But, your responsibility for shopping for an ideal health insurance plan should not end until you buy the policy. You must make sure that you keep the following pointers in mind to ensure that you do not face any hurdles during the policy period:

Go through the policy document carefully to check for any errors of factual data such as spelling of the names, age of the policyholders, address apart from the policy details such as the sum insured, the date of commencement of the policy and the waiting period for critical illness, etc.

Understand the claim process of the policy and how you can avail of the service during hospitalization. Learn about the protocols that you need to take to avail medical care through the insurance policy.

Follow up with your insurer about the Health Insurance Policy ID Card, which should be delivered to you within 15 days of issuing the health insurance policy.

Tell your family members about the details of the policy. Let them know the benefits of the plan and the claim procedure.

Set a reminder of the renewal date so that you do not miss out on renewing the policy on time and continue to enjoy the benefits of the policy.

Take advantage of the tax rebate on the health insurance policy to save on income tax. Under Section 80D of the Income Tax (IT) Act, you can avail tax rebate on the premium paid towards the health insurance plan.

Add new members to the policy. In case you have a baby, you need to include your baby as a beneficiary of the policy. Typically, a newborn baby is normally covered after 90 days of birth.

Save the policy as a scanned document in your email account, or you can upload it in the DigiLocker for future reference. You can also send a soft copy of the policy document to your family members.

Frequently Asked Questions

Here are the frequently asked questions about health insurance:

1) What are the different types of health insurance?

There are five different types of health insurance, and they are:

Individual
Family Floater
Critical Illness
Senior Citizen
Group Health Insurance

2) What are the documents required to buy health insurance?

While buying health insurance you are required to submit the following documents:

Age proof
Identity proof
Address proof
Passport size photographs
Medical reports, if required by the insurer
Income proof

3) Is it worth buying health insurance?

It is not just worth buying health insurance, it is also one of the most important responsibilities to secure you and your family with health insurance coverage especially during emergencies and avoid any financial burden.

4) Do I need to buy personal health insurance even though I have corporate health insurance from my employer?

It is advisable to buy personal health insurance even if you have the Group Medical Coverage (GMC) offered by your employer. In case you are moving to a new job or if you lose the current job, personal health insurance will act as a shield during such situations.

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