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Is Health Insurance the answer?

September 26, 2006

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)

Related Reading: Insurance for heart-disease
More reading on Health

11 Comments leave one →
  1. August 10, 2007 10:31 pm

    I am surprised to find no comments on this excellent article. There are various other angles that this issue does not touch because it may have been outside its scope. For example, the facility for cashless medical care is being denied in several instances even to deserving customers, and doctors’ statements are being challenged with very little scientific backing. For example, if a patient goes for a gall bladder surgery in his second year of policy, his claim may be denied on the basis of an ultrasound report that shows multiple stones, on the specious grounds that so many stones could not have formed within two years, and so the disease must have been pre-existing. Of course, it may well have, but why didn’t the company check it out? If there is no record of the patient’s having had the disease before taking the policy, that claim should be passed. The companies, at least some of them, are not coming clean in many cases.
    Part of the reason must be that most of the claims in India are fraudulent! This is really sad, but most people I see make a policy after having been diagnosed with some disease that requires major treatment.
    Thanks for pointing me to this article.

  2. August 10, 2007 10:41 pm

    Rambodoc, I am very happy to see you here!🙂 Actually this was my very first month of blogging…and at first my hits were very few. It took a very long time to build up the readership i have today…in fact its happened very gradually.
    Yes, you are right, there are many points not addressed here. Thank you for adding to it.
    Oh yes one more thing…even today compared to my readership very few people actually comment. I don’t mind. I know a lot of people are shy…what matters is that they are reading.

  3. August 11, 2007 6:27 am

    It is my pleasure to blogroll you
    (no reciprocation necessary or expected)!🙂

  4. August 11, 2007 9:33 am

    Rambodoc, thanks.🙂

  5. August 20, 2007 12:07 pm

    nice article……………….
    please let me know which policy is good for my parents……..(cover of 1-1.5 lak(is this enough))
    they r 53 and 51(dad and mom)
    i stay in bangalore.

  6. August 20, 2007 12:17 pm

    Damian it depends on your budget and the health of your parents. The more likelihood there is of falling ill in the future, the more precautions one takes. And to my mind if there is a family history of heart disease then certainly 1-2 lakhs may not be enough..one can go for sp policies. Its really too complicated to answer like this. You need to talk to an expert. Basically its a matter of weighing the risk with your budget and the decision only you can take.

  7. August 20, 2007 3:50 pm

    Damian,
    Try the largest possible coverage: not less than 5 lakhs a Dad/Mum!🙂

  8. September 1, 2007 11:28 am

    HLLO MAM,
    Please tell me about pre existing diseases and which policies covers pre existing diseases (names) and what are the rules regarding pre existing diseases ?

  9. dewdrops permalink
    September 11, 2007 2:28 pm

    a question hit my head after reading your informative article…you said that there was not much awareness about health insurance and yet people are buying it coz of increased medical costs…then what exactly is it in health insurance that sells…is it the range of features which every ad speaks about (cashless, hospitalisation cover, 12 critical diseases etc etc)…or is it the harsh experience of seeing someone suffer…or is it the push by agents and CAs…what is exactly the trigger for a normal 35 year old to consider buying health insurance?

  10. September 11, 2007 4:15 pm

    Dewdrops, if people are buying health insurance, it is purely because of the increasing medical costs…and as to what pushed them to buy it is increased awareness about its benefits – which is cashless treatment and unforeseen situations.

  11. Pradeep permalink
    November 22, 2008 9:19 am

    Can the rise in health insurance takers be attributed to the fact that people are finally conscious about their health?

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