In the previous instalment of Cover Note, I had written about my friend who was staring at a 75% escalation in her hospitalisation policy renewal, from ₹20,000 to ₹35,000, and that for a ₹3 lakh sum insured.

Such a massive increase was NOT reflected in the premium calculator on the insurance company’s website. The logic goes thus. The company/agent is de-marketing certain ‘high risk’ customers (advancing age, low sum insured) to whom they cannot, by law, refuse renewal. By quoting a high premium, the customer may just leave and, as the saying goes, “Good if it comes, better if it doesn’t”!

Intelligent speculation but one which some smart other agents also shared. As I said earlier, distress for the insured. Coming to the other, almost, senior citizen friend and her hospitalisation policy renewal saga.

Also read: Know the taxability of your investment returns

She had a floater policy for ₹5 lakh covering her husband and herself. By some strange advice of her agent, the coverage was dropped to ₹4 lakh a couple of years ago!

When I renewed my policy, I actioned my highly procrastinated plan to increase my sum insured before I hit the magic 6 – 0. After that everything insurance becomes costlier and no new benefits can be expected. I advised my friend to do the same as she would also enter the twilight zone just a couple of days after me. I told her to ask for individual sums insured, explaining that a floater means less premium but less coverage as well.

Closer to a deadline, aka renewal date, your bargaining power goes down, especially if you are a buyer in a seller’s market. And this, without a doubt, we all are as we get older, in as far as health insurance is concerned.

Also read: Gold, silver regain sheen

Unfortunately she got into action only a few days before renewal date, but fortunately, her company and her agent rose to the occasion and gave her what she wanted.

In the middle of all this, I said my piece to the husband and wife about sub-limits and why the sum insured should be at least ₹10 lakh. Their hearts sank and, my bright friend had this quick question. Today we think at least a ₹10,000 room rent is required and so we take a sum insured of ₹10 lakh. Ten years later, room rents will have doubled and tripled. So, this policy is meaningless as nobody is going to increase the sum insured at an even older age. There is a rider, an add-on cover for a small additional premium, that will complement your room rent sub-limit. As for the other charges if your hospital does differential billing, like surgeons fees and so many other medical services, you are still wed to your sub-limit.

(The writer is a business journalist specialising in insurance & corporate history)