Dear friends, today I want to discuss one of the most important aspects of personal finance, and probably the least understood aspect, it is health insurance. While it is very important to invest money for wealth creation, it is even more important to take health insurance. In fact, I always say that the first thing you should do when you get a job is taken your insurance, and then think about how to invest your money. Because when it comes to money management, it is very important to manage your risk. So just like when you drive a car, the first thing you need to do is wear a seatbelt. Likewise, when you start your financial journey, the first thing you need to do is health insurance. But in spite of that, many people do not take health insurance, or even if they take out insurance, it does not suffice their needs. For example, when you join a corporate job, many companies provide health insurance as a part of the benefits. But in many cases, those health plans are not enough. For example, one of my friends had health insurance from his employer, he had no idea about the terms and conditions of that health insurance. And one day, he made an accident and needed health insurance to cover his medical expenses. But unfortunately, his medical plan had a clause that the health insurance will only cover 80% cost; So he ended up paying 20% money from his own pocket hospital bill was around 1.5 lakh rupee, and he ended up paying 20% of that, which is around 30,000 rupees, now rupees 30,000 is a significant amount. And if he had the right medical plan, he could have saved that money. Likewise, there are many cases where people do not have any idea about the important features of their medical insurance. So in this article, I want to bust some common myths around health insurance and discuss some key features that you should have in your health insurance. All right, let's get started.
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Myth 1- I am young and fit, I don't need a health insurance
One big mistake people make with health insurance is the delay, they think that they are young, so they don't need health insurance. Once they get older, they will buy health insurance.
Reality
Please don't make this mistake. First of all, even if you're young, you can end up with medical expenses due to accidents. And if you don't have health insurance, then it will put a big dent in your pocket. And second, the right time to take health insurance is when you are young and fit. Because when you are young and disease free, you will end up paying a lower premium. Once you get old and catch the disease and then try to buy health insurance, then you will end up paying a very high premium. So make sure that you take health insurance as early as possible.
Myth 2- You will get complete reimbursement of the cost of treatment
Many people who have health insurance are under the wrong impression that since they have health insurance, it will take care of all their medical costs.
Reality
Well, it might not be true in many cases. In many cases, the health insurance policy has a clause where they have a cap for hospital room charges, depending upon the total sum insured, and the excess amount needs to be borne by the person. For example, let's say your health insurance policy has a room rent capping of Rs 2500. In that case, if you ended up taking a room costing more than Rs 2500, you will have to pay the money out of your own pocket, then many health insurance policies have a co-payment clause where they mentioned that the insurer would be or let's say 80% of the cost and remaining 20% has to be borne by the patient. In fact, the majority of group health insurance policies taken by employers for their employees have such a clause. So if you have health insurance coverage from your employer, then make sure that it doesn't have a co-payment clause. So that in case of need your health insurance policy, take care of 100% of your hospital expenses. Then there are some limits for other expenses, like your medicine or ambulance or diagnostics, test, etc, which may fall under partial reimbursement. And those small expenses can also cost you a lot. So make sure that you have complete knowledge of the cost parameters of your health insurance.
Myth 3- You can claim health insurance cover from day 1
Many people think that the day they purchase health insurance, they are covered with all sorts of diseases and medical expenses associated with the diseases.
Reality
This is a big myth. Every health insurance policy has a waiting period for certain types of diseases and this waiting period might be from 6 months to 3 years. For example, let's say you have diabetes, and you take health insurance. Now there are chances that you need to wait for 6 months up to 3 years for the waiting period to get over for the cost of treatment related to diabetes. And let's say your health insurance policy has a 1 year waiting period on diabetes and you end up with medical expenses for treatment of diabetes within 1 year, then the health insurer won't cover the cost. So make sure that your insurance policy has a limited waiting period for critical diseases.
Myth 4- At least 24 hours of hospitalization is mandatory for insurance claims
The general rule of thumb and health insurance is that to make a claim, you need to be admitted to the hospital for at least 24 hours, and if your treatment doesn't require a 24-hour hospitalization, then you cannot make that claim.
Reality
There are certain exceptions to this basic rule of thumb, and that is something which is covered under a section called 'Day Care Procedures'. Essentially, due to medical advances, there are treatments that earlier required 24 hours of hospitalization but today no more require that to be done. You know, a simple example, which all of us understand is probably a cataract operation earlier, you needed to be admitted it was a slightly longer procedure. Today, you can actually go in the morning and come back in the evening without really a hospitalization happening for this treatment or operation. So daycare procedures have a list of diseases with the health insurance plan covers which don't require a 24-hour hospitalization; almost all insurance companies and their plans have 100 plus a list of surgeries or treatments under which the daycare procedures are covered and hence the claim has been owned. So this list is quite exhaustive. As I said, it's 100 plus in most insurance companies. So you should refer to a document called the policy wordings of your policy and there will list will be very specifically mentioned. So if any of those treatments are being taken, then you can actually make a claim even if there is no hospitalization for 24 hours. But please bear in mind that you should go to a proper hospital are not go to some random clinic because insurance companies have certain criteria that the Treatment Treatment should have been done in a good hospital with an "X" number of beds, with facilities which are there for actually treating the particular illness. So before you go for this daycare procedure, please ensure that you contact the health insurance company and take their approval so that your claim is much smoother.
Myth 5- Employer-provided health insurance will be sufficient for your needs
I think this is again, a big myth among people who get health insurance from their employer. Complete dependence on health insurance provided by an employer can be fatal. First of all, as we discussed before, the majority of health insurance policies from employers have a co-payment clause where you end up paying a fixed amount from your own pocket; then many health insurance policies from employers might not be sufficient to cover both of you and your family.
Reality
There may be a case where the health insurance provided by your employer has a health coverage of Rs 2-3 lakhs, but you have some health issue and ended up requiring rupees Rs 5 lakhs in that case. Then you have to pay an additional amount from your own pocket, or your health insurance from your employer might not cover various critical illnesses, it might not have the best hospitals in the network and there could be many more reasons. And the biggest challenge with employer-provided health insurance is that the moment you change your job, you will lose your health insurance policy and if anything happens during that period, then you will end up paying the entire expense from your own pocket. Now, what can be the solution to this problem? The solution is that...
- You get a separate health insurance apart from your employer's health insurance.
- If your employer's health insurance is not enough, then you can consider taking a super top-up health plan;
Which is more economical and cost-efficient. It is because generally, the health insurance plans do not provide enough health coverage, especially the corporate health insurance plan from your existing employer does not suffice the requirement, or if you are a senior citizen, then you might need a large health cover which your existing health plan might not provide. As we discussed before, if you have a health cover of lets Rs 3 lakh and you end up with a medical expense of Rs 5 lakh then you will end up paying Rs 2 lakh from your own pocket, but if you opt for a super top-up health plan then it will take care of your additional expenses. For example, let's say you have health insurance of Rs 3 lakh and you take a super top-up plan for Rs 10 lakh so that In case if you break your Rs 3 lakh limit, you can claim the additional expenses from your super top-up plan. It is especially beneficial for corporate employees and those who have a health insurance plan with a very low sum assured. There are a lot of super top-up plans available in the market. For example, NaVi has launched Navi Smart Health Super top-up plan that provides you the additional coverage after your medical costs exceed the threshold limit. With this super top-up plan, you can get a large health cover at a very low premium. So this super top-up plan from NaVi can use for senior citizens that might need a large health cover over and above the existing health plan. It can also be useful if you are a corporate employee, where your existing employer's health plan does not suffice the requirement or if you have a health plan, but it has a very low sum assured.
Myth 6- You don't need to disclose your medical history.
I have come across many cases where the medical claim was rejected by the health insurance company. Now in such cases, we generally tend to blame the health insurance provider. But in the majority of cases, it is the mistake of people who have taken the health insurance. While opting for a health insurance plan, we have to fill few forms, and one of the biggest mistakes people make is that do not disclose their past health records. And this is one of the biggest reasons for the rejection of health claims.
Reality
So make sure that when you take the health insurance, you disclose your medical health track record, and do not hide any medical history. Some people try to hide their medical history to save some money on annual premiums. But that can be disastrous. Of course, you don't need to disclose the minute details like you had a fever 10 years ago, but make sure that you cover the major health record from the past and declare all the pre-existing diseases if any.
Myth 7- All benefits become void if insurance is renewed after the due date
It is first and foremost that you renew the policy every year before the due date and not break the continuity of the contract.
Reality
But, if due for any reason you fail to renew the policy, you can renew it within 30 days from the date of expiry of the policy. This allows you to retain all the benefits of the policy and you can continue with the coverage.
Conclusion
In this article, we'll discuss 7 common myths people have about health insurance. If I summarize, the 7 myths are...
- I'm young and fit and I don't need health insurance.
- You will get complete reimbursement of the cost of the treatment.
- You can claim health insurance cover from day 1.
- At least 24 hours of hospitalization is mandatory for insurance claims.
- Employer-provided health insurance will suffice your need.
- You don't need to disclose your medical history.
- All benefits become void if insurance is renewed after the due date
Dear friends, health insurance is one of the most important aspects of personal finance and considering the fact that the health care cost is rising at a fast rate. It is very important to not just have health insurance, but have the right health insurance because a few days of hospitalization can cost a few lakhs. I'm sure many of you would have experienced this during the COVID period, hence make sure that you have the right understanding of the key features of health insurance and make sure that you make a plan for your entire family. And also make sure that you also know which hospitals within your city are covered in your health insurance plan so that at a time of emergency, you would know which hospital to reach out to. Also, don't only look at the premiums as a parameter to select the health insurance. A lot of people think that the lower the health insurance premium better it is, but it is not the right approach because when you end up taking health insurance with a low premium; there are high chances that you won't get all the important features in your health insurance. And eventually, when you will need health insurance coverage, you will end up paying a lot of money out of your own pocket. So make sure that you do your research and select the right health insurance that fits your requirements. I hope you will find the article useful.
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