This article on types of Health Insurance plans is going to be a long but important one. And it is strongly recommended for reading if you are looking to buy a health insurance plan or mediclaim, shortly.
Choosing the right health insurance plan (or mediclaim or medical insurance) can be a lot tougher than say, choosing a term insurance plan. And there are 2 simple reasons for this.
1. You are inundated with choices of variants in health insurance, with each company deciding their own sweet spot of the right balance of features and benefits to cover that will be of value to the customer, versus the kind of risks it is able to cover at a reasonable price.
2. Unlike term insurance, claims for health insurance plans can be tricky. In term insurance you are either dead or alive. In the case of health insurance however, you could be right in expecting the claim for a certain hospitalization expense, yet the insurance company could also be right in pointing out that it is either not covered in the policy or covered only to a certain limit that may not be good enough for you. So for health insurance claims, there are a lot more greys, rather that clear blacks or whites.
For buyers, this means just one thing – when you buy a health insurance plan, you’ve got to be very careful in choosing the right kind of plan.
There are various kinds of Health Insurance plans, viz. Individual Health Insurance plans, Family Floater Health Insurance plans, Unit-linked Health Insurance plans, Top-up Health Insurance plans, Fixed Payout Health Insurance plans, Group Health Insurance plans, Health Insurance plans for Seniors. Also Health Insurance plans are often confused with Critical Illness plans, but they are very different. Let us understand each one and which one suits which kind of people/families.
|INDIVIDUAL Health Insurance Plans||These are mediclaim policies which can be taken only for a particular individual. It has a Sum Assured, which is the maximum claim that can be availed of only for that individual’s medical expenses, in a year. In the case of a family, you can take individual mediclaim policies for each person in the family, without any restriction on number of members. Each policy is independent of the other.||Example – If there is a family of 4 members, you could take 2 separate health insurance plans for Rs. 5 lakhs each for the father and the mother, and two other separate health insurance plans for Rs. 3 lakhs each for the son and the daughter. The annual limit of claim is determined by the extent of Sum Assured in their respective health insurance policies.|
|FAMILY FLOATER Health Insurance Plans||Family Floater policies can be taken for a pool of people, typically family members. The insurance cover ‘floats’ between different members of the family, and any one or more members of the family can together use any amount up to the maximum Sum Assured, in a year. Once a claim is made in a year, the claimable amount comes down by that much for the rest of the year. Any family member can continue to claim from the balance amount. In the next year, once the policy is renewed, the entire Sum Assured is again available for all members of the family.||Example – If there is a family of 6 members, you could take 1 Family Floater Health Insurance plan for all of them, for say Rs. 10 lakhs. Any family member can claim up to Rs. 10 lakhs, but the claims of all the members put together also cannot be more than Rs. 10 lakhs in a year. If a claim of Rs. 3 lakhs is made for the grandfather after 4 months of the policy, the remaining Rs. 7 lakhs is available for claim for all the family members (including the grandfather) for the remaining 8 months. If the policy is renewed next year, again Rs. 10 lakhs is available for the whole family.|
|FIXED BENEFIT Health Insurance Plans||Unlike other health insurance plan, Fixed Benefit plans give you a guaranteed fixed payouts irrespective of the actual hospital bill amount. Your can use it the way you want, for room charges, medicines, surgery, or anything other expense. All you need to provide is the diagnosis by a certified medical practitioner or a the medical bills. The plan may sometimes even have a fixed payout for each day of hospitalization and/or a fixed payout for different categories of surgeries. To some extent, this is like a critical illness plan, but it covers everything and not just specific critical illnesses. The good thing about such plans is that they also cover many minor day-care procedures which do not need 24-hour hospitalization. Also, you can claim for this over and above your other health insurance.
Such plans are used a lot for post-operative care (e.g. a nurse, physiotherapy, etc.) and supplementary medical expenses (e.g. expensive medicines that may have to be taken after hospitalization and during recovery phase, etc.). We recommend that this kind of plan is always taken in addition to a mediclaim policy and not standalone.
|Example – Aegon Religare’s Health Insurance Gold plan offers Daily Hospital allowance of Rs. 3,000 (up to Rs. 1,80,000 per year), Daily ICU benefit of Rs. 3,000 (up to Rs. 1,80,000 per year), and a flat Surgery payout ranging from Rs. 75,000 to Rs. 3,00,000 depending on the Category of Surgery. Also a Critical Illness payout of Rs. 75,000. You can claim all of it together, and this can be over and above your other health insurance. You can choose to do a cashless settlement to the hospital, or even take the amount directly from the company as a cheque in your name, irrespective of the exact amount of expense you actually incur.|
|TOP-UP Health Insurance Plans||A type of mediclaim plan that is used to top-up your existing health insurance from any insurance company. It works to provide additional coverage over and above the existing coverage, provided a threshold level or deductible level is used up. Such a top-up health insurance plan is generally inexpensive and is a great way to increase health expenses protection for the family.||Example – Bajaj Allianz Extra Care plan extends your health insurance cover so that you don’t run out of money if your existing health insurance policy limit runs out. The plan offers a top-up Sum Assured of Rs. 10 lakhs for a Deductible of Rs. 3 lakhs, i.e. if you have a total expense of Rs. 7 lakhs in a major surgery, then over and above any other existing mediclaim policy of Rs. 3 lakhs, you can claim the balance Rs. 4 lakhs from the Rs. 10 lakhs limit of the Extra Care plan.|
|GROUP Health Insurance Plans||A group health insurance plan is one master plan for a group of similar individuals, e.g. all junior employees in an organization, their parents and up to 2 children. Most companies offer Group insurance today as a perk or employee benefit, and the plans are very customizable and inexpensive compared to individual health insurance. The problem is that such a plan remains on paper and most employees are not aware of what exactly are the benefits of the policy and whether it is sufficient for them and their family members. Many of them also have sub-limits and other restrictions (such as no renewal on exit from company) which end up making the plan not completely effective.
We recommend that if your employer has a Group Health Insurance plan for you, please evaluate it thoroughly and ensure you take a separate individual or family floater health insurance plan if required.
|Most companies offer Group Health Insurance and the benefits and premium rates vary widely.|
|UNIT-LINKED Health Insurance Plans||These are plans which combine Health Insurance with Investment. A fixed premium is paid every year and it gets invested like a Unit Linked Insurance Plan (ULIP) into Equity, Debt or Balanced funds. From the fund that keeps getting accumulated, a fixed amount is deducted every year as charges for the Health Insurance plan. Premiums could stop after a few years, but the plan continues since it can have enough fund to take care of the annual deduction for Health Insurance charges. This kind of plan tries to give the impression to the customer that his fund is growing hence the health insurance comes to him almost free. The reality can be different though. Also, features like No Claim Bonus and Cashless compensation may not be available with these kind of plans.
We do not recommend mixing up Investments with Health Insurance, hence we do not recommend Unit-Linked Health Insurance plans.
Demand for this kind of plans have not picked up ever since their launch almost 6-7 years back.
|Example – You could pay Rs. 25,000 as premium into a Unit-Linked Health Insurance Plan for 5 years. The annual health insurance charges, say Rs. 6,000, gets deducted each year. The rest of the money keeps getting added to the fund and keeps growing depending on how the equity and debt market perform. After 5th year, there should still be money left in the fund, which should take care of the future deductions of health insurance charges. Of course, if the market falls, value could also come down, and you may have to put in more money as premium.|
So these are just the types of health insurance plans. How do you now find out which one, or what combination suits your requirements the best? An article on that, coming soon.
Whatever type you do decide to buy eventually, make sure that you check the Claims Settlement Ratio for Health Insurance companies and see which companies and the best in claim settlement. Because finally, health insurance is all about getting the claim paid out and that too in the shortest possible time.