The Emergency Code: How to choose a health insurance

The Emergency Code: How to choose a health insurance

With the number of claim rejections by insurance companies on the rise, a 360 degree view before purchasing a medical policy is always recommended.

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As medical inflation is far higher than general inflation on account of rising hospital and medical equipment expenses, it is imperative that everyone must have a comprehensive health insurance covering all family members against major diseases.

Till a few years back, OPD (out patient department) expenses, pre-existing diseases and critical illnesses like cancer and heart ailments, among others, were not covered by health insurance policies. The scenario has changed.

With increasing competition, owing to a steady rise in number of players in the sector, now even pre- and post-hospitalisation expenses (including maternity expenses) and overseas treatments have come under the insurance net. And the scope is only expanding.

As medical inflation, at around 15 per cent, is far higher than general inflation on account of rising hospital and medical equipment expenses, it is imperative that everyone must have a comprehensive health insurance covering all family members against major diseases.


“Medical inflation is growing at 15-20 per cent because of the rising cost and medical advancements and hence customers should look to revisit their overall cover after every three years as the treatment expenses may double in four years,” said Rakesh Jain, CEO, Reliance General Insurance. He further added that while no-claim bonus may provide cover against medical inflation to an extent, a claim may bring down the overall protection cover and hence a review is needed.


With the number of claim rejections by insurance companies on the rise, it is important to ensure beforehand that the policy being taken covers against a host of medical issues.

While several insurance firms are currently offering products ranging from covering basic ailments to international cashless treatment policies, it is needless to say that higher the premium, the more comprehensive is the cover. Experts, however, point out that individuals must ideally go for a comprehensive health insurance policy that covers OPD, hospitalisation, pre- and post-hospitalisation expenses for the entire family.

Choosing a Policy

Comprehensive cover

Even if an employer provides health insurance under a group insurance plan, individuals must ideally have their own health insurance that covers the entire family. Experts say that only if the company gives the option to transfer the policy after an employee quits the firm, one should consider not having a separate policy. Also, a comparison of various available policies across companies is a necessity.

Critical illness

Most of the comprehensive policies cover critical illnesses and hence it is not required to go for an additional policy. “It is better to take a comprehensive plan and then top it up with an accidental insurance which costs very less and these can take care of almost all the issues,” said Surya Bhatia, a Delhi-based financial planner. Experts say that only if there is a family history of a particular disease, one should go for a critical illness cover separately.

Family floater

It is better to bank on a plan that provides the benefit of family floater where the bulk of the cover can even be utilised by one person in the family. In policies without family floater, a Rs 10 lakh policy is split equally among the family members covered. So, for a family of four, each individual will have a cover of Rs 2.5 lakh. However, in case of floater the cover is not equally divided among the family members.

Restore benefit

This feature allows an individual to reinstate the basic sum insured, in case he has already exhausted the basic sum insured and multiplier benefit during the policy year. Market experts, however, say that the restore benefit is not available on the same ailment where the limit was already exhausted.


While the third-party administrator (TPA) is supposed to act as a facilitator at the hospital, experts say that many times they raise unnecessary queries which delay the entire process. It is always better to purchase a policy of an insurer who has in-house settlement desks rather than doing it through a TPA, as it also expedites the entire process.

No-claim bonus

Generally, if there is a year where the individual has not made any claims against his policy, there is a no-claim bonus provided by the insurer. Experts say that one should check on the quantum of no-claim bonuses as they range from 5 per cent to as high as one-third of a basic cover. A high no-claim bonus may cover you against the medical inflation on its own.

Waiting-period for pre-existing diseases

If you have a pre-existing disease then your insurer will not provide you cover against it at the time of buying the policy. Depending upon an insurer, the pre-existing disease gets covered at least after two years. While some allow it after two years, others may take four years to do so.

Policy portability

Portability is allowed among health insurance companies and one can move a policy to another insurer if he is unsatisfied with the services of the current firm. Experts say that consumers should use the facility to their advantage. “It allows you to carry the benefits (such as no claim bonus) accrued over the period with the previous insurer to the new insurer. The premiums, however, may vary depending upon the features of the new policy,” said Vishal Dhawan, founder, Plan Ahead Wealth Advisors. Experts also say that portability should be planned and be done at least two months before renewal of a policy.

Annual free check-up

While several health insurers provide the annual free health check ups, experts say that it comes at a cost and the price is always embedded. Therefore, only who are keen on getting annual health check-ups should only go for it. It is also important to see if an insurance policy that is renewed every year covers for one’s entire life because the longevity is increasing with improving medical technology. While many policies cover you for your entire life, there are some that only cover till 75-80 years.

Day-care & maternity

A number of policies now provide cover against several day-care procedures in hospitals that does not require overnight stay. One must look at the number of procedures covered that does not require overnight hospitalisation. Also, if one is planning a baby, he should ensure that the maternity expenses are covered by the policy. Experts feel that maternity is not a contingency and if someone is not planning for a baby, he/she should not look for it as the price gets embedded in the premium.

The premium


It is important to start early so that one can save a lot on the premium amount over the term of the policy. For an individual between 21 and 25 years, a Rs 10 lakh cover comes at an average premium of around Rs 10,000- 12,000 per annum. However, for a 35-year-old, the premium jumps to around Rs 15,000-18,000. While all these features can make a policy stand out and make one deal with any medical contingencies, it is important that the cover is adequate. Experts say that to start with, a family should go for a basic cover of around Rs 10 lakh as most medical issues can be treated within that limit.