Friday, April 22, 2016

Guidelines for taking Health Insurance Policy in India


Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care and health system expenses, among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is available to pay for the health care benefits specified in the insurance agreement. 

The benefit is administered by a central organization such as a government agency, private business, or not-for-profit entity. According to the Health Insurance Association of America, health insurance is defined as "coverage that provides for the payments of benefits as a result of sickness or injury. Includes insurance for losses from accident, medical expense, disability, or accidental death and dismemberment" 
Source and for more details on Health Insurance policy :https://en.wikipedia.org/wiki/Health_insurance

Coverage of Health Insurance Policies in India:

What a Health Insurance policy would normally cover A Health Insurance Policy would normally cover expenses reasonably and necessarily incurred under the following heads in respect of each insured person subject to overall ceiling of sum insured (for all claims during one policy period). 
a) Room, Boarding expenses 
b) Nursing expenses 
c) Fe e s  o f  s u r g e o n , a n e s t h e t i s t , p h y s i c i a n , consultants, specialists 
d) Anesthesia, blood, oxygen, operation theatre charges, surgical appliances, medicines, drugs, diagnostic materials, X-ray, Dialysis, chemotherapy, Radio therapy, cost of pace maker, Artificial limbs, cost or organs and similar expenses. 

Sum Insured 
The Sum Insured offered may be on an individual basis or on floater basis for the family as a whole. 

Cumulative Bonus ( CB) 
If you have a special condition, such as cancer or diabetes, add the third layer of a special cover, such as a cancer plan or diabetes cover. Health Insurance policies may offer Cumulative Bonus wherein for every claim free year, the Sum Insured is increased by a certain percentage at the time of renewal subject to a maximum percentage (generally 50%). In case of a claim, CB will be reduced by 10% at the next renewal. • Cost of Health Check-up Health policies may also contain a provision for reimbursement of cost of health check up. Read your policy carefully to understand what is allowed. 

Cashless Facility 

Insurance companies have tie-up arrangements with a network of hospitals in the country. If the policyholder takes treatment in any of the net work hospitals, there is no need for the insured person to pay hospital bills. The Insurance Company, through its Third Party Administrator (TPA) will arrange direct payment to the Hospital. Expenses beyond sub limits prescribed by the policy or items not covered under the policy have to be settled by the insured direct to the Hospital. The insured can take treatment in a non-listed hospital in which case he has to pay the bills first and then seek reimbursement from Insurance Co. There will be no cashless facility applicable here. 

Exclusions 
The following are generally excluded under health policies: 
a) A l l  p r e - e x i s t i n g d i s e a s e s ( t h e p r e - e x i s t i n g disease exclusion is uniformly defined by all non life and health insurance companies).  
b) Under first year policy, any claim during the first 30 days from date of cover, for sickness / disease. This is not applicable for accidental injury claims. 
c) During first year of cover – cataract, Benign prostatic hypertrophy, Hysterectomy for Menorrhagia or Fibromyoma, Hernia, Hydrocele, Congenital Internal diseases, Fistula in anus, piles, sinusitis and related disorders. 
d) Circumcision unless for treatment of a disease
 e) Cost of specs, contact lenses, hearing aids 
f) Dental treatment / surgery unless requiring hospitalization 
g) Convalescence, general debility, congenital external defects, V.D., intentional self-injury, use of intoxicating drugs / alcohol, AIDS, Expenses for Diagnosis, X-ray or lab tests not c o n s i s t e n t w i t h t h e d i s e a s e r e q u i r i n g hospitalization. 
h) Treatment relating to pregnancy or child birth including cesarean section 
i) Naturopathy treatment. 

The actual exclusions may vary from product to product and company to company. In group policies, it may possible to waive / delete the exclusions on payment of extra premium.

Source and for more details:Handbook on Health Insurance issued by IRDA

LIC(LIFE INSURANCE CORPORATION) of India:



Life Insurance Corporation (India) (LIC) is an Indian state-owned insurance group and investment company headquartered in MumbaiLIC offers a variety of insurance products to its customers such as insurance plans, pension plans, unit-linked plans, special plans and group schemes.

Some of the  Health Insurance Policy providers in India in addition to Life Insurance Corporation of India:




In Policy Bazaar.com brief details of 28 Health Insurance Policy providers and their website links are provided which the readers can refer to get full details.

Link for :Policy Bazaar.com

Now we come to the Guidelines for taking a Health Insurance policy and precautions  for claims:

The timing of the Policy: 

Buy a cover as early on in life as possible and definitely before you turn 45. If you procrastinate, diseases could surface and get excluded from your cover under the 'pre-existing disease' clause.

Of course, lately there have been products where pre-existing diseases are being covered, but that is subject to specific conditions. As you are likely to make no or few claims in earlier stages of life, you can get the benefit of no-claims bonus for every claim-free year. Do not rest assured in the fact that your employer covers your medical expenses. What if you fall ill between jobs? And buying a health cover without exclusions after you retire at, say, 60, will be much tougher.

The maximum renewal age

One of the most important things that one needs to look at the time of buying a health plan is the maximum age up to which the the insurer would allow renewals. The higher this is, the better, since your medical expenses are likely to increase with age. Changing insurer at a higher age has a high probability of being looked at as a fresh policy with no prior coverage.

Common oversights - 

Maybe because the maximum number of claims are made on health policies, possibly apart from motor insurance, the number of rejections, rendering a policy worthless, arising here is also quite large. Many of these arise because of the policyholder's lapses.

Things such as missing documents or late renewals can lead to rejection and, consequently, substantial medical debt. Here are the common oversights to avoid:
Pre-existing diseases. 
This is a common problem area since there was no standard definition of pre-existing illness earlier. In June 2008, the General Insurance Council said "the benefits (of health insurance) would not be available for any condition, ailment or injury or related condition for which the insured had signs or symptoms, and/or was diagnosed and/or received medical advice/treatment, prior to inception of the first policy, until 48 consecutive months of coverage have elapsed, after the date of inception of the first policy.

Four years is the maximum period prescribed by the Insurance Regulatory and Development Authority, but companies may offer products that could have a shorter waiting period under the 'pre-existing' clause.

When buying a policy, you should know:

From when claims on which pre-existing diseases will be allowed. The waiting period is not the same for all of them;

That the definition excludes all diseases arising out of earlier complications, such as obesity and hypertension;

That the period of four years does not include the track record from another insurer;

That the buyer should disclose the known pre-existing diseases at the time of application.

Claim problems. 

An insurance company cannot pay a claim unless it is in line with the agreed terms and conditions. If you provide incorrect information at the time of applying, your claims could be rejected.

To prevent that:

Keep the company informed. Limited information including illness and policy number is sufficient.

Give the correct papers when making a claim in a proper file. Keep in order the following:
(i) covering letter, original claim form and copy of the policy,
(ii) note from the concerned doctor describing the illness and the recommended treatment,
(iii) original prescriptions from the doctor for medical tests (investigation) and medicines and original medical test (investigation) reports,
(iv) sheet listing down bills and the amounts,
(v) doctor's and medical test bills,
(vi) hospital or nursing home bills,
(vii) medicine bills,
(viii) hospital bills, and
(ix) Original discharge card.
Get an acknowledgement of receipt of the claim before submitting the file and retain a photocopy of the complete set of documents submitted to the insurance company.

Keep the number of the third-party administrator and your insurer ready if you have a cashless policy. Try to inform them around 48 hours before the admission in general and 24 hours if it is an emergency.

Spell the name correctly. The patient's and his or her doctor's name should be spelled correctly, wherever required.

So you must:

  • Be careful in deciding the sum insured you need;
  • Be aware of the sub-limits under the policy for specified illnesses or expense heads, the waiting period, permanent exclusions, and so on.
  • Coverage. A family floater can be bought by an individual, who becomes the proposer, along with spouse, dependent children up to 25 years, or unmarried, divorced or widowed daughter, and dependent parents. Even parents-in-law can be covered.
A discount of 10 per cent is allowed on renewal premium by most insurers if there is no claim in the year immediately preceding the year of policy renewal. Similarly, in group health plans of your employers, you should know who are the ones it covers and the limit to which they are covered.

So you need to be aware of:

  •  Who are included in a family floater health policy and till what age;
  •  What the inclusions and exclusions are (and for how long) for each of the insured as enumerated in the 'inclusions' section of the policy document; and
  •  The age till which the policy can be renewed.
  •  Gap in renewals. Renewal of the policy on time is very important for health covers. Apart from no-claim bonus, after a certain period it could start covering your pre-existing ailments. For every no-claim year, most plans add up to 5 per cent of the sum insured as cumulative bonus. So you need to:
  •  Renew your policy a month before the due date to to prevent a lapse so that waiting periods do not start afresh; and
  •  Read policy wordings every time it is renewed so that you do not miss out on new inclusions or exclusions.

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