A Guide to Navigating Insurance Intricacies: Part 1

For many people, health insurance can understandably feel like a complicated concept. To help you navigate its vastness, we put together a guide so you can make an informed decision. Read on to understand the indicators you should consider before purchasing a policy!

First, what is health insurance and how does it work?

Health insurance is best defined as a contract between you and the insurer, where you pay premiums annually against a chosen sum insured, and the insurer bears eligible hospitalisation expenses when a claim is made. Understandably, this is a life-changing investment and a consequential decision that may raise doubts, a significant one being…

How do I choose the right insurance for me?

This is an aspect many struggle with. While some may base this decision solely on brand value, we recommend that you check the insurer’s metrics for the past 3-5 years to get a good understanding of their performance. Some metrics to look out for include:

• The Claim Settlement Ratio, which is the total number of claims settled by a company in a given year against the claims received. A higher CSR indicates better performance. You can check an insurer’s annual reports for this information. Some general insurers display payouts across other avenues and not just health insurance. It is therefore important to make this distinction while comparing insurers.
• The Incurred Claim Ratio tells you how many claims are settled against the premiums collected. An ICR that is too high could indicate that the company may incur losses, while a low ICR could suggest that the insurer is being stingy.
• A higher network hospital range increases your chances of receiving cashless treatment. Even if you are admitted to a non-network hospital, you can still have the claim settled, but on a reimbursement basis. Make sure to check the list so you know where to seek treatment if the need arises. Also look out for blacklisted hospitals, where claims can get rejected.
• The complaint ratio is another metric that talks about the number of complaints filed against an insurer with the ombudsman.
  

Beyond studying up on your insurer, making the right choice primarily requires a clear understanding of the key factors that shape insurance plans. Here are some important ones to know:

Waiting Periods

Waiting periods are put in place to protect insurers from claims for conditions that may have existed before or developed immediately after purchasing a policy. There are different kinds of waiting periods:

1. The initial waiting period is common across most policies, where nothing is covered during the first 30 days, except for accidents.
2. The specific illness waiting period can typically be two years. The policy document will contain a list of specific illnesses. Examples include piles, sinusitis, kidney stones. These are usually slow-growing and benign. Since it is difficult to determine whether a policyholder already had these conditions when the policy was purchased, a waiting period is imposed.
3. The third is the pre-existing disease waiting period. If you have been diagnosed with an illness at the time of policy inception, the insurer may impose a waiting period of three to four years for that condition and related complications.

Permanent Exclusions

The premise of medical insurance is to cover medically necessary treatments. In that context, expenses arising from investigation and evaluation, weight-control treatments, gender-change treatments, certain plastic surgeries, and treatments related to or resulting from substance abuse are standard exclusions. The complete list can be found in the policy wording of your plan. 

Premiums and Loading charges

A premium is the amount you pay the insurer for a certain amount of coverage. For instance, a 25-year-old may opt for a ₹10 lakh policy and pay ₹9,000 as the premium during policy inception. Loading is an additional charge over the base premium, levied because of pre-existing diseases or BMI. Depending on the insurer, loading can range from 10% to 50%. Premiums can also change every year depending on factors such as age, city of residence and inflation.

The right health insurance policy isn’t necessarily the one with the highest coverage or the most familiar name. Understanding the insurer’s track record, along with the conditions mentioned above, can help you choose a policy that suits your needs. Now that you know what to look for when comparing policies, there is more to understand before making your choice. Stay tuned for Part 2 of choosing the right health insurance for you, where we take you through the features and common questions about health insurance that you should know about.

Also read: How to choose right term for a term insurance plan

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