Determining Your Optimal Health Insurance Coverage

Are you looking to invest in health insurance to protect yourself and your loved ones from unlikely medical events? With so many insurance plans, it gets difficult to determine the right coverage for you and your family. Your goal should be broader coverage and ample financial protection. 

This blog gives you key insights that help you choose the ideal cover for yourself and your family.  

A Guide to Calculate The Total Coverage Amount

About 68% of Indians have insurance coverage less than Rs. 10 lakh. With rising healthcare costs, this is not an ideal situation. Determining the coverage amount before setting out to buy health insurance is crucial. The sum insured is the maximum amount you can claim from your insurance provider. 

For example, if you have Rs. 5 lakh coverage and your medical bill is Rs. 6 lakh, you can only claim for a maximum of Rs. 5 lakh. So, buying the maximum coverage you can afford is always better. 

According to experts, the ideal rule of thumb is to buy coverage that equals 50% of your annual income. However, the minimum coverage should be from Rs. 5 lakh to Rs. 10 lakh. 

Overlooked Features that Impact Cover Amount and Premium

For ample financial protection, look for insurance policies with broader coverage. Some of the overlooked features that you must consider while determining your coverage amount are:

• Co-payment: The higher the co-payment percentage you choose, the lower your premium will be. Choosing a 20% to 30% co-payment can help reduce your premium if you can afford considerable out-of-pocket expenses. However, please ensure you do not fall for the co-payment just to save on the premium since you have to contribute the %age co-payment applicable in every claim amount from your pocket.
  
• Deductible: Opting for a higher deductible will lower your insurance premium. For example, if you choose a Rs. 1 lakh deductible on a Rs. 5 lakh policy, you cannot claim if your medical expenses are less than Rs. 1 lakh. Your insurance coverage will kick in only for medical bills larger than Rs. 1 lakh. 
• Room rent limitations: Often, insurance policies that cover hospitalisation expenses have a limit on room rent. Your eligible claim amount may even be decided based on this limit. For example, if your policy has a room rent cap of Rs. 8000 and you choose a room that costs Rs. 10,000, then the insurer will consider that you exceed the limit by 20%. So, your total eligible claim amount may decrease by 20% compared to what you expected. Insurance policies that offer no cap on room rent have a higher premium. 
• Waiting period: Most insurance policies have a waiting period of 30 to 60 days before the cover kicks in, so you cannot make an insurance claim for diseases with a waiting period.  Also, most insurers have a waiting period of 2-4 years for pre-existing medical conditions. This means that even with comprehensive coverage if your pre-existing condition like diabetes causes your illness, you cannot make an insurance claim until you ride out the waiting period with the same insurer. 
• Cumulative bonus: Insurance policies with cumulative bonuses allow you to increase the sum insured without an increase in premium if you don’t make claims during a policy period. Some insurers offer discounts in premium instead of increasing the sum insured. 
• Restoration benefits: Built-in restoration benefits restore your sum insured to the total amount if you have exhausted the sum insured with the claims during the policy year. 
• Exclusions: Most cosmetic procedures are excluded from insurance coverage. Dental treatments, self-inflicted injuries, and hygiene products costs during hospital stays might also be excluded. Plans that come with more exclusions are often cheaper. However, while deciding the cover amount, it is critical to check the exclusions, too. You may not be able to use health insurance for the diseases which are excluded, irrespective of the cover amount. 

Optimal Health Insurance Coverage – What is It?

As you age and your health profile changes, you must adjust your coverage accordingly. Also, as you gain work experience, your income will increase, enabling you to afford a higher insurance premium. When your family expands, it is mandatory to revisit your health insurance to accommodate your spouse and children. 

For young individuals between 18 and 30, there are minimal health risks. So, a basic plan is sufficient. When you reach the age of 31 to 50, a comprehensive plan, including maternity coverage, lifestyle diseases, critical illnesses, etc, will benefit you. For seniors over 51 years of age, extensive coverage for chronic health conditions, long-term care needs, etc., may become necessary. 

Even if you feel that your coverage is adequate, purchasing an additional top-up cover will augment your insured sum, making you eligible to claim bigger medical bills. Many providers now offer health insurance coverage of up to Rs. 2 crore. This increased coverage will enable you to cover high-end medical services or modern treatments like robotics without limitations. 

Key Takeaways

The individual plan provides coverage for an individual. Family floater plans cover all the members in the family, like your spouse, children, parents, and sometimes, in-laws. Senior citizen plans are exclusively designed to cater to older individuals’ long-term and continuous healthcare needs. To determine optimal coverage, consider the health needs of everyone covered by the policy. This way, you can find a robust health insurance plan at an affordable cost. 

Explore platforms such as PhonePe to make the insurance purchasing process smooth and hassle-free, helping you secure the right coverage effortlessly.