'Go for a base cover of Rs 10 lakh and then buy a super top-up of Rs 90 lakh.'
A significant number of individuals who purchased their health insurance policies nearly a decade ago have not revised their sum insured, which continues to remain at the original Rs 2 lakh to Rs 3 lakh.
With medical inflation averaging around 14 to 15 per cent annually, such coverage is now grossly insufficient.
"The average cost of hospitalisation for 2.5 to 3 days can come to Rs 1.5 lakh to Rs 1.75 lakh. The cost in metros tends to be even higher," says Ashish Yadav, head of products and operations, ManipalCigna Health Insurance.
- You can post your health insurance related questions HERE
"A procedure like angioplasty can easily cost Rs 2 lakh to Rs 3 lakh. A more critical ailment, like cancer, kidney transplant, lung transplant, etc, could cost 10 times as much," says Siddharth Singhal, head of health insurance, Policybazaar.
Another considerable risk is that just one family member could exhaust the entire Rs 2 lakh to Rs 3 lakh sum insured, leaving others exposed for the rest of the year.
Multiple hospitalisations for a single member could also result in a severe financial strain on the family.
According to Yadav, given the high cost of treatment -- particularly for critical illnesses like cancer -- a minimum sum insured of Rs 50 lakh per individual is advisable.
"The policy you buy should also take care of inflation by offering bonus," he says.
Singhal recommends a combined coverage of Rs 1 crore through two policies: A base cover and a super top-up.
"Go for a base cover of Rs 10 lakh and then buy a super top-up of Rs 90 lakh.
"Such a combo would cost an individual aged 30 years around Rs 12,000," he says.
He adds that Rs 1 crore coverage would be optimal even for a family of three.
According to Singhal, purchasing a super top-up is a highly cost-efficient way to enhance insurance coverage.
However, maintaining two policies means the policyholder must manage claims from both, which could be more complex than receiving payout from a single policy.
Remedy: Enhance the sum insured of the base policy or buy a super top up after doing a cost-benefit analysis of both options.
Sub-limit on room rent and treatment
A room rent sub-limit functions in the following manner: Consider a policyholder with a Rs 5 lakh policy and a 1 per cent room rent cap.
This allows for a room rent of up to Rs 5,000. If the policyholder chooses a room costing Rs 10,000 per night, they may assume they need only cover the difference in room rent.
"Insurance customers must understand the concept of proportionate deduction, which means that most of the expenses -- doctor consultations, treatment costs, etc. -- are linked to room rent.
"In this example, the insurance company will pay a total amount according to the Rs 5,000 room.
"If the patient has stayed in a Rs 10,000 room, they could end up paying half the total hospitalisation cost out of their own pocket," says Singhal.
Some insurers impose ailment-based sub-limits -- for instance, on cataract, knee replacement, hernia, etc -- where only a fixed amount is reimbursed for treatment.
Others implement procedure-based sub-limits, such as for robotic surgeries, where the reimbursement is restricted to a pre-defined limit.
If the current insurer offers another product without sub-limits, the customer may consider switching.
"Whether one is able to do so will depend on the insurer's underwriting philosophy," says Yadav.
Alternatively, if a competing insurer provides a better offering or cost structure, one should port.
Poor claim settlement record
Policyholders should ideally be covered by an insurer whose claim settlement ratio exceeds 90 per cent.
"Even though this data is not available by line of business or product, and is not segregated for retail and group insurance, nonetheless it is a very important parameter that one should review," says Kapil Mehta, co-founder, SecureNow.
He advises policyholders to also examine grievance-related data published by the regulator.
In addition, industry bodies such as the Insurance Broking Association offer insights into the performance and credibility of health insurers.
If an insurer fares poorly on these parameters, policyholders should consider porting to a more reliable alternative.
Key points to know about porting
- Porting is a useful option if you are in a poor-quality policy or you face a sudden hike in premium
- While porting, accuracy in declaring health condition is crucial to avoid claim rejection later
- Porting should be initiated at least 45 days before the policy renewal date to avoid errors due to last-minute pressure
- Compare both costs and benefits: Many people mistakenly port only for lower premiums without evaluating if the new policy offers equivalent or better benefits
- At times, a lower premium could mean reduced benefits, such as lower room rent limits, which could increase out-of-pocket expenses at the time of claim
- You can post your health insurance related questions HERE
Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
Feature Presentation: Ashish Narsale/Rediff.com
© 2025