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It makes sense to buy a health insurance policy. But what do you do when faced with a plethora of policies that are available in the market today? ET helps you cut through the clutter

STUDIES reveal that those who buy health insurance not only protect themselves from financial shocks but also lead healthier lives. A survey by TNS on behalf of soon-to-be launched health insurance company Max Bupa, has discovered that health insurance policyholders tend to spend more on routine check-ups, sugar tests, vitamin tablets and so on to stay healthy which translates into better lifestyle. In some cases the free medical checks granted by insurers for those who have not made any claims, help policyholders take pre-emptive action against possible health situations.

Clearly, buying health insurance is a must. However the issue is how much cover should one opt for and what kind of cover should one go for. A decade ago health insurance was available in only one form - the standard mediclaim policy. A few years later, there was a major value addition in the form of cashless service for policyholders. Today there is a plethora of choice for policyholders.

SUM INSURED

This is the most important factor while taking a decision on a policy. The sum insured that you require depends on your age, the city you live in, the current state of your health, your work environment and finally, the kind of hospitals where you would want to be treated at. Individuals in the age bracket of less than 30 years would require a cover of Rs 3 lakh, while those over 30 will have to scale up this amount to Rs 5 lakh, say financial planners. For senior citizens, though, it is advisable to opt for dedicated policies, if possible, and the coverage amount will depend primarily on their affordability.

LIFE OR NON-LIFE

While the health covers sold by non-life companies are mainly in the nature of reimbursement products, which compensate you for the actual amount spent - either by way of cashless service at network hospitals or by paying you the amount later - life insurance companies' health policies hand out a pre-defined fixed benefit. Says Sanjay Datta, head of health insurance, ICICI Lombard General Insurance, "Life Insurers' health products mainly offer fixed daily cash benefit, implying that the customer needs to know and understand the cost of probable medical expenses. This makes buying the product complex as inadequate cover will not cover entire expenses of illness; though a higher daily cash limit may be chosen, this comes with disproportionately bigger premiums." Most general insurance companies offer medical charges up to 30 days before a person is hospitalised and pay the claims if a person has been undergoing treatment at home - a facility which life insurers seem to lack at this point in time, he adds. General insurers score over life insurers when it comes to the range of health products offered, says Gaurav Garg, MD and CEO, Tata-AIG General Insurance.

Financial planner Gaurav Mashruwala feels that an individual buying the policy for the first time should opt for one from a non-life company. "Such policies are based on the principle of indemnity. They will only reimburse your expenses, but on a continuous basis. In case of health covers from life companies, predominantly the nature of the policies is such that once you make a claim, which is settled, your policy comes to an end," he explains.

You can choose to buy your secondary policy from a life insurer - the key comfort in case of such policies is that the claims processing is usually hassle-free, thanks to pre-fixed benefits. "This apart, life insurers' health policy is payable even if the insured is fully reimbursed by a non-life mediclaim, which means that the insured can use the money for some expenses not covered by the latter," points out Frederick D'Souza, senior vice-president, HDFC Standard Life. "Besides, life companies offer health savings plans, which can help policyholders meet the expenses which are not insured." If you can afford both benefit and reimbursement products, there is no harm in going for both as they would come in handy, particularly in case of serious illnesses. While the reimbursement covers could take care of hospitalisation expenses, the lump-sum that you get from benefit products could supplement your future medical and non-medical expenses as well as lifestyle modifications costs.

EMPLOYER V/S INDIVIDUAL

Many individuals today are covered by the employers under group mediclaim, resulting in employees being lulled into the belief that their health insurance coverage is adequate. While that may hold true in terms of the amount, what many tend to forget is that the cover will cease to exist if you happen to lose your job or happen to make a switch to another company/career. If you face a medical emergency during the transition period, you may find it difficult to manage the enormous cash outgo. Same is the case with those nearing retirement, as people in this age bracket generally find it difficult to obtain a standalone cover at reasonable premiums.

BUYING TOP-UP PLANS

Top-up plans are designed to provide for medical expenses incurred over and above the sum insured in a basic health cover. For instance, if the total expenses for a critical ailment like cancer or kidney failure amount to Rs 6-7 lakh, and you have a cover for only Rs 4 lakh, then the top-up plan covers the rest of the expenses. Such plans come into play after you have exhausted your health insurance cover. Their utility lies in the consolidated higher cover that you get in return for relatively lower premium. They come at a lower cost compared to health insurance plans, as these are availed of only when a sudden need for huge expenses arises, notes Mr Datta. However, if you can afford a large health cover, you need not settle for a top-up, suggests Mr Mashruwala. "Your primary policy's sum insured should be as large as possible. Don't use top-ups to compensate for the low coverage that your basic policy offers."

Ref: The Economics Times