When you are chalking out a financial plan for yourself, health insurance is one aspect that features prominently. With cost of quality healthcare rising sharply (partly because of health insurance itself), a prolonged hospitalisation can deplete your long term financial health. An adequate health insurance cover can provide good cushion to your finances in such cases. Even though many realise the importance of an adequate health cover, there are still a few myths surrounding health insurance that prevent people from purchasing health cover or purchasing the right cover.
Myth 1: I Have Group Health Cover from Employer. I Don’t Need Personal Cover
Many don’t even think about purchasing a personal health cover because they have a health cover provided by their employer. If you belong to the same category, you must think again. Firstly, employer cover is very limited (say Rs 2-3 lacs). You must see if this cover is enough for the entire family, especially if you are staying in a big city.
By relying solely on employer cover, you are exposing yourself to whims and fancies of your employer. Your employer may choose to reduce the coverage from next year to cut costs. Your employer may negotiate a cover with lesser benefits (greater co-payment, or more sub-limits). What will you do? You have no control over your employer cover. You cannot increase the cover if you want to. Your cover is only as long as you are with same employer. There won’t be any health cover when you retire. Purchasing health cover at that age won’t be as easy. You will be left without a health cover even when your job is terminated. Moreover, if you switch jobs, your new employer may offer you a lesser cover or may not offer you a health cover at all. Additionally, you are not covered from the day you leave the current employer to the day you join the new employer.
Never ignore Murphy’s law. Anything that can go wrong will go wrong.
Myth 2: I Don’t Need Health Cover Now. I Will Purchase When I Need One
If you are young and healthy, the chances of your getting hospitalised are much lower. And you might be tempted to feel that you do not need any health cover at the moment. After all, you didn’t have a hospitalisation in 30-35 years of your existence. However, don’t expect that to continue. Your last 35 years won’t be as healthy as the first 35. You are not a superman. Your health will likely deteriorate from now onwards (as you move closer to your retirement). Human body is complex. You never know what might be brewing inside and may manifest when you least expect it.
Even otherwise, accidents can happen to healthiest of individuals. Accidents can lead to hospitalisation too. You need to plan for such contingencies too.
Additional aspect to note is that it is easier to purchase a health cover when you are healthy. It will be cheaper too. As per IRDA health insurance regulations, claims based loading is not permitted. i.e., the insurer cannot increase just because you made a claim in the previous year. As you grow older, you are likely to develop illnesses. If you have illness prior to purchase of plan (pre-existing illness), the insurance company may load your premium or may even decline to issue the health cover.
You must purchase health insurance when you don’t need it. Because when you need it, you may not be able to purchase one.
Myth 3: Cheaper Is Better
While this may hold true for term life insurance, cheaper may not be better when it comes to health insurance. With health insurance, the insured event is not as crisp as in the case of life insurance (death of the individual). Coverage of the two health insurance plans can vary significantly. Hence, comparing the two plans on the premium alone is not a wise approach. Well, wouldn’t you expect a phone with better features to be more expensive?
Policy A may be more expensive than Policy B because Policy A has lesser exclusions.
Policy A may be more expensive than Policy B because Policy A has lesser waiting period.
Policy A may be more expensive than Policy B because Policy A has lesser sub-limits, especially room-rent sublimit.
Policy A may be more expensive than Policy B because Policy A has no co-payment clause while Policy B insists on co-payment.
And there can be many more reasons. As you can see, Policy A provides better coverage than Policy B and hence is more expensive. If you focus only on the price, you may actually be comparing apples and oranges. I am not saying that you must go with a more expensive health plan. All I am saying is that there is more to a health insurance plan than its annual premium. For all you know, a cheaper plan might be a good fit with both your requirements and your pocket.
If you are finalising a health insurance plan, first decide your expectations from the health insurance plan. Shortlist plans that provide such coverage. Among those plans, you can go with the cheapest one.
Myth 4: My Premium next Year Will Go up If I Make a Claim
As mentioned earlier, insurer cannot increase just because you have made a claim. However, do note that does not mean your premium will not increase over the years. Your annual premium will increase. It will increase because of the increase in age or moving to a higher age bracket. The insurer may also increase the premium across the board (for all customers and not just you). It is just that insurer will not increase your premium just because you made the claim.
Myth 5: All My Medical Expenses Will Be Covered Under Health Insurance
Hospitalisation for continuous period of more than 24 hours is typically covered under most plans. Day care procedures such as dialysis, chemotherapy are also covered. Pre and post hospitalisation expenses for a limited number of days are also reimbursed by the insurance company.
However, your regular out-patient consultations (OPD), dental treatments etc are not covered unless explicitly specified in the plan. Even in cases of hospitalisation, many costs such as charges for food or consumables such as diapers etc are not covered. Such expenses have to be borne from your pocket. Remember this is before various sub-limits are checked for or co-payment clause is applied.
A health insurance company can dispute a claim for one reason or another. For instance, hospitalisation may be due to a pre-existing illness for which the waiting period is not over. Or the insurance company may contest your claim on non-disclosure of information. In cases of reimbursement (and not cashless claims), you first make the payment and then claim from the insurance company. My experience suggests, even in case of cashless hospitalisation, you may have to deposit some token money before taking admissions, especially on Sundays and holidays.
What does this tell you? Even if you have health insurance cover, you must still have adequate medical emergency fund to take care of expenses not covered by your health insurance plan and to cover those expenses which are not cashless.