Here are some tips to get you started

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Being covered by the most suitable health insurance plan is a necessity for all Indian families, especially as COVID-19 has highlighted the high cost of hospitalization. However, finding the most suitable plan is a challenge for most of us, as we have to compare multiple plans with confusing terms and conditions.

This article doesn’t have the complete answer, but it will provide some high-level guidelines, which our readers will find useful. Even though we have identified more than 150 parameters to differentiate Indian health insurance plans, we believe that the following are priorities:

  • Network of insurers: Insurers should have our usual hospital, as well as the preferred specialist hospital in our city in their cashless networks.

  • Diet type: The basic plans cover our hospital costs from the start, while the supplementary plans cover us after we have contributed a minimum amount (deductible). The critical illness benefit plans provide a lump sum if we are diagnosed with one of the specified critical illnesses. For the rest of this article, we will focus on the basic plans.

  • Type of coverage: Individual plans cover everyone’s hospitalization costs. Family floating plans jointly cover the members of a family included in the plan. We will focus on family floating plans as they are more popular among Indian households.

  • Sum insured: The benefits and conditions of the basic plans vary considerably depending on the sum insured. Therefore, it is best to decide on the sum insured before starting the comparison process. The right sum insured for a family float is a personal choice, based on economic status, risk aversion and family size. However, a general rule of thumb would be to have a sum insured that roughly matches our annual household expenses.

  • Room rent limit: This is a very important characteristic, since hospital expenses (even beyond the single room rent) are generally linked to the room rent. If we are admitted to a room whose rent is above the plan limit, we will be required to pay all pro-rated additional hospital charges out of our own pocket, not just the additional room rent. Room rent limits are often tied to the sum assured, so it is wiser to have a higher sum assured.

  • Waiting time: Most plans have a waiting period of up to 4 years for pre-existing conditions. If we start our health insurance policy after reaching “middle” age, we should look for plans with shorter waiting periods.

  • No claim bonus: This is the percentage or amount by which the sum insured will increase without an additional premium, after one year without a claim on the policy. This is useful because it allows the sum insured to keep pace with inflation. One caveat about the no claim bonus though. Some plans do not increase the room rent limit in sync with the increase in sum insured due to the no claims bonus.

  • Benefits of restoration: These are useful because they provide additional coverage for repeat hospitalizations within the same year.

  • Maternity benefits: These blankets are useful for families planning to have their first or more children. A caveat about these benefits. Most of them have waiting periods between one and four years, so it’s wise to buy a policy with maternity benefits well in advance.

  • Premium amount: Premium amounts for plans with similar benefits can vary widely, depending on the vintage and the scale of the insurer. Recent entrants often charge lower premiums because they want to gain market share. Some insurers charge lower premiums for younger age groups, but the rise is greater with age.

Comparing and choosing the right health insurance plan is a bit complex. Do not hesitate to get help from trustworthy advisors who will guide you with Integrity, Care and Expertise, our core values.

(Srinath Mukherji is co-founder of SANA Insurance Brokers Pvt. Ltd.)

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Insurer Claims Payout Ratio: Pre-selected insurers should have high claims payout ratios as this is an indicator of the insurers claims history.

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Posted: Sunday, April 10, 2022, 07:00 IST

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