Health Insurance
The money I wish goes down the drain
Shit happens. We get sick, injured & to put it plainly, we die. We may not be able to control these events, but fortunately, we can ensure that the impact of these events is less severe, especially financially.
The second & one of the most important steps in our playbook is getting insured. Brilliant minds have taken the advantage of probability & set-up insurance businesses. Become their customer, pay them, wish for them to grow & take your money for life. We don’t want that money back in most cases (except when you die, though you don’t get the money then). That’s the only place where we’d happily want our money to go down the drain.
Majorly, there are two types of personal insurance we need to take care of - Health & Personal. Each one of us needs health insurance, we may or may not need life insurance depending on our life situations. Today, we’ll talk about things to take care of while choosing a health insurance policy.
Warning: It’s a looong list. Unfortunately, the people in the insurance business do not get a lot of benefit by making our lives easier. So read on & ask all of these questions to your insurance advisor/agent.
Health Insurance
Choosing a health insurance policy is one of the most confusing tasks. It’s easy to get lost in the ton of random information they give & not focus on the things that matter.
I recently read the book Let’s talk Money by Monika Halan which I recommend everyone to read. The book listed some important things to look out for when buying health insurance. It highlights Price, Benefits & Claims as the three most important metrics to keep an eye on. Some details about the three -
Price: The premium of your health insurance policy changes as you age. Important to know what the policy costs today & in future. It may be cheap today when compared to peers but maybe expensive at fifty when you’d probably need it the most.
Benefits: Aim to get at least the following 8 benefits -
Ensure the policy does not have a co-pay: Co-pay means that you agree to share the costs with the insurance company. Eg. If there is a co-pay of 10% & for some reason you get hospitalized. Then on a hospital bill of 1 lakh, you will have to pay 10k & the insurance company covers the rest.
Pre-existing diseases: Insurance companies are allowed not to cover any costs of treatment for diseases you already had when you bought the policy for up to four years. Some companies offer a reduced period. Good idea to check this in the policies you are looking at.
Disease waiting period: Usually companies have a cool-off period when you buy a policy. They don’t pay any claims in this period. Some policies have a waiting period for specific diseases. Look for policies that do not have a waiting period on diseases or coverage.
Sub-limits: Within a policy, there are limits on the different type of spends. You may get a policy with an overall limit of 5 lakhs, however, it will have internal sub-limits on things like room rent. So it may only cover 3k per day room rent, anything over that will have to be taken care of by you. And usually in hospitals, with the luxurious rooms, the other expenses are also spiked. Check for the sub-limits & ideally look for policies with no/generous sub-limits.
Exclusions: There are always some diseases, conditions, services that the policy does not cover. Eg. Cosmetic surgeries, dental treatments etc. Know all the things your policy does not include.
Pre & post hospitalization costs: Some policies offer claims on doctor’s fees, tests, medicines before a planned hospitalization & also for three months afterwards. Check if the policy offers this & also the amount & time that it covers.
Day-care procedure coverage: Certain procedures & treatments don’t require you to stay in the hospital for over 24 hours. Check the day-care clause in your policy, what all is covered, how much is covered, how long do you have to stay to claim.
No-claim bonus: When you don’t make any claim for one year, the companies reward that. They do so by increasing your cover amount. Eg. If you have an insurance cover of 10 lakhs, for a premium of 8k, in 2019 & you don’t make a claim that year. Next year, for the same premium, you will get 10% more cover. So your cover will be 11 lakhs.
Claims: You may have all the benefits in the world, but if you can’t claim those, they better not be there. All may look rosy at the time of buying the policy, the real test is when you make a claim. Does the insurer pay, how much, what is the process, how is their support?
I have been in situations where I’ve had to deal with insurance companies & have had to file claims. Believe me, when you are in the hospital, the last thing you want is this hassle with the Third Party Administrator (TPA, the department that handles the insurance claims). Don’t wait to experience a rough claim process to appreciate a smooth one. There are two things to look at here -
Claim settlement percentage: Of every 100 claims, how many does the company settle? Buy only when this is over 95%.
Complaints: The book suggests looking at complaint data & look for a policy that has less than thirty complaints on every 10,000 claims made.
Do I have to remember all of this?
Naaah. However.
Unfortunately, the odds are stacked against you when it comes to buying a health insurance policy. There is just too much useless information that is thrust in your face. So it’s always good to refer to a list of things that matters. You can use this when buying a policy next for yourself or anyone else. Or even right now, just evaluate your policy on these parameters & see if any changes are required.
There is also a resource suggested in the book I mentioned before (Let’s talk Money). The Mint SecureNow Mediclaim Ratings. LiveMint evaluates all the available policies on the three main criteria of Price, Claims & Benefits and releases a rating each year. You can refer to it while making a purchase & can also check the ratings of your existing policies.
So now with a health insurance policy, we have taken care of some of the financial setbacks that may come along our way in terms of bad health. We’ll now move forward & put other pieces in their place.
Let’s make money do what it is meant to do - put you at ease!