Article: How to buy the right health cover?

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Let's look at the types of plans commonly offered. What they do and don't cover should help you determine which one is suitable.

Individual Health Plans aka  'mediclaim' policies

Covers:

• Hospital treatment expenses provided the treatment is on an in-patient basis and lasts for at least 24 hour
• Expenses include hospital bed and room, nursing, surgeon's fees, consultant doctor's fees, blood transfusions, oxygen and operation theatre charges

Does not cover:

• Pre-existing diseases or complications arising from them for the first four years of the policy
• Specific conditions that may not be covered for a certain initial period

There is generally an enhancement for every year during which no claim is made.

Family Floating Policies

The sum insured can be used for the treatment of any or all members of the family and not a single person. Rather than buying an R2 lakh health cover for each member of the family of four by spending for a total cover of R8 lakh, if you buy a Family Policy for R8 lakh, each person covered under it can avail benefits up to R8 lakh as opposed to R2 lakh in the earlier instance.

• Comes at a lower premium than individual policies would have done
• Can be bought by an individual who becomes the proposer along with spouse, including dependent children up to 25 years or even unmarried, divorced, widowed daughter and dependent parent

Critical Illness Plan

• Not a substitute for the basic individual or family policy
• Designed to be added as an addition to the former (The fact that these have to be bought separately is a major flaw in the way health insurance is sold in India)
• Provides financial assistance if the insured develops a serious ailment, such as cancer, or has a stroke
• Each cover has a list of ailments, usually 9-12 of them
• Can get it in the form of a rider attached to a life insurance cover, or as a standalone policy from either a life insurer or a non-life insurer
• If critical illness occurs, it pays the entire sum insured and terminates and can happen only once for any particular illness
• To get the payout, the insured has to survive for 30 successive days after the diagnosis
• No claim can be made during the first 90 days of the inception of the policy

Medical Cover From Life Insurance Companies

Life insurance companies, too, have started offering health plans. Most of these are, however, defined benefit plans - the pre-specified amount which is the sum insured is paid as compensation, irrespective of the actual amount of expenses incurred. Also, these are long-term, having a fixed premium for, say, three, five, or even 10 years. 

If you opt for a good combination of basic mediclaim, family policy and a critical illness plan, then these are not needed.