How I selected a health insurance policy

Published: December 25, 2017 at 8:57 am

In this post, Niten Kapoor discusses how he selected a health insurance policy. In my previous article on health insurance, I had invited readers to compare policies as guest posts. Niten agreed to write about how he compared policies and selected one. This is part of Re-assemble – a series on the basics of money management aimed at young earner. Here is a brief summary of all Re-assemble posts.

₹e-Assemble: a recap of the steps

Many of you may be on vacation this week. Now would be a perfect time to work on these steps.

₹e-assemble by is a series on the basics of money management for yougn earnersStep 1: Listing your goals dreams and nightmares

Step 2: Lay the Foundations to Get Rich creating an emergency fund

Step 3: How to buy Term Life Insurance

Step 4: How to choose a suitable health insurance policy

* Apollo Munich Optima Restore Benefit vs Max Bupa Re-fill Benefit 

* Star Health Comprehensive Insurance vs Religare Care Comprehensive Insurance

Building a health insurance comparison chart + Cigna TTK vs Royal Sundaram Health Policies

*  How to buy a Super Top-up Health Insurance policy

* This post: an example of a selection.

* coming soon: how to build a medical corpus

Step 5: How to select a credit card for maximum benefit

Step 6: How to track monthly expenses and manage them efficiently

Step 7:  How to close your loans and live debt-free

Step 8: Coming soon: choosing accident insurance

Step 9,10 etc. : Coming soon:  Starting investing and portfolio management with examples from readers.

The coming year, I would like to post more reader stories – how they manage money, how they choose products. This is always an interesting read and it can inspire others to act. Here are some reader stories from the past:

Reader Story: Arise, Awake and DIY!

Reader Story: A Force Awakens!

Reader Story: Are you sure you can be a DIY investor?

I would urge true DIY investors to open up and share their money management styles here. Please contact me first – freefincal [at] – discuss the outline and then write! 

Now over to Niten.

Before I start with the post, I would like to thank Pattu Sir for giving an amateur like me the opportunity to write an article on his blog. This is my first blog post and I would request the readers to provide me feedback so that I can improve.

About Me – I am a software engineer, based out of Gurgaon, temporarily residing in the US for an assignment.

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As with buying any product, selecting the right one and with good value for money, you need to understand the product. Similarly, you can buy the right Health Insurance plan if you know what parameters and features you are looking for in the product and understand the policy documents. The question is what should be my selection criteria? This varies from individual to individual and you need to identify what parameters are most important before finalizing the product.Below I am outlining some factors that I considered while selecting health insurance for myself.

After doing some research reading online articles and blogs, I got some basic knowledge about what a health insurance is and the need for the same. I had a pretty decent corporate coverage from my employer but still wanted a personal one in case I would switch jobs. You could refer to this article Should I buy personal health insurance if I have company health cover?

What are the parameters one should consider before buying health insurance

You can consider below parameters as a broader outline and add if any that are not in the listed while making the final selection.

  • Individual or Family Floater – Decide which type of health insurance you want. Having an individual health insurance is beneficiary as each member has a separate cover to use. However, there is a cost factor associated, as the premium would be high for each individual. It is suggested that parents should be kept separate from your health policy as the premium would be decided on the basis of the parent’s age and not on yours.
  • Co-Pay – This is the percentage amount you have to pay from your pocket when the claim is approved. So say for a co pay of 20%, for every 10,000 claim amount approved you need to pay 2000 out of your pocket. (Please note you still need to pay for non-covered items such as disposables from your pocket. This is irrespective of whether you have co-pay or not.)
  • Room rent sub-limit – This is the limit that insurance companies impose for processing your claim. Remember that room rent limit is not only limited to rent of the room but also hospitals vary the cost of doctor charges, operation charges etc. based on this limit. So the cost of the same procedure will vary depending on the room you have rented. In NCR region, this is a big factor as big hospitals have higher rent, so your insurance may cover only the partial cost if the room rent limit exists. For other people, find out average room rents in your area to arrive at a figure that is comfortable.
  • Availability of hospitals – You can get this by entering the zip code where you stay and see if your preferred hospitals are catered by the insurance plans. This makes the claim process fast and easy. One important factor, most of smaller towns in India are not equipped to handle complex medical cases. In such cases, patients are referred to nearby bigger towns for treatment. You can consider this for additional analysis to see what kind of insurance plan you need.
  • Premium Amount – See the combination of the amount of coverage and features you want in the insurance plan to decide how much premium you can afford.
  • Age till which coverage available – Though a long-term aspect, but people in late 40’s and 50’s can be impacted by this factor.

Finally, read the policy document before finalizing the product and do not rely on comparison portals to give the correct information. At the end of the article, I will highlight some of the carefully worded policy document terms which may spring a surprise while buying the policy or making a claim.

Some trivial or features that I ignored:-

  1. Dental coverage (more suited for western plans, in India still dental costs are not sky high)
  2. How the claim is processed (Third party or in-house)
  3. Maternity benefits, OPD, Eyeglasses coverage, Ambulance charges, vaccination expenses, alternative to allopathic treatments coverage – (All these are either one-time charges or the amount is not huge to impact your selection)

My Selection Criteria for health insurance

I read articles on freefincal multiple times to get knowledge. Also, Asan Ideas for Wealth group on Facebook would have regular discussions about health insurance plans. All this made the foundation for selecting the policy. I used for comparison as it does not asks for a mobile number.

I was looking for an individual policy for myself. The premiums for PSU companies was less compared to private companies.The hospital coverage for Oriental was better in my area (32 hospitals v/s 23 by Max Bupa).   However for me having an insurance plan without a co-pay and room-rent limit was of most importance.

Oriental Health insurance or for that matter PSU companies could not satisfy both these parameters.I then looked at other options such as Apollo, Religare and Max Bupa. Another parameter I looked at was how the premium is increasing with age? This is just an indicative thing (and the insurance company can change at any time), but I did not want to lock into a provider where the premium suddenly increases with a particular age limit.

In Apollo Munich Optima Restore benefit, the no claim bonus decreases if a claim has been made (from policy document highlighted in end). However, in Max Bupa, this would remain same. See: Apollo Munich Optima Restore Benefit vs Max Bupa Re-fill Benefit.

So I ruled out Apollo Munich. Max Bupa Health Companion is what I decided. There are some benefits like AYUSH (non-allopathic treatments) that are covered under this policy. I do not require these and they make the plan expensive, but I had to compromise as I wanted to buy a plan and not wait for researching more products.

Below are screenshots of comparison of policies. The features that met my criteria are highlighted in green. This is just a sample comparison and you can compare 3 policies in parallel. A similar exercise was done for other policies.

health insurance policy selection criterion

health insurance policy selection criterion continued

Pattu’s note 1: Max Bupa also scores well in a comparison I did before: Building a health insurance comparison chart + Cigna TTK vs Royal Sundaram Health Policies Download the comparison file from this post and add policies you like to it.

Pattu’s note 2: I noticed that coverfox tells you the no of covered hospitals in your pin code. This could be useful for those in non-metros.

Common Myths – Below are some of the myths that are associated with buying health insurance which are just noises to confuse the customer.

  1. Having a Third Party to settle the claim. Everybody is in there to make money and the insurer will find a decent reason to reject a claim. So having an intermediary will not have much impact.
  2. Pre-existing disease coverage – Please note, it says if and only if you have any pre-existing disease, it will be covered after a cooling period of say, X Years. If you are healthy you should not worry. If you have any existing diseases, please declare before buying the policy.
  3. Not divulging complete information can help in getting a health policy approved – What good is an insurance when it cannot be used at the time of need? Similarly, declaring all existing diseases and lifestyle habits such as smoking while buying an insurance helps in getting a claim approved. The company may reject the claim due to misrepresentation of information.
  4. Health insurance will cover all the cost of hospitalization – Not all the costs are covered by the insurance. Apart from the limitations of different plans, some costs such as disposable like gloves, nebulizers etc. are not covered, they are to be paid on actual basis.

In summary, online comparison portals just help you in getting a shortlist of insurance policies. You need to read the policy documents to get a better understanding of the policy and finalize your choice.

Thank you very much, Niten.

Pattu’s note 3: While reading Niten’s post, I looked at a few more policy comparison. I invite readers to comment on the following comparison from

You can share below your opinions on the above table and also how you shortlisted your health insurance policy.

A merry Christmas to you all. Did you check out the last couple of posts?

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About the Author M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates  and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)
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  1. It is surprising that the author has not mentioned anything about the claim settlement history of all these insurers. For me two things count:

    The number of hospitals in my area


    The claim settlement history of the insurer – which includes the percentage of claims rejected, percentage of claims settled in less than one month and number of complaints at claim stage.

    As they say, the real insurance is one that pays. These two factors are crucial. Most of the time people overdo their analysis of benefits, but rarely spend time to check if the insurer is really offering those benefits.

    1. Please do educate us as to where to find such claim settlement data for health insurance? And please do not point to claims incurred data. The ability to pay claims is not the same as claims actually paid Even in life, the claim settlement ratio is of little use.

  2. As mentioned above by Pattu sir, how reliable this data is really questionable. Insurance company can approve a say 1000 Re claim by paying just 100/-and can still claim it as settled. Also, it does not tell why the claims were rejected. So taking decision on the basis of data without classification is of no benefit.

  3. I recently discovered that your corporate health coverage can be useful when buying a personal policy as the waiting period for pre-existing diseases start from the “date of first policy with the insurer”.

  4. I have Apollo Easy Health Standard Family Floater which is a very good policy without co-pay and sub-limits and a good network coverage. PSU companies generally put a limit on these factors. Just like a good financial adviser the advantage of having a good agent cannot be ignored – my agent cautioned me not to upgrade to Apollo Optima Restore as the premium increases are steep and not worth the extra benefits compared to Easy Health(you will not get this information online which alone is worth having an agent).

    Another point is do not buy coverage more than your need but increase the coverage gradually over years per inflation – the premiums increase over the years and there are many clauses which may interfere with your claim settlement – do not buy 50 lakh cover fearing medical black swans – instead have decent coverage and build a medical corpus – instead buy a 5 lakh coverage and increase it gradually over the years. I will buy 50 lakhs if it covers all medical expenses unconditionally – it doesnt.

  5. DEAR ANANT,very very valid that there is a great wisdom in having a good insurance advisor. but so many advisors masquraeding we dont know how to find out who is a good advisor. Any suggestions?

  6. From the HDFC Ergo policy –

    B. Reduction in waiting periods
    1. If the Proposed Insured is presently covered and has been continuously covered without any lapses under:
    a. any health insurance plan with an Indian non life insurer as per guidelines on portability, OR
    b. any other health insurance plan from Us,
    a. The waiting periods specified in Section 9A I), ii) and iii) of the Policy stand deleted; AND:
    b. Thewaitingperiodsspecified intheSection9AI),ii)andiii)shallbe reduced by the number of continuous preceding years of coverage of the Insured Person under the previous health insurance policy ; AND
    c. If the proposed Sum Insured for a proposed Insured Person is more than the Sum Insured applicable under the previous health insurance policy, then the reduced waiting period shall only apply to theextentoftheSumInsured andanyotheraccruedsuminsured under the previous health insurance policy.
    2. The reduction in the waiting period specified above shall be applied subjecttothe following:
    a. We will only apply the reduction of the waiting period if We have received the database and claim history from the previous Indian insurance company (if applicable)
    b. We are under no obligation to insure all Insured Persons or to insure all Insured Persons on the proposed terms, or on the same terms as the previous health insurance policy even if You have submitted to Us all documentation and information.
    c. We will retain the right to underwrite the proposal as per Our underwriting guidelines.
    d. We shall consider only completed years of coverage for waiver of waiting periods. Policy Extensions if any sought during or for the purpose of porting insurance policy shall not be considered for waiting period waiver.

    It is my understanding that “any other health insurance plan” includes Corporate Group policies also

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