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9 common mistakes to avoid when buying health insurance – Forbes Advisor INDIA

In this era of high cost of living and rising medical costs, having a comprehensive health insurance plan is a must-have investment for individuals of all socio-economic classes. It is an effective tool for guarding against unforeseen medical emergencies and maintaining financial stability.

The widespread consequences of the pandemic have hurt the savings of many households as they rushed to cope with the increasing medical expenses of hospitalized family members. Such circumstances have reinforced the importance of ensuring health and financial well-being through adequate health insurance plans.

Without a good understanding of the consequences of a health insurance policy and its terms, hasty decisions could lead individuals to choose an ineffective plan that may not be used to opt for them. Here are the top nine mistakes to avoid when buying health insurance policy in India.

1. Lack of sufficient research.

Many people hastily buy a health insurance policy without a thorough understanding of the terms and conditions of the policy. People also don’t always remember to compare different fonts and prefer to buy the first font that comes their way.

It is recommended that individuals undertake rigorous research before choosing a health insurance policy. For example, families with two or more children should choose a floating family plan rather than an individual plan. Or, if grandparents are in the family, purchasing a senior health insurance policy with higher tax benefits might be more viable.

Individuals should take the time to understand their likely medical expenses in the years to come and to find an appropriate policy that respects them.

2. Insufficient policy coverage.

The cost of the premium is a primary consideration when choosing from a wide range of health insurance policies. However, many people choose suboptimal coverage plans to have an economical premium and choose plans with limited insurance coverage. Restricted insurance coverage can let a person pay out of pocket at the time of a medical emergency.

The annual cost of the premium is important but is not the only factor to consider when purchasing a health insurance policy. It is essential to consider family size, medical history, expected medical expenses, hospital costs and flexibility before making the final decision. Adequate coverage will provide financial security and save additional financial burden of medical expenses at the time of a medical emergency.

What defines adequate coverage?

There are a few aspects that should be checked in every health insurance policy to determine if the coverage is adequate:

  • Hospital costs: It is important to note whether health insurance policies cover hospital costs. Covered expenses must include hospital room rent, intensive care unit (ICU) fees, surgery fees, physician fees, and costs for diagnostic tests.
  • Pre and post hospitalization costs: A good health insurance plan should reimburse expenses incurred 15 to 60 days before hospitalization. This clause should cover doctor visits, diagnostic tests and any other pre-hospital treatment. Likewise, the policy should cover medical expenses incurred for follow-up after discharge from hospital. Ideally, insurance companies specify a window between 30 and 90 days after discharge for charges to be considered after hospitalization.
  • Health check-ups: Good health insurance plans offer annual preventive health checks to ensure that policyholders are careful with their lifestyle and promote good health. Understanding this clause and accessing timely annual medical exams is essential.
  • Waiting time: There are certain illnesses for which insurance plans provide a waiting period of 1 to 4 years. It is prudent to know this clause and you should consider purchasing health insurance policy at an early stage of life.

3. Hide accurate medical history.

Individuals make the mistake of hiding their medical history when applying for health insurance policies, fearing rejection or high premiums. Hiding a medical history or lifestyle habits such as smoking may act against the insured at the time of claims. This could be detrimental as insurance claims can be denied on knowledge of undisclosed medical information.

Health insurance contracts are built on the utmost good faith, based on the information shared by the insured at the time of purchase of the policy. Disclosure of medical history may result in a slightly higher premium, but will eliminate the possibility of claim rejection in the future.

4. Do not take out personal insurance.

An employee enjoys several advantages from his employer and health insurance is one of the attractive advantages of employment. But that amount of coverage may not be enough for the whole family and it’s a contract that will end when a person decides to quit their job. Therefore, it is crucial to have a separate health insurance plan unaffected by the terms and conditions of current employment.

It is advisable to take out low premium personal insurance to ensure financial security and sufficient insurance coverage regardless of employment status. This can be managed in two ways: either having parallel basic insurance coverage for yourself and your family, or supplementing it with super supplement plans for additional coverage.

5. Overlooking the fine print.

While an insurance company should explain the inclusions and exclusions in a policy document, it is also the customers’ responsibility to fully understand the policy. Often times, buyers pay attention to what’s included in the policy and forget to understand the exclusions. Neglecting the exclusion list when purchasing an insurance policy will be costly when settling claims.

Having a thorough understanding of a health insurance plan is mandatory to know the specified inclusions and exclusions. This clarity is crucial to avoiding unpleasant surprises at the time of settlement, and it also helps in making an informed decision when purchasing a health insurance policy.

Each health insurance plan comes with a 15-day free consultation period option. This period gives the insured the opportunity to review the policy after purchase and understand the fine details of the policy. The insured has the advantage of terminating the contract in the event of unacceptable clauses, and the insurance company will reimburse any amount paid if the policy is terminated during the free consultation period, provided that no claim is made within the period. police.

6. Misreading of the co-payment clause.

Most buyers ignore inflation and the declining purchasing power of money in the future when agreeing to a co-payment clause. With the co-payment clause, the insured is responsible for covering a specific part of the claim and the insurer covers the amount in excess of the co-payment limit. The clause usually covers expensive medical treatment, the elderly and treatment in metropolitan cities. Under this clause, the insured shares the amount of the claim up to the limit of the quota, which can range from 10% to 20% of the amount of the claim.

Policies with the co-payment clause tend to have low premium expenses compared to other policies. Understanding this clause is essential to purchasing a profitable and viable health insurance policy in the long term. The co-payment clause is beneficial at an early stage in life when the likelihood of a medical emergency is quite low.

7. Purchase insurance only to save taxes.

Although health insurance premiums reduce taxable income, they cannot be the basis for deciding health insurance policy. The main goal of health insurance is to have comprehensive coverage for health issues and to be financially secure in the event of medical difficulties. Buying a health insurance policy with a particular focus on saving tax will lead a client to invest in policies with inadequate coverage.

Health insurance premiums paid by an individual are subject to tax deduction under section 80D of the Income Tax Act 1961. It is recommended that the tax benefits of the policy be fully understood, but valuing an insurance policy solely on the basis of the tax quotient is not prudent. An individual should purchase insurance coverage worthy of meeting the health needs of his family during a medical emergency.

8. Invest in health insurance only in old age.

Many people believe that health insurance plans are for the elderly or are only needed in old age and make the mistake of not investing in health insurance policy at an early stage of life. No one can predict medical emergencies and not having adequate coverage at a young age could lead to erosion of wealth at the time of an unforeseen medical emergency or result in high premium outflows for coverage later on. To avoid either scenario, individuals should consider investing in health insurance plans at an early stage of life.

There is a wide range of policies for people under 45, and these policies are easy to get and usually involve a lower premium payment. The added advantage of purchasing health insurance at an early age is that one can easily cover the waiting period in times when the likelihood of triggering health insurance is minimal and therefore benefit from maximum coverage at an early age. early.

9. Overlooking the sub-limits.

It is common for individuals to overlook the sub-limit clause when evaluating and choosing health insurance plans, only to regret it at the time of claim when expenses exceed the sub-limit stipulated in the health insurance coverage. police.

Insurance companies specify threshold limits on their liability in specific circumstances by including sub-limits. They are defined as a maximum value for a particular illness / expense or as a percentage of the sum insured. Health insurance plans with sub-limits are cheaper compared to other plans. Sub-limits may be imposed on the rent of a hospital room, ambulance fees, doctor’s consultation fees or any major medical treatment such as knee replacement, kidney transplant, etc. . It is advisable to review the sub-limit clause before finalizing a health insurance policy. .

Final result

Health insurance is an essential investment to navigate unplanned medical emergencies unscathed. With the stressful and hectic lifestyle we lead today, purchasing a health insurance plan with comprehensive coverage and benefits is no longer a luxury but a necessity.

However, given the number of insurance products available in the market today, individuals must be well informed to make a wise choice. Avoid making the mistakes mentioned above and secure your future and well-being as well as that of your family with the right health insurance.