Buying health insurance? Here are things that you need to keep in mind

While awareness about the need to buy health insurance is growing, what is not adequately appreciated is that medical inflation, or the cost of treating diseases, grows at a much faster pace than the consumer price index-based inflation. So besides buying a health cover for your family, you also need to worry about whether the amount is adequate, and revise it upward from time to time.

According to a recent study by Product & Innovation Centre (PIC) conducted across 20 states and by taking into account the buying behaviour of over 10,000 consumers, around 40 per cent of Indians buying health insurance online opt for a minimum cover of Rs 500,000. Owing to medical inflation, the health cover that you bought a few years back may not be enough to support even half of your medical bills today. Says Vaidyanathan Ramani, head-PIC, Policybazaar: “The approximate rate of medical inflation in India over the past four-five years has been 10-15 per cent.” 

According to Prasun Sikdar, managing director and chief executive officer, Cigna TTK Health Insurance, “A kidney transplant may today cost around Rs 1.8 million. Fifteen years down the line, the same procedure will cost you Rs 14.65 million, assuming a 15 per cent price rise each year.”

You need to take into consideration several factors before deciding on the amount of health cover you should buy. One is the type of city you live in. According to experts, the minimum health cover for an individual living in a metro should range between Rs 500,000 and Rs 1 million. For a family of two-three members in a metro city, a starting cover of Rs 1 million should be considered. A family living in a smaller city should buy a starting cover of Rs 500,000. These suggested levels should be revised upward based on a few other factors. As Anand Roy, executive director, Star Health and Allied Insurance, says: “The exact amount should be worked out on the basis of the policyholder’s medical history, disposable income for insurance, family size, number of senior citizens, pre-existing diseases, and lifestyle.” 

However, based on your specific needs find out if an individual sum insured or floater cover suits you the best. According to experts, a family floater plan is usually a more cost-effective option as it offers a floating sum insured for the complete family covered under a single policy. But if one member in the family is at higher risk, the option of buying a separate cover for him may be considered.

If there is a history of illness in the family that can be inherited, or if you are diabetic or suffer from hypertension, find out the cost of treating diseases related to these symptoms and accordingly increase the sum insured.

Increase coverage when more individuals are added to the policy. “For every adult who is included in the policy, such as a daughter-in-law, the cover should be increased by 50-60 per cent. For every child, the increase should be 25-30 per cent,” adds Ramani.

The city of residence should also be considered. Typically, hospitalisation costs are higher in the metros, which have bigger and better-equipped hospitals where procedures could cost 50-60 per cent more than in smaller towns. Hence, if you live in a metro, get a higher coverage. Adds Roy: “One should take a relook at the coverage and future needs every 5-10 years. Also, provide for future needs as obtaining incremental cover becomes difficult with age and illness.”

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