Many of us realize the importance of adequate health coverage in our insurance portfolio. Without adequate health cover, a prolonged hospitalization can deplete your resources quickly and affect long term financial health.
In this post, let’s look at some of the common myths surrounding health insurance plans.
Some of the myths prevent us from purchasing a health plan in the first place and the other myths are major reasons behind our grievances against insurance companies at the time of claim.
Myth 1: I am fit and healthy. I will purchase health insurance when I feel the need
Don’t make this mistake. I have said this many times before on this blog.
In India, health insurance is only for the young and healthy.
If you think insurance companies are unreasonable only at the time of claims, you couldn’t be more wrong. Insurance companies are equally unreasonable at the time of issuing covers.
Your health insurance application will be rejected for the most innocuous of reasons.
I say this from my own experience and experiences of many friends and clients. Not to ignore many cases I across in newspapers and magazines. Read this brilliant article from Money Life where numerous such examples have been listed out.
Forget about purchasing a fresh cover, even porting is practically meant for young and healthy. Insurance companies are quite whimsical when it comes to porting cases.
My insurer recently declined to port my existing policy to a different plan. Till now, the insurer has not given me any reasons. I am chasing the insurer for reasons. Will surely do a post based on my findings. I am still better off because I hold a health insurance plan. What if I was applying for the first time?
Shifting the blame away from insurer, you may actually acquire illnesses as you grow older. The insurer may be justified in declining the cover (or loading premium) if the perceived risk of payment is higher.
And you may still be quite healthy and may stay so for all your life. But accidents can happen to anyone. Health insurance cover will help you cover hospitalization expenses in this case too.
Purchase health insurance when you don’t need it. Insurance companies won’t sell you insurance when you need it.
Myth 2: I have group health cover from employer. I don’t need a personal plan
This is a common excuse for not purchasing a personal health insurance plan. If you fall in the same category, you need to answer the following questions.
Does the employer cover provide your family sufficient coverage? Is a cover of Rs 2 lacs or Rs 3 lacs enough for your family?
What will you do if your employer reduces the cover next year and stops offering health cover altogether to cut costs?
What if the employer introduces sub-limits or co-payment from the next year?
What if you switch jobs and the new employer does not offer any health cover?
What if you were to get hospitalized during the job switch period?
As discussed in the previous point, insurance companies can be quite whimsical even at the time of policy issuance. You may not be able to purchase cover when you think you need it.
Myth 3: Insurance premium will go up if I make a claim
Claims based loading is not permitted under IRDA Health Insurance Regulation. Hence, your insurer cannot increase the premium just because you made the claim in the previous policy year.
Suppose you get hospitalized due to a heart condition and made a claim, your insurer cannot increase the premium based on your claim in the previous year. Do note the insurer can increase the premium based on your age.
However, if you were going to purchase a health plan after diagnosis/hospitalization for this heart condition, the insurer can load the premium or even decline to issue cover altogether.
Essentially, diagnosis of any illness (or any hospitalization or any claim) post the first policy issuance will not increase your health insurance premium.
One more reason to purchase a health insurance policy when you are young and healthy.
Myth 4: Cheaper is better
Health insurance plans are not quite like life insurance plans.
Under life insurance plans, the insured event (death of the policy holder) is quite crisp. The insured event is same across insurers in case of life insurance plans. The premium can vary in case of life cover due to difference in underwriting policies of the insurer.
Hence, in case of life cover, you can simply purchase a plan with the lowest premium. It shouldn’t make much of a difference.
In case of health insurance, the coverage can be very different across plans. A plan that has sub-limits, co-payment clauses, long waiting periods, disease-wise capping is likely to cost much less than a health plan without any sub-limits or co-payment clause. And rightly so.
If you go for the cheapest plan, you might be in a shock at the time of claim. I am not saying you must not purchase plans with room-rent sublimit or co-payment clauses or disease-wise capping. You can go for such plans. Your budget may not permit a better coverage plan.
However, you must be aware what you are purchasing. Do not just fall for the low price.
See if the plan meets your requirements and then you can opt for it.
The irony is that I hold a health insurance plan that offers maternity benefits. I made a mistake purchasing such a plan in the first place. In my defence, I bought the plan years back when I did not have much awareness. Now, I am facing issues in porting to a non-maternity benefit plan with the same insurer (even though I feel I am young and healthy).
Myth 5: All medical expenses are covered under Health Insurance Plan
Continuous hospitalization of more than 24 hours is covered under all plans. Complex day-care procedures such as dialysis and chemotherapy are also covered under most plans. Pre and post hospitalization expenses are covered for a fixed number of days.
Typically, OPD charges are not covered (unless you opt for a plan that covers OPD charges).
If your health insurance plan has co-payment clause, then you will have to share cost burden with the insurer. You need to watch out for sub-limits in the plan. In case there is a capping of Rs 50,000 on a particular illness, the insurer won’t bear any amount in excess of Rs 50,000.
Even during hospitalization, many minor expenses may not be covered. Food and consumables are not covered. You can go through policy terms and conditions to get better clarity about coverage.
This also highlights the importance of having a medical emergency fund despite having a health cover.
Myth 6: Everything is covered after 3 years
Typically, insurers have waiting period for pre-existing illnesses ranging from 2-4 years. Thus, pre-existing illnesses are covered after the waiting period gets over.
However, do not get the impression that even those illnesses that you did not disclose at the time of purchase of the policy will also be covered once the waiting period gets over.
Such belief might lead you to hide information from the insurer. Don’t do that.
If the insurer discovers that you did not disclose your health conditions completely at the time of policy purchase, it may still decline your claim (even after the waiting period has got over). And the insurer is justified too.
Insurers underwrite the policy based on disclosures and results of medical tests. The medical tests are not exhaustive and you cannot expect insurers to identify everything through those medical tests. If you do not disclose your medical history, the insurer may end up under-pricing the risk.
Many of us might have grievances against insurance companies. In my opinion, insurance companies have not set really high benchmark of propriety.
However, you must remember that insurance is a contract and you must keep your end of the bargain. Make complete disclosures at the time of purchase.
Image Credit: The original image and information about usage rights can be downloaded from Flickr.
The post was first published on October 14, 2016.