Five Things To Remember Before Buying A Medical Insurance Policy

Medical insurance, like any other type of insurance, provides a range of benefits in case a difficult and unforeseen event arises. When it comes to maximising the gain out of a plan, medical insurance is no different: the policyholder must compare suitability and feasibility of a product to his or her situation. Lack of clarity about health insurance in general or about a particular health insurance plan often burns a hole in the policyholder's pocket, say experts. Many individuals end up subscribing to a health plan without due diligence only to claim income tax benefits on the premium paid.

Do all medical insurance plans offer sufficient incurred claim ratios, and do they cover each and every pre- and post-hospitalisation expense? These are some of the very elementary questions one must ask before subscribing to a medical insurance product.

Here are five things one must understand before purchasing a medical insurance policy:

1. Incurred claim ratio

Incurred claim ratio (ICR) - or simply, loss ratio - is the ratio of the total value of claims disbursed by an insurer in a year against the total amount collected as premium. This is an indicator used by experts in determining the ability of an insurer to settle claims. The higher the ratio the better for the policyholder, say experts. Information on an insurer's ICR is released by insurance regulator IRDAI or Insurance Regulatory and Development Authority.

Another useful parameter to observe while comparing different medial insurance providers is claim settlement ratio. Claim settlement ratio or CSR is calculated as the ratio of the number of claims booked in a year versus number of claims settled. Simply put, claim settlement ratio helps the potential policyholder in deciding which insurer to trust more. This information too is provided by the insurance regulator.

2. Types of insurance

Today, insurers offer a range of products aimed at different clients. From health plans focused on senior citizens to those that cover pre-existing diseases, one should have a thorough understanding of what is covered and what is not, say experts. A regular medical insurance plan may not include protection against specific diseases, therefore it is significant to know full details of a medical insurance policy. For example, many insurers provide special plans to provide protection against critical illness.

On the other hand, there are certain health insurance policies that allow a subscriber to be aware about his or her medical condition by taking up routine check-ups; these are known as preventive health plans. Typically, a critical illness plan covers treatment against cancer and kidney failure, besides bypass surgery, major organ transplantation, paralysis, coma etc.

3. Waiting period

This is the amount of time between subscription to a health plan by a person and the time he or she becomes eligible to receive the benefits of the same. In other words, this is the amount of time a customer has to wait after subscribing to a policy before a claim can be admitted by the insurer. Waiting period can also be understood as the amount of time a person has to serve as customer of the insurer before his or her healthcare coverage can commence. It is always more beneficial to take up a medical insurance plan as early as possible after assessing one's need and selecting the best suitable policy, say experts.

4. Top-up plans

A top-up plan enables an existing subscriber of a medical insurance policy to enhance the amount of cover allowed. For example, if a medical insurance plan offers an annual cover of Rs 3 lakh, subscription to a separate top-up plan by the customer can increase the cover to Rs 5 lakh. The additional cover is applicable once the basic cover is utilised. Typically, the premium payable against a top-up medical insurance plan is lesser than a regular plan. It is advisable to assess one's situation to decide on suitable cover for a year. The subscriber can take into account the estimated medical expenses in a year in his or her household, any existing policy and the respective cover, the number of dependents, and total household income.

For example, splurging on a medical insurance policy for benefits actually not suitable for one's family can be avoided by thoroughly understanding the family's requirements. Medical insurance can vary drastically from subscriber to subscriber, and family to family.

5. Hospitalisation expenses

When it comes to a health insurance plan, hospitalisation expenses can be classified into two broad categories, depending on the timing of expenses occurred. Doctors often recommend certain tests - ranging from blood tests to scans to follow-up visits - along with suitable medicines and vaccinations that help them assess the case. These are known as pre-hospitalisation expenses.

On the other hand, similar expenses borne by the policyholder once the patient is released from the hospital are known as post-hospitalisation expenses. Usually, insurers disburse the amount against pre- and post-hospitalisation expenses after settling the dues against the primary treatment, which the patient receives while being admitted in the institution. A cashless facility offered under a medical insurance policy is a service under which the insurer makes payment against medical directly to the network provider subject to a pre-approved limit. All other expenses to be borne by the insurer under a medical insurance policy are first paid by the policyholder, which can be claimed from the insurer later. Experts advise that one must check with the insurer, or insurance agent, the number of days covered towards pre- and post-hospitalisation expenses.

IFFCO Tokio is a general insurance company that provides a range of medical insurance products, such as Family Health Protector Policy, Individual Health Protector Policy, SwasthyaKavach Policy, Health Protector Plus Policy and Critical Illness Policy.