A comprehensive medical insurance is an important safeguard to ensure a financial cover in case you need to avail medical care. Some working professionals only use the corporate medical plan that is offered by their employers. However, it is always prudent to have a personal plan as well which comes in handy post retirement. Also, you might need medical insurance for your dependent parents who are retired.
Selecting the right plan can often be confusing. There are too many clauses, a lot of information that one doesn't really know or understand. Generally one looks at the cover amount while selecting a policy and only when the time comes to make a claim that one gets to know about the numerous clauses and conditions in the policy. Many policies have hidden costs, unclear wording, and conditions buried in fine print. Clauses like Co-Payment, Room Rate Cap, Waiting Period, and Restoration Benefit can drastically change how much you actually receive during a claim. Understanding these terms is the first step in choosing the right policy.
We are sharing 5 important clauses in the insurance plans that you need to be aware of and tips on how to select the best medical insurance plan suitable for you.
1. Co-payment : Medical insurance plans in India have a Co-payment clause. This clause means you have to foot a percentage of the invoice amount. Depending on the policy, co-pay could be 10%, 20% or more which means that you will have to pay that percentage of the total bill even if you have enough coverage in your policy. It is best to avoid policy with co-payment terms.
Example: Suppose your hospital bill is ₹80,000. If your policy has a 20% Co-Payment, you must pay ₹16,000 while the insurer pays the rest. Without Co-Payment, the insurer would cover the full amount, which is ideally what you should be looking for.
2. Room Rate Cap: Some insurance policies have a cap on the allowable room tariff that can be claimed. If you exceed this limit, the additional amount will be borne by you. However, the catch here is that all in-room services claimed will also be proportionally deducted.
Eg) Consider a case where you have a policy where sum insured (SI) is Rs. 300000/- and room rent cap is 1% of SI (Rs. 3000/- per day). Suppose you are getting a superior room in Rs. 4000/- can are fine with paying the additional Rs. 1000/- per day. You incur a total fee :
1. Room Fees for 5 days - 4000 x 5 = Rs. 20000/-
2. Surgery Fees - Rs. 150000/-
3. Medical Tests and Evaluations - Rs. 20000/-
4. Consultation fees - Rs. 10000/-
5. Medicine Fees - Rs. 10000-
The total bill is Rs. 210000/- . You feel that apart from the Rs. 5000/- (additional Rs. 1000 for 5 days stay) the insurer will pay everything else. Well, you're wrong. Because you exceeded the room cap by 25% (₹4,000 vs ₹3,000), the insurer will proportionally reduce all other claimable services that you took.
Here's what the insurer will be liable to reimburse in both scenarios:
With the room rent cap, you have to shell out Rs. 50,000/-. Imagine what a shock that will be! Chances are, this amount is much higher than you annual premium!3. Pre and Post Hospitalization Expenses: You generally will not plan to get sick. You will do some tests, diagnosis which will lead to your hospitalization, surgery, etc. After discharge and during your recovery, you have to deal with medications, followup tests. Often, the cost before and after hospitalization is substantial. Best medical insurance plans cover these pre and post hospitalization expenses.
Tip: Always keep ALL medical receipts, prescriptions and reports for at least 1 year. Do not throw these away. It will help to have the receipts if you want to claim prehospitalization expenses.
4. Waiting Period: If you have a pre-existing illness (diabetes, heart issues, cardio-vascular issues, chronic issues, etc) then you will have to go through a waiting period before you can start to claim expenses incurred from these illnesses. Better pick a policy which has a less waiting period so you don’t have to wait too long. The waiting period duration is an important criterion of how to select a good health insurance plan.
Tip: Always disclose such conditions. Do not try to hide or misrepresent facts.
5. Restoration Benefit: In some policies your cover amount is restored once a claim is made. Imagine you are hospitalized, and your complete policy sum insured runs out and later you or a member of your family falls ill. Without restoration benefit you would have had to foot the bill completely for the second hospitalization. Multiple restorations might not be offered by most policies but you can get at least one in a year which can come handy.
All these rules might bump up your premium a bit, but help you immensely if, god forbid, you or your loved ones need hospitalization. The whole thing about insurance is that it is your safety net and you need to make it as strong as possible. Always remember you might think - “I will never need this feature so no sense in unnecessary inflated premiums”, but if you are lucky enough the need one of the features that you excluded in your insurance, you will repent later. Also one final tip - KEEP ALL RECEIPTS DURING YOUR HOSPITALIZATION.
Need Help Selecting the Right Medical Insurance?
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Book a Free ConsultationFrequently Asked Questions
1. What is Co-Payment in medical insurance?
Co-Payment means you pay a part of the claim amount from your pocket while the insurer pays the rest.
2. What does Waiting Period mean?
Waiting Period is the time you must wait before coverage starts for specific illnesses or pre-existing conditions.
3. What is Restoration Benefit?
Restoration Benefit means your sum insured is reloaded if it is used up within the policy year.
4. How do I decide on Sum Insured vs Premium Cost?
While lower premiums are attractive, always balance them with adequate Sum Insured to cover high hospitalization costs in big cities.
5. Why are Network Hospitals important?
Network hospitals allow cashless treatment, which reduces financial stress during emergencies. If you take your treatment in a hospital outside the empaneled hospital of the insurer you have to pay the bills yourself and claim the amount from the insurer later. Also, be sure to know the list of blacklisted hospitals - insurers sometimes blacklist hospitals based on past experiences of malpractise, etc and the insurer will NOT reimburse if you get treatment in these hospitals.
📌 Related Reading: Why building an Emergency Fund is as important as Insurance.
📌 Also Read: What is Money Dysmorphia and how it affects your financial health.
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