In this article, we answer some questions on health insurance asked by listeners of the “Let’s Get Rich with Pattu” podcast. These are also FAQs that we receive from time to time from our readers.
Q: This concerns the medical Insurance episode on Let’s Get Rich with Pattu. I’m a private sector employee and have a bunch of questions around this:
1. I already have group insurance from my employee. Do I need private health insurance as well? What are the pros and cons of it?
A: Most definitely! Unless your job is permanent, you need private health coverage. We have heard of cases where people have got hospitalization in the two weeks’ time between jobs and had to pay all costs out of pocket. Don’t take that risk! It can set you back severely!
2. Is only hospitalisation covered under insurance? Can I claim if I go to the doctor for a cold, cough, stomach issue, etc.? Can I claim medicines? Will this impact my premium(impact under both personal and group insurance)?
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A: Health insurance is only for hospitalization. Pre- and post-hospitalization expenses like doctor fees and medicines are covered. Some policies cover OPD charges but are not worth the extra premium.
3. We know the earlier you buy life Insurance, the less premium you would have to pay. Is it the same with health insurance? I heard from someone saying irrespective of when you start, you’ll have to pay the same premium. So it does not matter if I start today or after ten years; I’ll pay the same premium after ten years.
A: This is as false as it can get! The premium on purchase and future premiums depend on age, health conditions and the insurer’s profitability.
4. Let’s say I leave a company. Can I carry forward the group insurance? Or convert it to private insurance?
A: Carrying forward is impossible. Converting to private insurance is, in principle, possible but can come with restrictions. Also, see Group Insurance Portability to Individual health insurance cover.
5. Let’s say, for some reason, my insurer increases my premium. Can I switch to some other insurer with less premium? How hard would that be?
A: Portability is possible, but the new insurer may not accept your application or load your premium higher than what you paid earlier! One should apply at least 45 days before the renewal date. Also, see Health Insurance Portability: What you need to know before porting.
6. Should or can I have multiple health insurance? How should I plan it? What would be the pros and cons of it?
A: You can. There is no advantage per se in doing so unless your old policy has limitations, but you do not want to port (also see below). A base plus super-top-up combination would be more useful. See: What is the best way to combine base and super top-up health insurance policies?
7. Is it better to have separate health insurance for each family member? Or a group insurance for all?
A: A large floater cover for all healthy family members is good enough. Those above 50 can be covered separately.
8. Will my premium increase every time I claim? If yes, shouldn’t I periodically switch my insurer?
A: Claim-based loading or premiums is prohibited. However, insurers would find ways to increase premiums from time to time, as mentioned above. Switching once or twice makes sense, but not beyond that, as all insurers will hike premiums. Some policies are designed to cost more each year!
9. Is there group medical insurance outside of private companies? Like group insurance for the whole society or some similar-minded people coming together for group medical insurance?
A: One cannot form a group to buy group insurance. Even for existing societies, group insurance is not practical. The cost will not be low unless there are thousands of employees. Change in management can result in a change in terms of procuring the policies. Group insurance is also getting expensive and restrictive due to many claims paid out. It is not a practical option unless there is an employer involved.
10. Which health insurance do you have?
A: Disclaimer: I purchased this policy when I knew nothing about health insurance and have since continued it. This is not a recommendation to buy. We have a United India Policy covering myself, my wife and son and my mom since 2006. We have made five claims so far. We have gradually increased the sum insured, and currently, my wife, son and I have Rs. 25 Lakhs individual cover. My 76-year-old mom has a Rs. 6 lakh cover (hers could not be enhanced).
In addition, we have a super top-up from United, with a threshold of Rs. 5 lakhs and a cover of Rs. 95 lakhs. This is a floater cover among my wife, son and I. My mom has a separate super top-up of Rs. 15 lakhs with the same threshold (deductible). Also see: United India launches Super Top Up Policy with 95 lakhs sum insured.
Before United India changed its room rent sub-limits on its family Medicare policies – New features introduced in United India Insurance Family Medicare Policy – I wanted a second set of policies for my wife and son (I was not insurable anymore due to Myasthenia Gravis, an autoimmune condition and my mom was too old). So, I got a base cover from Future Generali and a super top-up from Liberty Insurance via plancover.com. See: Why we purchased a 2nd set of base & super top-up health insurance policies.
This combination of policies is hardly ideal and quite expensive. Why didn’t I port? Because I trust PSUs more than privates. The total premium is more than Rs. 1 lakh, but more than 50% is for my mom’s policies. Again, please buy a policy suitable for your needs. The above should not be viewed as a recommendation.
11. After having a policy for two years, if we declare a condition for the third year, will the waiting period exist for that condition?
A: If we renew the policy with the same sum insured, then declaring a condition that developed after policy inception should typically not change much. However, the insurer can deny an increase in the sum insured in future or even exclude that condition from the extra sum insured.
Say you had a policy for five years and in that five years developed an illness. In the sixth year, you wish to enhance the cover. The waiting period will apply to the condition for the enhanced cover alone. For example, suppose the waiting period for pre-existing conditions is two years, and you have increased the cover from Rs. 5 lakhs to Rs. 10 lakhs. The additional Rs. 5 lakhs will have a waiting period of two years.
So if you undergo hospitalization for that condition within two years of enhancing cover, the effective cover will only be Rs. 5 lakhs. After the waiting period, the full Rs. 10 lakh would be available.
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