Mahatma Gandhi once famously said, “It is health that is real wealth and not pieces of gold and silver.” In today’s world where health-related issues are growing on a daily basis, it becomes highly difficult to protect this aspect of your “WEALTH”. If we are healthy, we find ourselves in the right frame of mind to tackle any hurdles that may be thrown in our way. However, just like life that has its ups and downs, our health too is not always predictable. We may make healthy choices every day, follow a good diet and exercise regularly, but may still find ourselves falling sick once in a while. Living a healthy life and ensuring protection against unwanted medical emergencies, which in turn creates a big dent in our savings, is fast becoming more and more difficult.

Having a health insurance is an important and cost effective method of protecting us against unexpected health issues and providing us with more control over our health care. It is important to choose the right health insurance policy to ensure that you get the required treatment when you need it, where you need it. One thing most of us forget is that health insurance is not an investment tool but is a protection for an unknown risk on your health.

Now choosing suitable policy from over 180 health cover policies offered by almost 20-odd health insurance companies is no simple gig. Most of us only compare the premium prices and opt for a health insurance policy that provides maximum coverage for minimum premium. But, apart from premium prices, we need to look at a few other important specifications also before selecting a health cover. Sub-limits, exclusions, waiting period, loading, no-claim bonus, network of hospitals, coverage of alternate medicine treatment, claim settlement ratio among others are few that comes immediately in my mind. We usually just examine broader specifications of the policy without going into finer details. Take for example, how many of us check if our health policy has ambulance or room rate restrictions. We may have a perception that we have bought the best policy. Reality could be much different though when compared diligently.

We should always question as to why an X policy is costlier than a Y policy ! Sometimes, it may just be due to company specific guidelines regarding their underwriting norms and risk modeling. Other times, the premium cost goes up due to certain additional benefits being offered, for example, air ambulance facility, a bigger look-in-period or higher hospital cash. Before subscribing to a policy, one needs to fully understand the benefits one actually needs.

Few factors that play a crucial role in selection of a suitable mediclaim policy:

  • Efficiency of claims process: Claim settlement time and claim settlement ratio should be one of the most important factors to be be considered. Higher the settlement ratio and faster the settlement time is, generally means that the insurance provider is doing a good job with genuine claims.
  • Co-payment:Co-payment mandates that the policyholder will bear a pre-defined percentage of the claim amount and the insurance company will settle the rest. This is a common clause with most group health insurance policies (your employer provided policy). While you may find an insurance plan to be cheap, it may not offer you compete coverage if it comes with a co-payment clause.
  • Day-care procedures:Day-care procedures are not covered in many health insurance plans. Moreover, to make a medical claim, hospitalization for at least 24 hours is mandatory. Thanks to numerous innovations in technology, today, many procedures do not require hospitalization beyond 24 hours. Thus, it is best to opt for a plan that covers maximum number of day-care procedures.
  • Network hospitals:Check the list of network hospitals and see if it includes the facilities that you often visit. It is also an important factor to consider if you travel or move cities, because your health insurance should travel with you. It is worth mentioning here that the cashless facilities can only be availed in network hospitals.
  • Pre/Post Hospitalization: Medical expenses incurred before and/or after hospitalization are called Pre/Post hospitalization expenses. During hospitalization, some part of the treatment extends beyond the hospitalization. Follow-up visits to the doctor, medicines to be taken or follow-up investigations to be done fall under the category of post-hospitalization expenses. Only those expenses relevant to the ailment for which the person has been hospitalized shall be considered under Pre & Post-hospitalization expenses.
  • No claim bonus: Many insurance companies offer a no-claim bonus, in case the policyholder has not lodged any claim during a particular policy year. In such a case, either the sum insured increases or the premium decreases or both. Each policy can vary widely as to how they reward the policyholders for not availing any claim during a particular period.
  • Free preventive medical checkupLook for a health insurance policy that entitles policyholders to a free medical check-up. The tests/checkup has no bearing on the premium when policies come up for renewal. This is a win-win feature as it helps in timely prevention of bigger disorders to the policyholders and saves big amounts of probable claims to insurance companies.
  • Lifetime Renewal: With progress in age, the requirement for medical coverage increases more than proportionately. A health insurance policy that covers you for whole life without any conditions is the best feature you can have. Obviously, this may lead to slightly more premiums for such policies.

The cost of medical care is ever increasing due to inflation and advancements in medical technology. At the same time the longevity is improving thus forcing us to consume more medical care. Picking a right health cover plan for our family requires correct guidance & good research. So, just like any investment we make, gauging the correct amount to put in medical care policy is critical.


By Sameer Rastogi

18 years of experience, PG in Finance and has delivered Wealth Management lectures at IIM Lucknow, IBS Gurgaon and IIPM Delhi. Contributed to various newspapers. Strength – Application of Economic fundamentals to Investment

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