Health Insurance, Type of Health Insurance, and Comparison of Health Insurance Plans

Health Insurance is a type of insurance which covers the medical expenses arising out of an illness. The expenses covered could range from hospitalization costs, cost of medicines, ambulance charges or consultation fees. Rising cost of treatment could cause a serious financial strain on the savings of an individual. Opting for a health insurance plan can help an individual cope up with any unwanted health issue in future. No doubt, opting for a health insurance plan ends up being one of the smartest financial decisions taken by an individual.

Type of Health Insurance Plan

Basically there are 4 types of health insurance offered by the insurance companies.

1) Mediclaim Plans: They are the basic type of health insurance. The objective of such plans is to cover the treatment costs when a patient is hospitalized. The claimant needs to submit the original bills and the payout is made on the actual expenses incurred upto the sum insured.

a) Individual Policy: Only the policyholder is covered under such plans. Only one person can avail the benefits under such policies. E.g. Reliance Health Wise Silver plan by Reliance General Insurance Company offers individual coverage upto ₹5 lakhs for a 30 years old male at a premium of ₹8,130 per year.

b) Family Floater Policy: The coverage is provided to the policyholder, which could be extended to family members including spouse and children. E.g. Reliance Health Wise Silver plan by Reliance General Insurance Company offers family floater coverage upto ₹5 lakhs for a family of 4 at a premium of ₹17,721 per year.

c) Group Mediclaim: Such policies are offered to the employees by the employers. The employees and their family are covered under such plans. The group mediclaim plans are customized on the basis of sum insured, number of employees, including or excluding employees’ family.

2) Critical Illness Plans: Critical Illness Plans cover specified life-threatening diseases. Such diseases normally require prolonged treatment, often supplemented by lifestyle changes. The patient is often compelled to compromise on his professional commitments to cope up with such diseases. The payout is made as per the critical illness cover chosen. This amount could be used for medicines, lifestyle changes or to compensate for the loss incurred due to inability to work. The payout is made based upon the diagnosis of the disease, without the need of submitting medical bills. The major illnesses covered under such plans are:-

Major Organ Transplant
Cancer
Paralysis
Heart Attack
Kidney Failure

E.g. Reliance Health Infinity plan by Reliance General Insurance Company offers a comprehensive cover of ₹1 crore including critical illness at ₹25886 per year.

3) Personal Accident Plans: Such plans cover the policyholder against an accidental death/injury. The sum insured is paid out to the owner/nominee in case of permanent partial or total disability or death. E.g. ICICI Lombard’s Personal Protect Insurance offers accidental death coverage of ₹5 lakhs at a premium of ₹1521 per year.

4) Unit Linked Health Plans: ULIPs are investment cum insurance policies. A part of the premium is invested in the stock markets and the policyholder is provided with appropriate insurance coverage. The policyholder also gets returns based on the performance of the stock market. All major insurance providers offer ULIPs based on the customer’s investment capabilities and coverage requirements.

Factors to look while choosing type of Health Insurance Plan

Consumers are often confused about how to choose a good health insurance plan. A few important points one must consider before shortlisting health insurance plan are:-

a) List of Critical Illness Covered: A good plan must cover a wide range of critical illnesses. Avoid any plan covering only limited critical illnesses.

b) Change in Premiums: A good health insurance plan should not raise the premium during the policy term even if the health condition deteriorates.

c) Cashless Facility: Do check for the cashless facility in the plan. Your plan must offer cashless treatment at a large number of hospitals across the country. In all the health insurance policies, the cash-less treatment is always given in the network hospitals of the insurance company. If policyholder take treatment in non-network hospitals then he/she needs to pay first from pocket and then get reimburse after submitting bills.

d) Long Term Policy: Make sure your plan is a long term one, thus covering your health even in your old age. The health insurance plan should be taken for long-duration.

e) Small Waiting Period: There is a certain waiting period during which your insurance plan doesn’t cover critical illnesses and/or certain other treatments. Compare the waiting periods of various plans and try to opt for the one with a small waiting period.

f) Large Hospital Network: The insurer should have tie-up with a large network of hospitals across the country. It will be much convenient for quick approval of cashless treatment or claim settlement.

g) Co-Pay – Co-Pay is the amount one need to pay every time when claim is made. For Example: The policyholder has purchased has 20% Co-Pay health policy and if god forbid, policyholder gets hospitalized and medical bill comes at Rs. 2 Lakh , then insurance company will pay only 1.60 Lakh, rest 40k (20% of the bill) to be paid by policyholder. So, before buying any health insurance policy, one should always check that there should not be any Co-Pay. It has to be “Zero”.

h) Sub-Room Limit
Every hospital has different class of rooms similar to what we see in hotels. Every class of room varies in rent you pay to use on daily basis. The Normal ward would cost you less, but VIP ward or ICU ward would charge you more. Therefore, your health insurance policy, should not have fixed daily limit on room that you can use if you get hospitalized. For Example: The policyholder has purchased a health insurance policy which has room rent limit of say 5k per day. If god forbid, policyholder gets hospitalized, and admitted in the room which has room rent of 10k per day. And suppose policyholder has remained in the hospital for 5 days. The total room rent is 50k for 5 days, but, the health insurance company will pay only 25k and rest 25k policyholder need to pay from his/her own pocket. So, before buying any health insurance policy, one should always check that there should not be any specified limit on room rent.

i) No- Claim bonus
If policyholder don’t claim any insurance for one year, next year no-claim bonus added in the policy and insurance cover gets increased. This no-claim bonus varies between 10-50%.

For Example: Policyholder has taken a policy of 5 lakh and it has 50% no-claim bonus. If the policyholder does not claim insurance for one year, next year, the limit will be enhanced to 7.5 lakh and next year again if policyholder does not claim, then it will increase to 10 Lakh. Maximum it can go 100% of initial insurance amount i.e. 5 Lakh in our case. So, it is always better to see how much no-claim Bonus Company is offering before buying any health insurance policy.

Comparison of top 10 health insurance plans based on certain parameters. [5 Lakh Sum Insured]

Sr. No. Name of the Company Premium Copayment Claim Bonus Pre- existing Disease Room Rent Limit Limit On Specific Disease Day Care Treatment Domiciliary Pre-hospitalization Post-hospitalization OPD Claim Settlement
1 Manipal Cigna 13096 no Guaranteed Cumulative Bonus of 5% of Sum Insured, max upto 200%, irrespective of whether there is claim or not 3 years you will have to pay more if you stay in a room category above single private room no Check diseases covered under the policy Check diseases covered under the policy 60 days 90 days Option of Rs 5000, Rs 10000, Rs 15000, Rs 20000 89.43%
2 HDFC ERGO 10783 0-20% 10% of cover amount for every claim free year, max up to 100% 3 years No limit no Check diseases covered under the policy Check diseases covered under the policy 60 days 180 days no 97.63%
3 Bajaj Allianz 10502 0-20% 10% of the Sum Insured for every claim free year, max upto 100% 3 years No limit no Check diseases covered under the policy no 60 days 90 days no 92.10%
4 Reliance 10311 25% 5% No claim discount, maximum up to 20% 2 years No limit no Check diseases covered under the policy Check diseases covered under the policy 60 days 90 days no 94.02%
5 Iffco Tokio 9341 10% 5% of cover amount for every claim free year, max up to 50% 3 years No limit no Check diseases covered under the policy Check diseases covered under the policy 45 days 60 days no 87.76%
6 Manipal Cigna 8679 no Guaranteed Cumulative Bonus of 10% of Sum Insured, max upto 200%, irrespective of whether there is claim or not 3 years you will have to pay more if you stay in a suit or room of higher category. no Check diseases covered under the policy Check diseases covered under the policy 60 days 180 days Up to Rs 2000 89.43%
7 Star Health Insurance 8277 no 50% on 1st year renewal, 100% on 2nd year renewal 3 years you will have to pay more if you stay room category above single standard A.C room. no Check diseases covered under the policy Check diseases covered under the policy 30 days 60 days Upto Rs. 1,200 with per consultation limit of Rs. 300 for all consultations other than Ortho/Dental consultation. 89%
8 Reliance 8130 25% 5% No claim discount, maximum up to 20% 2 years no limit no Check diseases covered under the policy no 60 days 90 days no 94.02%
9 ICICI Lombard 8045 no 10% of cover amount for every claim free year, max up to 50% 2 years no limit no Check diseases covered under the policy Check diseases covered under the policy 30 days 60 days no 96%
10 Care Health Insurance 7780 no 60% of cover amount for first two years and 10% for subsequent years.Maximum Non Claim Bonus 150% 4 years you will have to pay more if you stay room category above single private room. no Check diseases covered under the policy Check diseases covered under the policy 30 days 60 days no 92.70%

Hope this helps you to choose the perfect health coverage for you. We at InvestorZone has a team of IRDA approved Insurance advisors, so you can contact us at info@investorzone.in or Whatsapp at 8700044209 for any query or advice.