Doing a double-check on your medical cover

Medical cost inflation has been rising, expanding in the double digits. The cost of health insurance has also been on a spiral and the employers who have been offering health insurance to their workers have started feeling the heat. A recent statistic released by Towers Watson, a global professional services company shows that the cost of group health insurance has increased at over 10 per cent every year on an average for last three years for companies in India. To trim these costs, some organisations have withdrawn insurance benefits for the elderly parents, some have introduced sub-limits on expenses and others have scrapped maternity cover. This makes it imperative for employees to evaluate if the health cover that they possess is indeed adequate.

Every individual needs to have an individual health insurance policy with a sufficient sum assured. IRDA's research on claims data from health insurers reports that claims on circulatory diseases have increased quite sharply in the last three years and the average claim amount under heart related diseases has risen 57 per cent to Rs 3.56 lakh in this period. So, are you ready for an emergency?

What has changed?

A floating health cover is often one of the standard components offered by companies to employees as a part of their compensation package. Though a couple of years ago, employers offered a comprehensive risk cover for health through a group health policy, they have started imposing restrictions on these products of late.

A few companies removed certain types of covers from the group plan offered to employees- cover for parents, cover for maternity expenses and cover for pre-existing diseases are a few such instances. Others have brought in a ‘co-pay' system where employees are required to share around 10-15 per cent of the premium cost, says Mr R.Krishnamurthy, Managing Director (Product, Distribution and Markets), Towers Watson (India), a company that advises companies in the area of employee benefit. So, how do employees counter this ? Is there a way out? Yes. Buy a separate health policy from a general insurer.

What you can do?

Organisations decide on the sum assured for an individual employee under the group policy based on the individual's position in the office. But when you take a policy, considering the medical history in the family and your financial status, you can choose the sum assured you want.

There are umpteen products in the market to choose from - an individual policy, a family floater, a policy for elderly parents, a separate policy that gives lumpsum benefit on a critical illness, etc., that give comprehensive covers to individuals meeting their specific requirements.

A family floater plan doesn't generally cover parents above 60 years of age; it covers only the insured's spouse and children. But, there are separate policies available in the market for elderly people. Health covers are available for people till the age of 65 (and even 70 years with some insurers). So, if you have elderly parents (or even an elderly aunt or uncle who is dependant), you can consider such policies. ICICI Lombard has such a policy. Here, the premium on a policy of sum assured Rs 2 lakh (per person) for parents in the age 55-65 years is around Rs 17,200 per person.

Child delivery expenses are another worry for young couples of today. While some health insurers do not cover maternity expenses under a normal hospitalisation policy others have a limit on the sum assured for maternity cover. However, one can opt to buy maternity cover as a rider on his health policy (or as a standalone policy) by paying additional premium. ICICI Lombard, Star Health and Max Bupa are some players who offer maternity covers (See Money Alerts column on the right).

Do note that all health policies have ‘pre-existing' disease exclusion in them; you can't do away with it! Individuals need to go through a waiting period (1 year or even more) to claim on diseases that were detected before the policy was purchased. In a maternity benefit policy, the waiting period can go upwards from three years…

So, what more? A cover for critical illness? You have many options here too. A critical illness policy is a benefit cover - it covers a predefined condition of illness (doesn't cover any other disease). The sum assured under the policy is paid as lump-sum benefit and once the claim is made and benefit paid, the policy ceases to exist. A critical illness cover can be taken as a standalone policy or as a rider with a hospitalisation policy or even a term life policy. However, as expenses on a critical illness are normally very high, it may be prudent to take adequate sum insured under a standalone policy says Mr Karan Chopra, Business Head – Retail Business Group, HDFC ERGO.

When buying a policy, go through the policy document with an eye on details on policy exclusions, waiting period for pre-existing disease and sub-limits for various expenses. Insurers are offering competitive rates and waiving off sub-limits now, so do your homework so that you can negotiate the deal with your insurer.

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