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Protect Your Family's Health

The right health insurance is critical for the well-being of your family…

Stories abound of how patients have realised the virtues of buying health insurance after taking one look at their hospital bills. As the television advertisement rightly says, hospitalisation bills can at times get you down worse than any ailment can. A health insurance cover enables you to meet unexpected medical expenses with confidence. Given today’s high cost of treatment, people who live without health insurance court a serious risk every day of their lives. Health insurance can shield them from penury that could be caused by prolonged illness and the expenses thereof.

Awareness about the need to buy health insurance is increasing, especially in urban areas. At least those who are financially literate no longer subscribe to the view that health insurance is only for the old or the infirm. They buy health insurance as soon as they have the means to do so, which is the right thing to do. If you wait till you are, say, in your 40s, then insurers will insist on a health check-up. And then if some disease is found they may deny you coverage.

Today buyers have the option to purchase a comprehensive medical cover either from a general insurance company or from a standalone health insurance company.

These days a lot of employees also get a health insurance cover from their employers. However, it would be prudent not to depend on such a policy alone but to buy one of your own. In case you lose your job, not only will you be without a regular pay cheque, you will also find yourself without a health insurance cover.

How much?
The first question to answer is how much insurance you need. Financial planners suggest that irrespective of age, a person should have health insurance of at least Rs3 lakh. Senior citizens should have a cover of Rs5 lakh or more.

Individual or floater?
An individual policy means that you have a separate policy for each member of the family. So, if there are four members in your family, then you could buy four policies, each of which has a cover of, say, Rs3 lakh each. Buying such individual policies is expensive. The advantage, however, is that if more than one member of the family falls ill simultaneously, there is adequate cover to meet the needs of each.
In case of a family floater policy, a single policy covers all the members. So instead of buying four policies of Rs3 lakh each, a family could purchase a single policy of Rs5-7 lakh and any member of the family could avail of the benefits in case of an illness. The key attraction of a family floater policy is that it is more cost-effective.
Financial planners, however, don’t favour buying a family floater policy. Their argument: what if one member of the family falls ill at the beginning of the year and uses up a substantial portion of the sum assured? The other members of the family will then be left with inadequate protection for the rest of the year. Similarly, what if more than one member of the family falls ill simultaneously? Though the probability of this happening is low, it could well happen.
Another disadvantage of a family floater plan is that it is renewed only till the senior-most member reaches the maximum age of renewability allowed by the insurer. This means that family members who are part of a floater plan will need to buy individual plans later in life. At this point, they will not get the benefit of their claim history and pre-existing disease coverage that comes when you renew the same policy. Especially for elder members of the family it may be difficult to get individual policies at such a late stage of life (again, the problem of denial of coverage to the elderly).
Similarly, when children reach a certain age (25 years in most cases), the insurer will not allow them to be part of the family floater plan. They too will have to buy a separate policy for themselves, and they too will be denied the benefits that come from renewal of the same policy.
Moreover, if the senior-most member of the family passes away suddenly, the policy gets terminated and the surviving members of the family are left without coverage.
Only in two circumstances is it advisable to buy a family floater plan: one, if members of the family already have individual plans but the family wants to enhance coverage. It could do so via a family floater plan. Two, you could buy a floater if the elderly members of the family do not have health insurance coverage, but there is the possibility of including them in a family floater plan.

Health insurance to go portable
Health insurance portability is consumer-friendly move. But wait to see how it plays out on the ground
After mobile numbers, it is the turn of health insurance policies to go portable in the country, beginning from July 1 this year. With this landmark regulation, the insurance regulator has set up, what one author of a marketing text book famously referred to, as a “dissatisfied customers’ exchange”.
It often happens that at the time of purchase, the health insurance company promises convenience, high-quality service, and above all, the assurance that your healthcare bills will be taken care of if and when you fall ill. In reality, customers sometimes have a different experience. You could, for instance, find that even though you own a cashless policy, the hospital demands the entire (in some cases, a part) of the total treatment expenses at the time of admission. Even if it reimburses the money at the time of checking out, this does involve an inconvenience. What if the illness is sudden and you are unable to cough up the cash (usually a huge amount)?
Two, you could find that the insurance company takes advantage of hidden clauses to wriggle out of its commitment to pay your bills. Three, the experience with the third-party administrator (TPA) could be unpleasant. Four, even if you have coverage of, say, Rs10 lakh, the insurance company could initially sanction only a part of the total amount, say, Rs3 lakh.
All these problems are quite commonplace. So far, you had no option but to grin and bear them. Switching your insurer was difficult because it meant a loss, in terms of the benefits that arise from a no-claims history, or the waiting period for a pre-existing disease.
Now, you may well switch to another health insurance provider. This is a landmark ruling that is expected to enhance service standards within the country. It is inspired by the American Health Insurance Portability and Accountability Act (HIPAA). For insurers, the advantage is that they will be able to share risk profiles and check frauds, which would in turn help them rein in insurance costs.
While the hopes from this ruling are high, one will have to wait and watch for the new portability regime to be implemented to see whether benefits actually accrue to customers.

What is portable?
Initial waiting period: The 30-day initial waiting period will no more act as a deterrent for the insured to change the insurer. Instead of deciding not to continue with a cover with a certain insurer (during or towards the end of the free-look period), the insured could well decide to shift to a different insurer.
Sum insured: When customers switch from one insurer to another, they will be able to get a policy for the same amount of sum insured. If they decide to augment the amount of cover, then the benefits on the existing value of the cover will remain. Only the additional sum insured will be treated as new and will need to pass the waiting period as stipulated by the new insurer.
Waiting interval: The waiting period for a pre-existing disease will be portable. This is the biggest benefit of this ruling. Pre-existing diseases normally get covered after three years. Earlier, if the insured moved to a new insurer, any waiting time that she had already served under the old policy was not considered. She had to undergo the waiting period again in the new policy. But now she will be able to carry over the waiting period already served under the old policy.