What is Health Insurance and How to Choose One?

As odd as it may sound, health insurance does not help you stay healthy. But it can help you stay wealthy. 

That’s right. It's true.

A brief stay in private hospitals can set you back by several thousand rupees (or lacs if the stay is longer or due to critical reasons). And if you don’t have a health insurance policy, then you will have to foot that large hospital bill from your own pocket.

Common sense tells that you would want to avoid that at all costs. Isn't it? That’s why health insurance is essential and is a must-have. But even then, there are people who avoid purchasing medical insurance.

Some reasons why people avoid buying Health Insurance

• Reason #1 – “There are so many policies out there? I am totally confused about which one to choose, where to buy it from and what about the complex paper-work and medical tests? Who has time for that?”
  
  Inertia is the single most important reason for people not buying health insurance. But people fail to realize that when hospital bills come up for payment, they will be in for a shocker.
  
  
• Reason #2 – “I am already covered by my employer’s group health cover”
  
  That is fine. But what if you change jobs with a gap between your next assignment and unfortunately, you get hospitalized during the transition? Who will pay the bill then?
  
  
• Reason #3 – “I have enough money to afford to pay the bills if necessary.”
  
  Is there a point in dipping into your savings to pay for such unfortunate(!) expenses, when you can easily avoid it (if you have health cover)?

Then there are many other reasons which don’t even deserve a response – like:

‘it won’t happen to me’,

‘dekha jaayega yaar’,

and even ‘health insurance won’t make me healthy’!

What is Health Insurance?

It is an annual contract, where for a small annual premium, the responsibility of paying your hospital bills (partly or fully) is transferred to the health insurance companies. You can either take it for yourself or go for a family health insurance plan which covers the whole family. You (or family) can then make claims on that policy up to the sum assured, in case of hospitalization.

You pay a small premium now so that you don’t have to pay hospital bills in the future.

Sounds useful? Great. But there are hundreds of health insurance plans to choose from.

How do you decide which Health Insurance Policy to purchase?

A good policy is one that allows you to make a claim easily and the claims are honored without any hassles by the insurance company every time. That too for a very low annual premium.

But apart from the price factor (which is, of course, important) and cashless claim feature, there are certain other features that should be considered too:

1. Co-Pay – Its a feature where a part of the bill has to be borne by you. So if co-pay of policy is 20% and the hospital bill is Rs 1 lac, you will have to pay Rs 20,000 from your own pocket and your policy will pay the remaining Rs 80,000. If given a choice, you should pick a policy with lower or zero co-pay.
2. Sub-Limits – Some policies have capped expenses that can be made under individual heads (like room rent, doctor’s fee, the sum assured per person under group plans, etc.). One can never be sure which component of hospital bill (surgery, room rent, special second opinion) might shoot up. So you should prefer policies which have no sub-limits.
3. Waiting Periods – Waiting period is the time that needs to pass before your insurer can honor claims made against hospitalization due to pre-existing ailments. So obviously, policies with lower waiting periods are preferable.
4. Claim Processing – This is very important. You don’t want companies to harass you before making payments. So ask your friends, colleagues for their experiences with their respective insurance companies. Also, check IRDA’s website to get an idea about every insurer’s claim settlement ratios.

Cheapest available Policy might not be the best

It's natural to desire all good features with the lowest possible premium. But that is not what happens. When a company gives you features as per your needs, then it will obviously charge you accordingly.

So going for the cheapest policy might mean that you don’t get all the features you need (like ‘zero’ co-pay, no sub-limits, etc.). And hence, don’t just blindly go for a policy with the lowest health insurance premium.

There is no shortage of affordable health plans in India. So you need to find the one which suits most of your needs. Compare health insurance features of all shortlisted policies first and then decide.

You don’t want to end up with a policy that doesn’t even help when you need it the most (i.e. to clear bills for ‘all’ possible medical expenses).

Now that we have convinced you about the importance of health insurance, it's also important to understand you need to have an adequate insurance cover. Don’t try to cut corners by opting for smaller covers just to save a few hundred bucks. It can cost you several thousand (and even lacs) in case of hospitalization.

And did we tell you that younger you are, lower will be your health insurance premiums? So buy it as soon as possible.

Need another reason to purchase Health Insurance?

The government even gives you tax benefits for paying health insurance premiums for yourself and your family. You can claim deductions (up to a limit) on premiums paid.

Here are 4 things for you to remember,

• Hospitalization is sh** expensive. Having enough Health Insurance cover can help you avoid paying huge medical bills
• Not all policies are the same. Buy one which has the right features, even if it costs a little more
• Younger you are lower will be your policy premium. So buy a cover as soon as you can
• You even get tax-benefits for buying health insurance. So that’s an added bonus

Health insurance will not keep you healthy and neither will that gym subscription that you don't use. But till the time you start using the gym, at least protect your hard-earned money by purchasing health insurance for you and your family.