Insurance Uncovered

I am 59 years old. I subscribed to ICICI Health saver 10 years back. I have not claimed any amount so far. I am single and want to know if this is the best scheme for me? Or, can you suggest an alternative fund that can give benefits — life-long or maximum — in the industry (for ₹10 lakh). Should I also take critical insurance?

K V Rao

Health insurances have improved considerably over the past 10 years, which is why you should evaluate newer options. Most unit linked health insurance policies, including your plan, have now been discontinued.

I prefer standalone medical insurance to fund-based health saving plans for three reasons. Health saving plans combine investment, medical care and death benefits, which make their evaluation relatively difficult. They often have a maximum age limit after which the insurance ceases. This is typically 75 years, but you should check your policy contract.

This means that you may not have insurance when you are most vulnerable. The ICICI Health Saver plan has a room rent restriction of 1 per cent of sum assured. In metros, you could be out-of-pocket in a single AC room. Buy a standalone mediclaim policy for yourself. These insurances are renewable for life. Also, get a sum assured that is at least ₹15-20 lakh.

Many critical illnesses can cost over ₹10 lakh to treat. About ₹20 lakh of cover, which is twice of what you currently have, will cost ₹20,000 a year. However, if you have a pre-existing health condition, wait for the pre-existing period in your new insurance to be completed before letting go of your old insurance.

When you buy a health insurance, the most important criteria should be premium, the number of years pre-existing diseases are excluded and claims settlement rates.

The pre-existing disease exclusion should be three years or less. Claim settlement rates should be over 90 per cent. These settlement rates are available in the public disclosures on the insurer’s website.

One advantage that the Health Saver insurance has is that it also pays for health costs not ordinarily covered by mediclaim. For example, medicines not linked to hospitalisation or dental treatment. But for these costs, you are better off paying from your savings as the amount of real insurance built into out patient department (OPD) plans is currently low.

Critical illness insurance is an excellent second insurance to buy. A good standalone critical illness plan will cover over 20 diseases. Many of these diseases will be those that do not require hospitalisation, such as stroke, blindness, deafness and Alzheimer’s. A critical illness plan at your age will cost about ₹10,000 per year for ₹5 lakh sum assured.

The writer is co-founder, www.securenow.in

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