Marriage, childbirth, dependent parents and ageing increase the cover a person needs.
Data collected by CoverSure, an insurance distributor, from more than a lakh policyholders show that most people aged over 50 have cover of less than Rs 5 lakh.
Sixty-three per cent of those seeking a better policy could not switch because of pre-existing conditions, underscoring the need to upgrade their covers before illness makes it difficult to do so.
Key Points
- Medical inflation of 13-14 per cent annually rapidly erodes the real value of health insurance, making older policies insufficient.
- Most policyholders above 50 have cover below ₹5 lakh, while many cannot upgrade due to pre-existing medical conditions.
- Experts recommend reviewing health insurance at every renewal and increasing coverage every three years as family needs evolve.
- Super top-up policies offer significantly higher protection at lower premiums but require careful alignment with the base policy.
- Policyholders should review room-rent limits, co-payment clauses, restoration benefits, consumables coverage and hospital network before renewing.
- You can post your health insurance related questions HERE
When a health cover falls short
Medical inflation erodes the value of cover over time.
"Medical inflation is estimated at 13-14 per cent annually," says Siddharth Singhal, head of health insurance, Policybazaar.
"A Rs 5 lakh policy purchased eight years earlier may now provide cover equivalent to only around Rs 1.9 lakh at 13 per cent inflation," says Arvind Rao, founder, Arvind Rao and Associates.
Relocation to metros raises costs.
Room charges in Mumbai, Bengaluru and Delhi can range from Rs 10,000 to Rs 15,000 a night.
Room-rent limits and disease- or procedure-specific sub-limits in policies reduce effective payouts.
"The relevant measure is the protection available at claim time rather than the stated sum insured," says Saurabh Vijayvergia, founder and chief executive officer (CEO), CoverSure.
Marriage, childbirth, dependent parents and ageing increase the cover a person needs.
All these factors make regular reviews of one's health cover necessary.
Assess whether the cover is adequate
No universal formula exists for calculating the right amount of cover.
"The assessment needs to be customised to each person's circumstances," says Vijayvergia.
City, age, lifestyle, family medical history and existing conditions should be factored in.
One way to assess adequacy is to estimate the costs of various procedures, including bypass surgery, angioplasty, six months of chemotherapy and major orthopaedic surgery, at preferred hospitals.
A family floater should provide enough cover to handle multiple claims in a year.
Families with dependent parents, children or members with existing conditions need more cover.
"A floater of around Rs 20 lakh to Rs 25 lakh may suffice in a smaller city. Families in metropolitan areas may need Rs 30 lakh to Rs 40 lakh coverage," says Vineet Gupta, head, product development, ManipalCigna Health Insurance.
Policyholders should review their cover at every renewal and consider increasing it every three years.
Buy a super top-up
A super top-up pays hospitalisation expenses after total annual claims cross the deductible.
"A super top-up gives you a much larger sum insured at a fraction of the cost of a standard base policy," says Gupta.
Align the deductible with the base cover.
Ensure that the super top-up has an annual aggregate deductible rather than a per-claim deductible.
Compare the waiting periods under the base policy and the super top-up.
"A lack of alignment in waiting periods can create coverage gaps or claim-related difficulties," says Singhal.
Also ensure that the base policy and the super top-up have similar room-rent eligibility.
Buy both the base policy and the super top-up from the same insurer, as this makes cashless processing simpler.
Check features of existing base policy
Many older policies cap daily room rent at 1 per cent of the sum insured.
"Opting for a hospital room above your specified limit triggers 'proportional deduction', meaning the insurer will reduce a large portion of your final claim payout, not just the room charges," says Gupta.
"Consider moving from a co-payment policy to a non-co-payment policy," says Rao.
Watch out for sub-limits for specific treatments and procedures.
Find out whether the restoration benefit covers the same member and the same illness.
Consumables can form 9-10 per cent of a hospital bill, so review whether your policy has this cover.
Also check coverage for outpatient department treatment, day-care procedures, domiciliary care, pre- and post-hospitalisation costs, and whether your preferred hospitals are in the cashless network.
Review the insurer's claim-settlement ratio and the turnaround time for cashless approvals.
Upgrade Before Health Issues
"The best time to upgrade health insurance is when the policyholder feels healthy and does not expect to need it," says Rao.
Tips for health insurance customers
- Review health insurance at every renewal
- Reassess cover after marriage, childbirth, relocation, a job change or a new family diagnosis
- Avoid choosing low initial cover on the assumption that it can be increased easily later
- Pay very small claims from personal funds where affordable to preserve the no-claim bonus
- Compare older policies with newer plans; latter may offer more valuable features
- You can post your health insurance related questions HERE
Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
Feature Presentation: Ashish Narsale/Rediff
