Buying a health cover? Read the fine print

Parag Desai, 41, needs to renew his family health insurance policy. On going through his policy details, he notices the maximum renewal age offered by his insurer was 60 years. He isn't sure if this was a good enough reason to shift to a new insurer right away.

Mahavir Chopra, head (e-business), medimanage.com, says, "Buying a medical policy at that age will be expensive and difficult, given the number of conditions attached. The earlier Desai shifts his insurer, the better."

Insurance advisors say it is imperative to compare the features on offer before buying a policy. A careful perusal of wordings will highlight the policy clauses unfavourable for you. Here are some points worth consideration:

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Exclusions:

This is, perhaps, the most important part of your policy document. It mentions a host of exclusions or ailments which will not be covered under the cashless or reimbursement plans.

Though the policies vary, certain norms remain unchanged across the industry. Thus, illnesses arising within 30 days of buying a policy are not covered and neither are pre-existing diseases.

While certain age-related diseases like rheumatoid are covered, they have a long waiting period.

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Loading:

If you make a claim on your policy, you are liable to pay an extra amount or, loading, on your next premium.

Companies may differ in the way they calculate this extra amount. And, this is what makes the difference, say health insurers.

While some companies link it to their claim ratio slabs, others link it to the percentage of sum insured claimed.

For instance, for customers making a claim of Rs 30,000 in two consecutive years, Bajaj Allianz General Insurance raises premium by as much as 30 per cent.

"The feature will not be favourable for policy holders having a smaller sum insured. For instance, for a sum insured of Rs 1 lakh, the limit of using just Rs 30,000 in a year may not really cover one's medical expenses," adds Chopra.

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Sub-limits on aliments:

Over the past year-and-a-half, some insurers have introduced sub-limits on specific illnesses. So, the amount you can claim on these ailments is capped, irrespective of the amount of sum insured.

Most players have decided a cut-off amount one can claim for minor surgeries such as cataract, where the operation date can be decided in advance.

However, United India Insurance has even put a cap on major ones like cardiac, brain, cancer and joint replacement surgeries. It pays either the actual expenses or just 70 per cent of the sum insured, whichever is less.

And, if the claimant is more than 60 years old, it deducts 20 per cent of every claim as co-pay.

"Sadly, these products have been filed with (and approved by) the regulators. So, it is up to the customer to view every purchase with a magnifying glass to get the fine print", says New Delhi based, Sateesh Kumar, COO, Amicus Insurance Broking.

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Co-pay:

Most companies levy a co-pay condition for pre-existing diseases and senior citizens. Some, like Bajaj Allianz General Insurance, levy a co-pay of 10 per cent in case their Health Guard policyholders approach hospitals outside of its network.

Typically, co-pay customers are made to pay a percentage of the total payable claim. So, a 10 per cent co-pay on a total claim of Rs 38,000 means the customer will have to bear 10 per cent of the amount, or, Rs 3,800.

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Renewal age:

Insurance companies also follow the cut off rule for policy renewals. Most private players limit the renewal age to 60 or 75 years.

However, lifetime renewals are offered by private players like Apollo Munich Health Insurance and Max Bupa Health Insurance , besides all PSU health insurers.

Financial planners advise opting for policies which offer lifetime renewals as the products for senior citizens offer very low sum assured, which, combined with the sub-limit, gets restricted further.

Also, these products have a higher waiting period for pre-existing diseases.