Is Health Insurance the answer?
When we are forced to shell out big bucks after an accident or after being stricken by an illness like heart disease or cancer, most of us go broke. Some of us are lucky enough to get reimbursed by our employers but these payouts are usually insufficient and in some cases do not cover all family members.
The obvious solution is personal Health Insurance, but if it is, why aren’t people scrambling over themselves to get it?
Lack of information is often the culprit. ‘Health insurance awareness is pretty low,’ acknowledges Mr. K. Krishnamoorthy, Head – Underwriting at Bajaj Allianz, a company which has various health products on offer.
A whole gamut of questions tend to haunt the potential buyer. Are the premiums very high? Does health insurance cover pre-existing conditions? Will the company deliver? How do I choose the best deal? Deepali Agarwal, a working woman says, ‘There are too many unanswered questions.’
This is so inspite of Health Insurance having been around for sometime now. MediClaim and Royal Sundaram were the early entrants and now there are companies like Bajaj Allianz and ICICI Lombard. Life Insurance companies are also offering Health Insurance which piggybacks on Life Insurance. Both types of Health Insurance policies (Health Insurance which is tied up with Life Insurance and Standalone Health insurance) have their pros and cons.
Life Insurance Plans with health benefits have inherent disadvantages. In certain plans, once you claim under the health insurance benefits (usually a fixed sum) the whole structure of the base policy changes and could mean a reduction in the rest of the payments and termination of benefits. Future premiums could also be re-worked. Also, the health cover benefits are usually available only during the premium paying term. Policies like Tata AIG’s HealthFirst, shell out a flat sum regardless of your medical bills.
Standalone Health Insurance policies charge higher premiums, premiums which jump dramatically after the age of forty-five or fifty, but they are far more comprehensive in their coverage. All expenses involved in hospitalization fall under its purview. ‘A health insurance policy like ours usually takes care of hospitalization including expenses like doctors’ fees, tests and medication,’ says Karan Chopra, National Manager, ICICI Lombard.
Whether it’s ICICI Lombard’s 10K Tax saver plan, Bajaj Allianz’s Health Guard, Royal Sundaram’s Health Shield or the government’s MediClaim – these policies reimburse bills upto the limit of the policy and usually cover all ages upto the age of 75 years. All the products offer family discounts.
While these policies offer similar benefits, the add-ons can vary from policy to policy. Royal Sundaram for example offers a free ambulance referral facility and if one buys the 10K ICICI policy a health check-up is not mandatory and a digitally signed policy can be bought online.
The critical differences in the policies can lie in the terms and conditions. All plans have a list of diseases which are not covered (including pre-existing diseases) but some plans start giving you protection against a few of these after some years of holding the policy, though this is subject to certain conditions. Knowing what one is not covered for avoids any unpleasant shocks later on.
Finally the policy you choose depends on what your company pays for or doesn’t, the health risks you perceive for yourself and what premiums you can afford. However, no matter which policy you choose, it is important to avoid the pitfalls.
Pavan Chadha, who has had a health policy for the last eight years recounts a painful experience. When his father was sick with cancer he had claimed Rs. 36,000 for a bottle of oral chemotherapy pills but only got 20% of his claim reimbursed. The insurer pointed out that not all the pills had been consumed. In fact, Chadha had donated the rest to the hospital, having missed the clause which stated that unused medicine has to be returned to the insurer. ‘It had been in the fine print,’ says Chadha ruefully.
Another loophole that health insurers use are inaccuracies in the claim forms. Unless the forms are filled correctly and all necessary documents supplied, your reimbursements may never come. All bills, receipts, discharge certificates from hospitals, cash memos supported by prescriptions and diagnostic test reports have to be attached. Claims have also to be made within the stipulated period. The funny thing is that the insurer will not get back to you to tell you that anything is wrong until you call to ask why your cheque is still not in the mail. ‘There should be a time limit for the insurers to pay up,’ says Chadha.
The medical insurance document, a binding contract between you and the insurer, is very important. The fine print has to be read carefully and all information required has to be declared, even if you think it’s trivial. If there are inaccuracies or you have left something out, you could just might not get that reimbursement you are looking for.
With all these problems is a Health Insurance policy worth it? Chadha thinks so. He has one even though both he and his wife are covered by their respective companies. ‘This way it’s comprehensive,’ he explains. And there’s also the tax-saver.
The truth is that our lifestyles are changing. Health costs are spiraling. Insurance companies know this only too well. Bajaj’s Krishnamoorthy says, ‘According to a recent report by the Ministry of health and family welfare, by 2010 the lifestyle impact diseases like cancer and cardiac diseases will account for nearly 30% of the in-patient health spending.’
Health Insurance might just be the only way to pay those exorbitant bills.
(Published in the Times of India in 2006)