There is a lot of distress regarding health insurance policies. This is especially so during renewal time and more so for older people.
A friend just messaged that her hospitalisation premium for just ₹3 lakh sum insured had gone from about ₹20,000 to ₹35,000. Understandably, she just did not want to renew. And, there would be another increase in premium when she turned 70 in a few years.
She was, correctly, concluding that all her years of premium payment were a waste with such ghastly escalation edging her out of insurance coverage at an age when she needs it more.
Looking for alternatives
She is, thankfully in good health, normal coughs and colds are not anyway covered and her local primary health centre was a good place to seek medical treatment, she had found. What are her alternatives, she asked?
She could go without cover, I said. Savings will help. Government or community hospitals won’t wipe out your bank balance.
But even healthy people can be hospitalised. There are not only illnesses but surgeries, accidents….
I also told her, on a contrarian note, undoubtedly deepening her dissonance with insurance, that her ₹3 lakh sum insured was just not enough. I had to tell her about the distressing concept of sub-limits. About how she will be eligible only for a ₹3,000 room rent per day and how many hospitals practise what is termed differential billing, where they tag various expenses (like surgeons’ fees, various diagnostic and procedure charges etc.) to the category of room and all those expenses would also be paid only proportionately. I think her disillusionment was total by now.
Moment of disillusionment
My moment of disillusionment came soon after. The same agent of the same company had offered her options to migrate. One was a ₹10 lakh policy for about the same premium as her renewal but with a 10% co-pay (which means she pays that much of every claim).
Another option was a senior citizen policy, but only up to ₹5 lakh for a premium of just above ₹20,000 but with a 30% co-pay. Why were the options lower priced, never mind the co-pay?
Escalating premium
The steep increase in her renewal premium was by itself mystifying. And the question that comes up is, where will this end? In the next three or three decades of her life, how is this premium escalation even affordable?
Leaving my good friend pondering a question worthy of King Solomon, I came away to write this instalment of Cover Note.
I will update you on how it went and also tell you about another senior citizen friend and how she grappled with her renewal.
(The writer is a business journalist specialising in insurance & corporate history)