How to shortlist the right health insurance

For a new health insurance buyer or even for existing policyholders looking to add another health insurance policy, the abundance of choice is more of a distraction than empowering.

There are different price points, add-ons and riders, apart from top-ups, within the menu of a single insurer. For example, there are at least 7-8 variants of Care, Niva or Aditya Birla Health insurance, for policyholders to choose from. This is further compounded by at least 10 insurers in the marketplace, each with such diverse variants. From a few limited insurers offering a standardised product, the policyholder is now clearly overburdened with choice.

A systematic approach is the need of the hour to navigate the insurance marketplace. The right insurance product for your needs, with an optimum functionality, can be found with a simplified yet systematic approach.

Focus on one need

Apart from covering basic medical coverage, health insurance variants can now cover shorter PED waiting (pre-existing disease), healthcare while in travel, OPD visits, disease-specific covers, or even wellness rewards for fitness and many more options.

As with every other financial investment, the policyholder should assess their needs, even before beginning the search. Policyholders can zero in on the basic need or two to be served and should anchor the search based on that. The policyholder can complement the basic need with other options, but the primary focus should be well-defined.

If the primary objective is disease-specific cover, Care Health’s Heart policy, Freedom from Diabetes, Star’s Comprehensive for high blood pressure, cancer policies from Aditya Birla are available.

For a young couple looking to start a family, Star’s Young Star Gold or Silver plans, Niva’s Aspire plan are available. For policyholder concerned about lowering the PED limit, IRDAI itself has reduced it to three years from four years for all new policies. Digit’s Super Care, Tata Medicare or ICICI Pru’s plan also have variants with three years or lower waiting period. Star’s PED Buyback policy can reduce it to 2-3 years as well.

Health insurance while on a travel schedule is covered with Tata AIG Medicare, Digit’s Worldwide Treatment or Reliance General Insurance plans.

If the primary focus is on covering OPD consultation costs, Manipal Cigna’s Prime Advatage, HDFC Ergo’s Optima Secure are good options.

By narrowing the field to three or four insurers specialising in the basic need (PED or OPD or disease-specific), the secondary options, coverage terms, and other factors can also be accommodated.

Coverage can be secondary

There are options that can relegate coverage and premium to second or even third priority in choice of a policy.

Within the base policy itself, NCB (No claim bonus) and restoration of cover can effectively augment even the basic ₹5-lakh policy to ₹15-35 lakhs in a span of 2-3 years. NCB bonus can add 50-100 per cent for every year that one doesn’t make a claim till coverage reaches 3x-7x times. New policies such as ICICI Pru’s Elevate insurance or Care’s Super Premium can do the same even with claims made in a year where unclaimed amount can be carried forward to next year.

Restoration benefit, which allows multiple claims in a year up to the claim limit, can effectively act as increased coverage amount in the rare case of needing health insurance twice or more times in a single year.

If NCB and restoration are part of the base policy to increase coverage, policyholders can now consider ₹1-crore policy itself, which is at a premium of 20-30 per cent to a normal ₹10-lakh policy. Also, policyholders can purchase top-up or super top-ups as a second line of defence. These externally purchased options complement the base policy by getting triggered once the base policy limit is breached.

Service levels

The litmus test of insurance is at the time of claims. Unfortunately, there is no metric that can quantitatively convey the claims service levels — the turnaround time in service, the number of queries raised in reimbursement cases or even basic claim service ratio. The industry boasts of a claim settlement ratio starting from 96 per cent to 99 per cent; a highly undifferentiated range that lends very little to real world application. Claim service ratio indicates the number of admitted claims that were served, but the number of claims not admitted due to lack of paperwork or misrepresentation or outside of coverage purview is not included in the ratio. This leaves the ratio incomplete to assess chances of getting a claim serviced.

Policyholders have to rely on word of mouth or their preference to the insurer providing the service to gain confidence. Fortunately, health insurance is mostly a yearly contract with possibility to port, retaining the gained benefits.