8 features to look for when you buy a health insurance plan

| Updated on January 02, 2014

A health insurance plan has become inevitable in today's era of sky rocketing medical expenses. And if you don't have one of your own, you may end up shelling out a huge amount from your pocket.

Knowing the importance of health insurance for your family is just the starting point. A step forward - and an important one - is selection of an ideal health insurance plan, when there is gamut of them available today. Some of them have really unique features, but there are some common features available in all policies which you must compare before finalising any health insurance plan.

Let's have a look at 8 features you must compare before buying a Health Insurance Plan:

1. Sub-limits on Room Rent

Room Rent is one of the major expenses you have to bear if any member of your family gets hospitalised; so some general insurance companies cap the maximum amount that they will pay under their health insurance plan. Generally such limit is to the extent of 1% of sum assured and in case of ICU (Intensive Care Unit) the maximum limit is 2% of sum assured. But there are various general insurance companies which do not have any maximum limit on room rent, so you should look for such health insurance plans.

2. Pre-Existing Diseases

Pre-Existing Diseases are those which you are suffering from before opting to buy a health insurance plan, and therefore insurance companies do not cover them from day 1 of your policy. They have a waiting period ranging from 2-4 years in which they will not be liable for any claim arising on account of your pre-existing disease. Therefore, you should look for health plans which will cover your existing disease and have the least number of years of waiting period.

3. Co-payment

Co-payment is a clause in health insurance plans that requires cost-sharing by the policyholder. Cost sharing is the specified percentage of the admissible claim amount. For instance, suppose you have a health insurance plan which has a 20% co-payment clause; so in case you are hospitalised and your claim amount is Rs 1 lakh, then you as an insured would be liable to bear Rs 20,000 (Rs 1,00,000 * 20%), while the rest--Rs 80,000--would be settled by the insurance company. Hence, ideally you should look for health insurance plans which do not have any co-payment clause at any stage of your life.

4. Network Hospital

Network hospitals are those which have a direct tie up with your health insurance company; so in case of a claim you can go for cashless facility. Cashless facility saves you from settling the bill amount with the hospital as the insurer directly settles your bill. And you do not have to file for reimbursement.

You should ideally look for health insurance plans which have the maximum number of network hospitals, and more importantly, maximum number of good network hospitals in your city.

5. Pre & Post Hospitalisation Expenses

Pre-Hospitalisation expenses are those incurred before you are hospitalised while post-hospitalization expenses are those incurred after you are hospitalised. pre-hospitalization expenses are generally covered for minimum of 30 days while post-hospitalisation expenses are covered for 60 days. But there are insurance companies which offer cover for more number of days. So you should look out for health plans which cover you for maximum number of days of pre and post hospitalisation period.

6. No Claim Bonus

In the years that you have not made any claim, the insurance companies also provide you with a no claim bonus. This has an effect of increasing your sum assured in next renewal of the policy. Such a bonus can range from 10-50% for a claim-free year. Hence, you should look for a policy which provides you highest no claim bonus.

7. Exclusions

Once you buy a health insurance plan, you might feel relaxed that you have covered you and your family against any possible hospitalisation in future. But if you don't go through the exclusion section of your policy, then you might get surprises at the time of claim. So before finalising on any health insurance plan go through its exclusion and select the one which has least number of exclusions and are clearly defined.

8. Premium

Premium you would pay is a vital aspect you should consider while buying a health insurance plan; but mind you, it shouldn't be paramount in your selection process. Just think, you buy a health plan with a very low premium without even taking into consideration the features of the policy. At the time of claim you learn that the insurance company is not liable to reimburse you as the cause for which you were hospitalised was not covered under the policy. So you should be well aware of all the feature, or else you may find yourself in a soup with a huge hospital bill to be paid, amid times where you just recovering with your health conditions or God forbid, yet ailing.

PersonalFN believes that, if you keep in mind these features while selecting a health insurance plan, you may not regret having made wrong choice in the future. We also believe that you should buy it from a reliable insurance agent rather than directly from the insurance company, as there is no difference in premium between direct and regular plans. Also an insurance agent can assist you at the time of claim.

It is important to have an adequate health insurance cover, which can help you financially manage medical emergencies better. Having an optimal insurance coverage is integral in the exercise of financial planning, which helps you to put your personal finance in order and aids you achieve long-term financial goals.

This article has been authored by >PersonalFN, a Mumbai based Financial Planning and Mutual Fund Research Firm known for offering unbiased and honest opinion on investing.

Disclaimer: The opinions expressed by PersonalFN are theirs alone and do not reflect the opinions of The Hindu Business Line or any employee thereof. The Hindu Business Line is not responsible for the accuracy of any of the information within the article.

Published on January 02, 2014

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