Things no one told you about Health Insurance

Team Digit, 09 Oct 2018

You spend 17,280 a day for your health! We're not talking about money though, but about something even more precious, your breath. An average human takes 12 breaths a minute and 17,280 a day. That's huge work! Good job!

As we don't even realize that breath, we may not realize the value of it. Just like how we don’t understand the value of a sound and healthy life. We're talking about most of us, not the ones who do live life mindfully, making every breath count.

Yes, life is valuable, and you got it right, we're insurance after all, so somehow, we'll get to protection and insurance.

Bingo, we are talking about something so essential that it's bigger than you or us. It's about your health, your life, your happiness and, of course, health insurance follows.

And because we are going to launch our health insurance plans soon, we thought we should start with simplifying the understanding of health insurance there as well. Back to basics?

We try to keep our ears as close to our customers as possible. And while we were talking to them to know more about what we can offer, we realized that health insurance has many myths waiting to be busted, so many grey areas that are waiting to see the light of simplification.

And we thought it is only fair that we straighten the knots, even before our health insurance plans are up and running, so you can choose the best health insurance plan for your family.

So, let’s start with things you should know about a health insurance plan that need your attention before you choose one.

What is the right age to buy a health insurance plan?

Everybody believes that they are fit and will be so forever. Even if age starts catching up with them, people believe that they need to start worrying about health only after they reach 50.

However, that’s not what research tells us.

Statistics reveal that 15% - 20% of heart attack patients are between 25 and 35 years of age.

That’s not only shocking, but also super scary. So, if you ask us, our answer is - take a health insurance plan as early in life as possible. Owing to the kind of lifestyle and work pressure young people have today, the likelihood of diseases and unfortunate medical conditions has increased drastically.

Starting early also has the benefit of lower premiums.

The lower the age, the lower is the premium. So, you get a comprehensive cover for a much lower price if you start early, since the risk is lower too.

What’s more, when you take a health insurance plan, you have a waiting period for some time for coverage to kick in.

For example, if your health insurance plan has maternity benefit, you have to wait for a minimum of 2 years to avail this benefit (this differs from one insurer to another). So, if you are 25 years old now and have taken a health insurance plan with maternity benefit, you will have to wait till you are 27 to avail this benefit.  

Starting early helps you endure the waiting period and get active covers when you actually need them.

Is only a corporate health insurance plan enough for me?

We are often satisfied with the health insurance plan that is provided by our company. But do we ever ask if it is enough?

The answer is, often it is not. The cover is standardized for all employees, and it is not customized according to your individual needs. Hence, there are high chances that you might be under-insured.

What are the factors on which the Cover or Sum Insured in a health insurance plan is dependent?

The factors based on which your Sum Insured should be decided are:

  • Age: A lot of people think that younger people don't need a high sum insured. But they don't realize that an unexpected illness or accident can happen to anyone, at any age. Also, taking a health insurance plan at a younger age is beneficial as it has lower premiums and most of the waiting periods are lower.
  • Life stage: People should plan the sum insured of their health insurance plan based on their life stage i.e. are they about to get married, are they planning a kid etc. 
  • No. of dependents in the family: The higher the no. of dependents, the more should be the sum insured in a health insurance policy. A lot of people think that a health insurance policy should only be there for the chief wage earner of the family but that is a misconception. Insuring all the members of the family under a health insurance policy is a wiser way to protect your family against future financial risks related to high medical costs. 
  • Health conditions: If there is a hereditary disease in the family or a common health condition rising in the city where the person lives, it is even more important first, to have a continuing health insurance policy and, secondly, to have a sum insured large enough to cover the insured in case of hospitalization or treatment.
  • Lifestyle: This is a highly ignored but an important aspect to be looked at in today's day and age from a health insurance plan point of view. Imagine this: a person living in a metro, toiling with traffic then with office stress and a sendentary lifestyle is at a higher risk of falling ill than a person who is in a non-polluted town, probably owning a yoga centre. While life is not always in extremes, you get the point, don't you?

Only after factoring all of these should you select a Sum Insured that can adequately cover you and help you in tough times.

With a corporate plan, that is usually not the case – it can leave you high and dry when you have left the job or are on a sabbatical.

The moment you leave your job, your corporate health insurance plan ceases to protect you. If anything unfortunate happens by the time you join your new company, you are left vulnerable.

So, it is advisable to take a personal health insurance plan in parallel even if you have a corporate plan. Or at least have a top up plan, so when the base cover ceases to cover you, the top up plan still has your back.

Is it enough to take a health insurance plan for tax savings?

We know how crucial the months of January, February and March are. They're the months when you try to maximise tax savings – a health insurance plan is bought hurriedly at this time.

But the mistake that people usually make is that they take a plan that fits only one requirement: to fill the gap in their tax saving calculations - another time when people do not select their Sum Insured wisely!

Taking a health insurance policy only for tax savings is not only pointless but also not useful during emergencies – especially, in situations where hospitalisation cost exceeds what you can otherwise manage. So, instead of just looking at it as a tax saving instrument, we should look at it as a cover for emergencies because, sometimes, our savings alone might not suffice.

What are the benefits I should look at?

It is always advisable to look for a comprehensive health insurance plan which has benefits tailored to your needs. Evaluate benefits based on your life stage and family phase, and what is apt for you at that phase and the comparative cost of one vs. the other.

For instance, an annual health check-up is hygiene for any health insurance policy. But if a policy doesn’t have it, we shouldn’t take it out of our selection list entirely. We should see if it has other benefits that might be more relevant in terms of cost, like an OPD cover.

To sum it up, you should choose a plan that has benefits relevant to your needs and not get swayed by just the frill benefits.

Should I take a floater policy or an individual policy?

An individual policy is definitely a winner, as it provides greater coverage and benefits. However, a floater policy can be taken depending on the family structure. If you want to cover your 5-year-old kid, then a floater policy makes more sense than buying an individual health policy. However, if you want to buy health insurance for your spouse, then a floater policy might not be enough for the both of you.

Let us explain this with an example. Suppose you and your spouse have a cover of 5 lakhs for your health insurance. Unfortunately, your spouse falls sick and utilises the entire 5 lakhs as claim. You will be left unprotected for the rest of the policy year.

In such cases, also having a restoration benefit in your health insurance policy is beneficial. A restoration benefit refills your Sum Insured once you exhaust it in a year. So, even if you claim your entire sum insured once, you or your family will not be left with a cover.

Also, for parents, it is always better to take an individual policy and not include them in your floater policy, as they would have pre-existing diseases and require a higher claim owing to their age.

Which health insurer should I go ahead with?

We know you are flooded with options when you search for health insurance plans online. You do your research, check ratings and reviews, talk to people who have already taken insurance, and then make an informed choice.

Our advice? To prevent sounding biased, we will try to be as factual as possible.

To objectively assess a health insurer, check how easy their claim process is, how seamless their service is, how many network hospitals they have, who their third party is for tests and cashless services, and how simple their documentation is. You can make a dummy call to their customer care number to get a feel of their processes. If the process is not easy and simple or the documentation not hassle-free, you will experience stress at the moment of truth, come claim time!

Here are some more common questions that come to people's minds regarding their health insurance policy.

Why do I need a health insurance policy?

Life doesn’t always go as per plan, you don’t plan to get unwell or hospitalized. But the whole point of having a health insurance policy is to protect you
in these times.

  • Health insurance policy protects your savings against unplanned medical costs.
  • Health insurance policy comes to your rescue in case of an illness or accident.
  • Your health insurance policy may also have benefits like a free annual health check-up, OPD (out-patient department) cover, day-care treatment etc., which don’t even need hospitalization.
  • If you start a health insurance policy at a young age, the insurance premiums are lower and you cross the waiting period while you are still in good health.
  • If you have taken a health insurance policy for your family, you secure them against unfortunate times and your savings against a big dent.

Is it mandatory to buy a Health Insurance Policy in India?

No, it is not mandatory by law to buy a health insurance plan in India. But it is important to buy one as the medical costs in India are on the rise each year and a health insurance policy protects you against them in case of an unexpected illness or accident. 

What are the common types of health insurance plans and benefits in India?

1. Family floater or Individual plan 

2. Senior citizen plans

3. Pre-existing disease cover plans

4. Critical illness plans 

5. Maternity benefit

6. Daily hospital cash benefit

7. OPD Benefit 

8. AYUSH Benefit 

How to choose the Best Health Insurance Plans for my family?

What are the Health Insurance Tax benefits under Section 80D?

The government encourages people to secure their health which is why under the Section 80D of the Income Tax Act, you can be eligible for some tax exemptions. Time to wrap your head around some common things you should know:

  • If you buy a health insurance policy for yourself, your spouse, your children and parents, you are eligible for a tax exemption under Section 80D of Income Tax Act of up to 25,000.
  • If your parents are above the age of 80 years and they don’t have a health insurance policy, even then you get a tax exemption of the expenditure towards their treatment or checkups.
  • If the taxpayer is a senior citizen, the exemption limit is increased to 30,000 (50,000 from A.Y. 2019-20) from 25,000.
  • The tax exemption on the premium payment for the health insurance policy is only valid if the payment is done by cheque or electronically, not by cash.
  • You cannot claim tax exemption for the premium paid by your employer under the group health insurance policy of the employer.
  • You cannot claim tax exemption for the service tax paid on the premium of the health insurance policy.

Phew, that was a long article right? We know, but there’s so much to uncover about health insurance, we couldn’t keep it short.

Our health insurance plans are taking shape and we are adding last minute touches to present to you the best we can. Do drop your suggestions on what else we can do at hello@godigit.com. Rest assured, we will try our best to make them a part of our Health Insurance plans.

Now that we know how many breaths we take every day, how many do you think are the ones that count? Food for thought!

Team Digit

Digit is a General Insurance company on a mission to Make Insurance Simple for people. We are backed by Fairfax, one of the largest insurance companies in the world.

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