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All You Need to Know About Health Insurance

By Sourabh Banerjee - Jan 17,2022
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Health Insurance

Why Health Insurance?

Let’s understand why taking a health insurance is so important.

1. Uncertainties of health conditions and sharp increase in non-communicable diseases at an early age in Indians

The top NCDs identified are Diabetes, Hypertension, Pulmonary diseases, Cardio Vascular, Cancer, Chronic Kidney Diseases, among others. These diseases often lead to episodes of emergency surgery or prolong hospitalisation in case they are not detected on time or managed well. It has been observed that India’s NCDs increase after 18 years and show a quantum leap when an individual crosses the age of 35 years.

  • Factors causing the NCS
    • Environmental factors are the biggest cause of NCDs
    • Inactive lifestyle and imbalanced diet
    • Intoxication (alcohol and tobacco consumption)

Top 3 lifestyle diseases in Indians age between 25-49 are Hypertension (28% of Indians affected), Cardiovascular Diseases (25% of Indians affected) and High Blood Sugar (10% of Indians affected). 1 out of 10 men and 1 out of 8 also suffer from any form of Cancer.

2. Medical Inflation

The World’s top most consulting firms & WHO are expecting an increase in cost of medical expenditure year on year in India. In India, the medical inflation is around at 8% in FY21 till Dec’21. There has been a steep rise of 2% in one year, which used to be around 0.5% – 0.3% annually during the pre-COVID 19 situation.

  • The key factors attributing to the rise in cost of medical expenditure are:
    • Disruption of supply chain of medical equipment and supplies
    • Uneven load on medical infrastructure on Urban facilities in lack of Rural medical infrastructure
    • Demand and supply gap of medical professionals
    • Providers are spending more on staffing and safety measure post-pandemic as per government and WHO protocol.
    • Overall Retail and Wholesale inflation in Indian Economy including fuel price rise, utilities price rise, etc.

3. Difficulty to get a plan at later age and post a medical condition

The premium of a Health Insurance coverage increases with an individual’s age, as the risk of illness is higher in older age. In case an individual is suffering with any medical condition, the Insurance coverage goes for medical underwriting (a kind of risk evaluation by medical experts) and loaded with higher premium to cover the risk or some time even resulting in exclusion of any hospitalisation or medical expenses arises due to aforesaid declared medical condition.

4. Employer provided Health Insurance

  • The Health Insurance provided by an employer is called the corporate coverage and is subject to revised every FY.
  • The plan covers an individual and dependents only till the term of employment.
  • There are high chances one may not get the same benefits in another job, or the same plan may subject to revision with T&C like copay for dependent in next FY.

5. Safeguard your savings

  • By buying a suitable health insurance policy, one can better manage his or her medical expenditure without dipping into your savings
  • Health insurance lets you avail tax benefits, which further increases your savings.

Types of Health Insurance

Indemnity Plan

Fixed Benefit

  • A fixed benefit health plan is one where a fixed amount of funds (the sum insured) is paid out to cover expenses for a predetermined illness or condition that has been insured. The fixed benefit plan can be used as a supplement to a that provides an additional source of funds during a pre-insured health incident. Example: Critical Illness Plans, Personal Accident Plan, etc.

Deductibles or Top-Up Plans

  • It is kind of Indemnity plan but is in addition to a basic Health Insurance, it gives you a benefit of enhanced Sum Insured over and above your basic policy at a lower premium. The coverage triggers when you exhaust your base sum insured or the limit of deductible amount. One can opt for a Top up plan if he feels the base plan is not sufficient for future needs. Example: Bajaj Allianz Extra Care Plus

Key Features To Look Into An Insurance Plan

  • Sum insured
  • Premium
  • Coverage basis the need of individual and dependents: no. of diseases, day care treatments, OPD, lab tests and diagnostics, surgical procedures, mental illness coverage, maternity, etc
  • Waiting period
  • Inclusions and exclusions of policy
  • Capping on certain medical expenses, e.g., room rent, ambulance, hospitalisation cash, etc.
  • Copay or deductibles
  • Network hospitals
  • Pre and post hospitalisation coverage
  • Claim process
  • Claim settlement rate
  • No claim Benefit
  • Benefit on premium on maintaining the good health
  • Discount offered on paying a premium of more than 1 year
  • Annual comprehensive health checkup

Individual or Family Floater Plan

  • Individual plans cover only one individual at a time. The sum insured is only restricted to one member and provides a higher coverage.
  • Individual plan for each member of family may cost you higher subject to age and health conditions of members.
  • Family floater comes in combination of individual, spouse, children and parents.
  • The single sum insured can be consumed among all the members up to the limit.
  • These plans are often cheaper than individual plans, but the premium is decided basis the eldest member.
  • In case one member consumes the entire limit, there will be no balance coverage for rest of the members for any unforeseen situation of hospitalisation.
  • One should choose any of the two health insurance options depending on his or her needs. For instance, if your income is less and you have small children, a family floater policy would be better. But in case any member of your family has a history of bad health conditions, then buying individual policies would be more helpful as the cost of treatment may be very high.

After considering all these factors, the insurance company uses a health insurance calculator to decide the final amount of the premium. You can also use any online insurance premium calculator to calculate the estimated premium.

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