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How to choose a health insurance policy (with a shortlist)

In this article, SEBI registered fee-only advisor Ajay Pruthi explains how to choose a health insurance policy.

About the author: Ajay Pruthi is a fee-only SEBI registered investment advisor. He can be contacted via his website Ajay is part of the freefincal list of fee-only advisors and fee-only India.

Do you think there’s no need for personal health insurance as you’re covered under corporate health insurance cover? I don’t know how many of these people have personal health insurance coverage. However, the situation of becoming jobless will be really scary if a recession kicks in. Once your job is gone, so would your corporate health insurance cover.

I’ve always advised people to take personal health insurance coverage beyond their employer’s corporate coverage. But everyone takes it so lightly. Most of the time, people argue that they’ll purchase it later as they’re currently covered under corporate health insurance cover.

Now I ask you a question – What if you lose your job and a medical emergency strikes before you get a new job? What if your new employer doesn’t have a mediclaim scheme when you switch jobs? Or what if there is a medical emergency while switching jobs, and you have a break in between?

Most people say that they’ll purchase personal health insurance coverage only if they lose/switch their jobs. Why should I spend extra money every year if I can get the cover anytime I want?

The answer raises a more pertinent question: What if the insurance company denies the coverage later if you’re not in good health?

The basic assumption to purchase it at a later stage is that people think that they’ll always stay healthy. Can you guarantee that you’ll stay healthy for the next 5/10/15 years? With the current scenario of chronic stress in the job and personal life, it’s difficult to guarantee. And I’ve seen many cases where the insurance companies deny health insurance policies even for health issues like thyroid.

What if I say you can get 50-100 Lakhs health insurance coverage for your entire family? And that too with an annual premium of Rs. 20,000 – Rs. 25,000 if you’re below age 45.

We’ll come to the cost at a later stage. But first, let’s see which option you should choose for health insurance coverage.

Types Of Health Insurance Cover

There are two types of health insurance coverage.

  1. Individual Health Insurance – It covers the hospitalization expenses for an individual up to the sum assured limit.
  2. Family Floater Health Insurance covers expenses for the entire family up to the sum assured limit.

Let me explain it with the help of an example.

Individual Health Insurance – If you’ve two family members, you can get an individual cover of Rs 2 lakhs each. In this case, each of you is covered for two lakhs. If two members face a need for hospitalization, each of you can get expenses recovered up to Rs 2 lakhs. Hence, these two policies are independent.

Family Floater Health Insurance – In this case, if there’re four family members, you can take a Family floater policy of Rs 5 lakhs. Now, anyone can claim up to 5 lakhs for expenses. But then the cover will go down by that much amount for that particular year. So if one of the family members is hospitalized and the expenses are 3 lakhs, it’ll be paid. And then the cover will be reduced to 2 lakhs for that particular year. Next year again, it will start fresh from 5 lakhs.

Which One To Choose – Individual Or Family Floater

The concept of choosing the type of health insurance policy is very straightforward and simple.

  1. Choose Individual Health Insurance if you’re young and single. Don’t include your parents in the policy, buy a separate one for yourself.
  2. Purchase an individual health insurance policy for your parents.
  3. If you’re suffering from any disease like diabetes, BP etc., purchase an individual policy for self. And buy a separate policy for your family.
  4. Purchase family floater health insurance if you’re married, have kids and most importantly, you’re healthy.
  5. If any family member is suffering from any disease, buy a separate individual health cover for them. Purchase a family floater for the rest of the family.

Health Insurance – How Much Should I Insure For?

Though, there is no standard answer for this. One must look at his lifestyle, health, age, life stage, family history of illnesses and affordability to decide the amount. But with the current inflation in the healthcare sector, you should’ve a health insurance cover of at least 50-100 Lakhs.

Also, note that many health insurance policies “provide additional covers” such as daily allowance, ambulance charges, etc., for hospitalization. Not only are such “covers” superfluous, but they also tend to drive the premiums higher. It’s better to avoid such plans and stick to something basic and simple, if you want the maximum value for money.

How Much Would Be The Premium?

The premium for a 50-100 Lakhs cover wouldn’t be more than Rs. 20000-Rs. 25000 for a family floater health insurance policy. (If you purchase a combination of base policy and super top-up policy.) Click on the link given below to read more about super top-up policies.

A base cover of 10 Lakhs and a super top-up cover of 40-90 Lakhs is ideally suggested.

Which Is The Best Company To Purchase Health Insurance Policy?

I don’t have a definite answer for this. You’ll have to research on your own to select the best company as per your needs. Though there’re a few points you must consider before zeroing down on a health insurance policy.

  1. Don’t purchase a health insurance policy which has room rent sub-limits.
  2. Don`t purchase a health insurance policy which has co-payment.
  3. Don`t choose deductibles in base policy.
  4. Check the network of hospitals for a particular health insurance company.
  5. Waiting period for pre-existing diseases if any.
  6. The company providing base health cover plus super top-up cover.

I’d suggest the following companies, taking into consideration the criteria mentioned above.

  1. Max Bupa
    • Base Policy – Reassure 2.0
    • Super Top-Up Policy – Health Recharge
  2. ICICI Lombard
    • Base Policy – Health AdvantEdge
    • Super Top-Up Policy – Health Booster
  3. HDFC Ergo
      1. Base Policy – my: Optima Secure
      2. Super Top-Up Policy – my: health Medisure Super Top-up 
  4. Care
    • Base Policy – Care Supreme
    • Super Top-Up Policy – Enhance

So, stay safe and purchase a personal health insurance cover now

*Disclaimer- Nothing contained in the article is a solicitation, recommendation, endorsement, or offer by me. If you have any doubts as to the merits of the article, you should seek advice from an independent financial advisor. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors. Investment in the securities market is subject to market risks. Read all the related documents carefully before investing.

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