Today there is an increased awareness about healthcare costs and mediclaim insurance that helps mitigate the risk of such costs. One question for the first time buyer is whether to take individual insurance polices for each family member or a family floater policy.

Before we look at the pros and cons of each type let us quickly look at what each of these policies mean. An individual policy means a separate policy for each of the family members. That means if in a family of 3 members, each of the family member is covered for Rs. 2,00,000/- and the hospitalization expenses for a particular.  member is Rs. 3,00,000/- then only Rs. 2,00,000/- will be reimbursed. In contrast in a family floater plan the limit can be utilized by any of the family member. If the same family takes a family floater plan for Rs. 4,00,000 then under similar circumstances the full amount of Rs. 3,00,000 will be fully reimbursed. So in many ways the family floater plan offers flexibility in terms of utilizing the overall insurance coverage among the family as a group. This would seem to indicate that a floater plan is always more beneficial for a family. However there are several other considerations that need to be taken into account before taking this decision. We have used some examples to understand this better.

Given below is a table for the cost of an individual insurance policy for 2 typical families from Star Health (This company has been chosen at random since it offers both Individual policies and Family Floater policies and has very similar policy wordings for both individuals as well as family floater policy and hence any comparison will be on a like to like basis).

We then tried to find out the value of a family floater policy that they will get for about the same amount of premium. And we found that the older family would be able to get a family floater plan for Rs. 4,00,000 at almost the same cost (Rs. 13,092 as compared to Rs. 13,106 for the individual policies). The younger family fares much better with a family floater policy of Rs. 5,00,000 available at a much lower cost (Rs. 6,998 instead of Rs. 7,776 for individual policies).

As you can see for the older family for the same amount of premium the family floater plan doubles the amount available for each family member (Rs. 4 lacs from Rs. 2 lacs) while halving the overall family cover (Rs. 4 lacs from Rs. 8 lacs). For the younger family the flexibility is increased dramatically (Rs. 5 lacs from Rs. 2 lacs) without a significant impact on the overall family cover (Rs. 5 lacs from Rs. 6 lacs) and with money saved to boot. The reason for this is not far to seek. The family floater plans are priced on the basis of the age of the senior most member and as he/she gets older the flexibility decreases and/or the cost increases significantly.

There are other disadvantages to a family floater policy as well. The policy will be renewed only till the senior most member reaches the maximum age of renewability allowed by that company. As it stands today, at that stage, the other family members will need to take a fresh policy without having the benefit of their claim history and pre-existing disease coverage that comes from continuous renewal of the policy. The same thing applies to children who reach the maximum age (normally 25 years in most cases) after which they will need to buy a separate policy for themselves without the benefit of the earlier continuous coverage that they have got under the family floater policy. Most policies also make no specific provision for continuing cover of the surviving members in case of the unfortunate death of the senior most member.

All in all since continuous coverage and claim history is critical in this category and currently there does not seem to be any stated basis for taking these with you when you are forced out of a family floater plan we would strongly recommend taking individual policies for the whole family.

It’s that time of the year again when wishes are horses (well almost). Imagination (and hope) runs high . Well here is my wishlist for Mr. Mukherjee.

http://www.apnaloan.com/prebudget-wishlist.html

Health care costs for hospitalization in India have risen sharply in recent years in tandem with global trends. Many a family has seen their financial planning go for a complete toss due to unexpected costs on hospitalization of a family member. Also due to increasing exposure to media there is a far bigger consciousness about medical insurance. In fact the biggest question asked to us by first time mediclaim buyers is which is the cheapest mediclaim policy?

Unfortunately if this is the only parameter used by a consumer he is likely to end up making a wrong choice. An example will illustrate this point:

If you have diabetes, would you (all other things being the same) rather buy a mediclaim policy that may be a little more expensive but will immediately cover the hospitalization expenses arising from complications connected with this disease (heart problems, kidney or eye problems associated with diabetes) without considering them as pre-existing disease rather than a comparatively cheaper policy which treats all such diseases as pre-existing and hence not immediately coverable.

The following paragraphs lays down the broad parameters apart from premium which you must compare before you buy:

1) Pre-existing disease: This is probably the most important parameter. The relevance is because if a disease is treated as pre-existing then the policy normally provides no coverage or very restricted coverage for expenditure incurred due to that disease in the immediate future. The various things to be considered under this head are

a. Definition of Pre-existing disease: Most policies provide that any disease that was present at any time in the past (including any disease which the insured person may not have been aware of) is treated as pre-existing. But some have a narrower definition, which may extend to only diseases for which the insured person had sought consultation for or was treated for or he was aware of during say the last 4 years. The narrower the definition the better it is for the consumer

b. After how many years of continuous coverage by the company will the pre-existing disease get covered: This is important as after the expiry of the cooling off period even pre-existing diseases get covered. A fine point is to find out if the company you are considering allows your track record of continuous coverage from another insurance company for the purpose of calculating this cooling off period or insists only on continuous coverage with itself for this purpose.

c. Special dispensation for diabetes/hypertension: Diabetes and hypertension have acquired epidemic status in India with one estimate putting the figure at around 5% of India’s population. Also a host of illnesses/diseases such as heart disease, kidney failure, paralysis, stroke, eye problems can trace their root cause to either diabetes or hypertension or both. Since the definition of pre-existing illness includes any complications arising there from, this has been a major reason for disputes between the mediclaim providers and the consumers in the past. Now some insurers provide immediate coverage for at least complications arising from this (ese) disease(s) even though expenses on treating the main disease itself may not be covered. If you already have diabetes/hyper tension then this is a vital consideration for you. Off course it comes at an additional cost and may also involve pre-acceptance medical tests. All these factors need to be taken into account before taking a decision.

2) Sub- limits: Sub limits mean where the overall coverage is broken down into the maximum payable for a particular kind of expense. For eg. A few insurance companies now provide that room rent cannot exceed 1% of the covered amount or that doctors/consultants fees cannot exceed 20 or 25% of the covered amount. Whilst most of these sub-limits are reasonable it is better to take a decision after being aware of them.

3) Co-Pay requirements: Quite a few companies now require that the insured bear a certain percentage of the eligible expenses either unconditionally or under certain conditions. This is called a co-pay requirement. Some companies provide a discount in premium if you agree to co-pay. Some others might want a co-pay if you choose to get treated in a non network hospital or others may have a co-pay for choosing a single air conditioned room or for getting treated in a hospital in a higher cost city. The co-pay feature is built in to ensure that the insured chooses the appropriate hospital/room/doctor level relevant to his economic status and also watches the reasonableness of the charges levied by the hospital to ensure that there is no overspend or overcharge just because of the existence of the mediclaim policy. Again there is nothing inherently unfair about this provision as long as you take a conscious decision after being aware of it.

4) Specific Exclusions: Almost all policies have general exclusions such as costs incurred for Aids/Sexually transmitted diseases or congenital diseases, etc. However some policies have specific exclusions that may be relevant to you.

5) Maximum Coverage Amount: This is important, as a particular policy that suits you may not be available for the amount of coverage that you seek.

6) Maximum age at entry: This is relevant for senior citizens as quite a few policies may not be available to them.

7) Renewability upto what age: This is relevant for senior citizens as well as people in their 50s since they need to be able to enjoy the benefit of their track record

This is not a comprehensive list of parameters by far. Each policy may have specific positive or negative features that may be relevant to you such as restricted coverage for angioplasties or certain other kind of treatments or features such as free diagnostic tests offered after a certain number of claim free years, etc.

Now presumably it is far clearer why you need to study the policy features rather than just buy the cheapest policy available. The parameters listed have been summarized in the accompanying table.

In the next article in this series I will cover the debate on whether to go in for individual policies or for a family floater policy.

So best of luck with your hunt for the most suitable mediclaim policy.

None of the Indian hospital expenses reimbursement policies (popularly known as “mediclaim”) cover expenses incurred on diseases/illnesses caused due to HIV/AIDs or any other sexually transmitted disease. This piece looks at some of the reasons why …..

http://www.apnainsurance.com/health-insurance-india/no-sex-please-health-insurance-aids.html

Watching cricket has professional spin offs as well. Just saw an advertisement from the Bajaj Allianz Insurance group (it has both life as well as non life insurance products). The advertisement feature a youngish couple engaging in white water kayaking as well as other sports which, in my dictionary, can only be classified as adventure sports. The advertisement story line is that the couple is so relaxed because they have chosen to protect themselves through the various policies of the group that they can afford to engage in these pursuits. So what is so exceptional about this advertisement that i am writing this blog entry?

The point is that most health and accident policies exclude claims arising from injuries/accidents caused while engaging in adventure sports. Most consumers are not even aware of such exclusions. now if somebody watched this advertisement and bought a policy from them and a claim arose because he followed the lifestyle that the advertisement featured  would the Insurance company be justified in rejecting that claim ?

I invite your views on this. For the Apnateam members - could somebody please do the research on their policies to see if white water kayaking is covered in their accident and health insurance policies ?