5 Common Mistakes To Avoid When Buying Health Insurance
Major illnesses or accidents that require hospitalization can significantly deplete an individual's finances
. Health Insurance protects you against rising healthcare costs and financial uncertainty associated with unforeseen hospitalisation due to accidents or illnesses. Here's a ready reckoner of common mistakes to avoid when buying health insurance products.
* Insuring yourself for less than you should: Costs for treatment of an illness requiring prolonged hospital care can sometimes be fairly expensive and due care should be taken while choosing the adequate amount of cover that you should insure for. Do not restrict your cover to the nominal amount that may be required to meet your tax exemption limits only.
The fact is that a major illness or accident requiring hospital care can significantly deplete a person's finances. Costs for the treatment of an illness requiring prolonged hospitalization can be sometimes be more than Rs. 10,00,000 in a top hospital. Due care should be given to planning for health insurance cover. In addition to personal circumstances, income, and pre-existing or family history, the key factor to consider is the potential health care costs that one should insure against. This will depend largely on the location and type of hospital in which care may be provided the cost of care varies hugely between a government hospital, a private nursing home and one of the larger "Category A" hospitals.
* Leaving it for too late: It is always better to start your coverage at an early age. With age the risk to our health only increases, consequently making insurance more expensive with age. What is also an important consideration is that most companies are now providing guaranteed renewals for life once you are issued a health insurance policy and you are most likely to 'get in' when young.
Another key factor is the existence of an exclusion period (generally 2-4 years) for certain illnesses or medical conditions. One could, most likely, see through this exclusion period without any complications in the early part of one's life and be covered for such conditions at a later stage.
* Making your decision based only on premiums: Premium comparison are a given but one should also compare some of the following features to assess the value for your money rather than only comparing absolute and standalone premium amounts.
Cashless hospitalisation: a facility in which a person can get the required treatment while the medical expenses are settled by the insurance company directly with the hospital if the hospital comes under its network. You may, therefore, also want to compare the associated network of hospitals of each insurer.
Cumulative Bonuses or Premium Discount: Some products carry incentives for 'claim free' years and offer either an increased Sum Assured for no extra cost or a reduced premium for your Sum Assured.
Exclusions: Do carefully review the exclusion list of each product. Needless to say, for the same amount of cost you would want to go for the product that has the least number of exclusions. Alternately, you may want to be covered for a specific medical condition which may actually be excluded in a given product.
Maximum age of Renewal: This is the age to which the company would continue to provide you with health insurance on payment of premiums. You may want to go for a product with a higher maximum age of renewal.
Other benefits: You may also want to compare certain other benefits such as Ambulance charges, coverage for day care procedures (for which hospitalization is not required) etc.
* Not going in for a health insurance when covered by your employer: Your employer will cover your medical expenses only as long as you are in his services. Tomorrow, you may change your job, retire, or even start something on your own. In all such cases you and your family will be stranded if a medical emergency arises and you have not arranged for an alternative health insurance policy. . It can also act as a supplement to your existing medical cover in case the cost of medical treatment is higher than your existing cover level. Delaying the purchase of your personal health insurance will also lead to issues related to higher costs, exclusions and waiting periods etc.
* Not considering Critical Illness cover: Critical Illness or what was originally known as dreaded disease cover is an insurance that pays a benefit on the diagnosis of certain specified critical illnesses. The diseases covered under such plans vary from one company to another but most plans cover ailments such as heart attacks, cancer, bypass surgeries, kidney failure, organ transplants, multiple sclerosis etc. The very nature of some of these critical illnesses results in medical expenses that are way too high and can deplete your savings significantly.
The expenses associated with serious and life threatening ailments are not just restricted to hospitalisation. There could be financial needs associated with lifestyle changes required, continued treatment post hospitalisation as well as the reduction in or loss of regular income. Health insurance policies primarily cover medical and hospitalisation expenses only and do not usually cover post hospitalisation expenses beyond a certain number of days. Since the benefit under a Critical Illness policy is paid out as a lumpsum amount, it gives you the flexibility to manage these additional requirements without having your savings significantly depleted.
The best combination, in fact would be to buy a health insurance policy and top it up with a critical illness plan. This helps you meet your hospitalisation expenses for both critical illnesses or even other diseases/accidents through the health policy and can provide you with a meaningful financial protection you may require in case of a critical illness.
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