Measure your health risk before buying insurance cover

Pushan Mahapatra

In the past few decades, India has seen an upward surge in disposable income of its people – a great achievement for any developing nation. However, a faster pace of life, added stress and longer working hours have led to an increase in Indians suffering from various lifestyle related diseases. According to estimates of various global and domestic organisations, one out of every four Indians is at risk of dying from non-communicable diseases such as diabetes, cardio-vascular ailments or cancer before the age of 70. According to the Public Health Foundation of India, currently our country is home to 62 million diabetics — an increase of nearly 2 million since last year.

Though regular inflation is about 7-8% p.a., medical inflation is currently between 18 and 20% while only 5% of healthcare expenses are paid by insurance. Today, with rising health costs, hospitalisation can lead to us becoming almost bankrupt. It is thus sensible to invest in a good health insurance policy which will take care of any financial exigencies during a medical crisis.

Managing health risk

On analysing lifestyle and health problems one is likely to face, it is important to select a health insurance policy that can cater to these possible future ailments. Various insurance companies provide a variety of specially customised health policies for you and your family.

Keep medical inflation in mind while applying for a policy. For example, if you’re taking a policy for yourself at the age of 30, you are likely to make a medical claim after 20 years or more in the future. Try to get an understanding of what hospital costs will be then (It is safe to assume an inflation rate of 7%), before you settle on the policy amount. Make sure to check for deductibles and co-payments that you will have to make while signing up for a policy.

Keep in mind following points while buying a policy:

n Don’t depend on your employer: Your employer will cover you only as long as you work for them. It is important you invest in a policy on your own, especially considering rising medical costs.

n Invest in a top-up plan: If you know you need a high medical insurance cover but don’t have the necessary means to fund it, it is advisable to invest in a top-up plan. A top-up plan acts as a buffer if your existing cover is exhausted due to any unforeseen illness. For instance, if you invest in a Rs 3 lakh-plan with a deductible limit of Rs 2 lakh and your hospitalisation costs amount to Rs 4 lakh, then get a top-up cover of Rs 5 lakh at a premium much smaller to the regular cover of Rs 5 lakh.

n Always buy insurance from a reputed insurer: Choose insurers who have clear policy processes and good claims settlement history. It is advisable to always intimate the claims at the earliest to the insurance company.

n Check waiting period for pre-existing ailments: The waiting period is how long the company waits before covering any of your medical costs for pre-existing ailments. Usually if you have a pre-existing ailment the health insurance policy will have a waiting period of 2-4 years.

n Stay aware of sub-limits: If your policy has sub-limits, it means the company will only pay for the claim up to the sub-limited amount only, the remaining portion of the claims will have to be borne by you. For instance, if the sub-limit on the hospital room rent is 1% of the sum insured, then in case of a policy with SI of Rs 5 lakh, company will pay only Rs 5,000 per day for room rent and in case you have selected a deluxe suite where the room rent is more than Rs 5,000, then the remaining amount will have to be paid from your own pocket.

While health insurance ensures peace of mind, it is advisable to do your part to avoid any possible illness by exercising regularly. Even a simple 30-minute workout, five days a week will go a long way in keeping health risks at bay. At the end of the day, your health is your wealth.

The author is General Manager & Chief Operating Officer, SBI General Insurance Company. The views expressed in this article are his own