In today’s world, most people have a sedentary lifestyle with unhealthy dietary habits. Nowadays, we are even more prone to diseases caused due to stress and hectic schedules. According to the World Health Organisation (WHO), India has nearly 50.8 million diabetics, the highest in the world and 25 million people with cardiovascular illnesses accounting for 60% of all cases worldwide. However, with time and inflation, the cost of treating these diseases has also increased substantially.
Medical treatment cost is one of the prime reasons for people falling back into poverty. According to the National Health Accounts, an average Indian household’s out-of-pocket expenditure (OOPE) on healthcare stood at around 48.21% in 2018-19 which is very high when compared to a global average of around 18.1% in 2019 as per the World Health Organisation (WHO). As per WHO estimates in 2022, high OOPE on health was seen as impoverishing some 55 million Indians annually, with over 17% of households incurring catastrophic levels of health expenditures every year.
Needless to say, one solution to this challenge is adequate Health Insurance. But we would even go a step ahead and propose a complete health insurance portfolio.
Why should you get a health insurance portfolio?
A health insurance portfolio is like a combination of different types of plans to ensure that you get the maximum benefits and medical coverage as is possible at an affordable cost. The idea is to give you comfort and confidence to not worry about medical expenses in case of any medical emergency when the need arises with your health insurance plans in the portfolio. While counting on your health insurance coverage, you would typically avail facilities such as cashless treatment; pre & post-hospitalisation expenses; no claim bonus, etc along with the tax benefits.
We can choose from different types of health insurance policies depending on our needs and wants. There are three main types of plans under health insurance to choose from:
1) Base Plan:
The base health insurance policy is like your standard, standalone health insurance policy and covers medical expenses up to the sum insured amount. The coverage and benefits of the insurance vary depending on the insurance provider. Some of the common features and benefits to look at while considering a base health insurance plan is a comprehensive coverage, pre & post-hospitalisation expenses and a regular premium.
2) Top-Up Plan:
A Top-up plan offers extra coverage for a claim exceeding the base amount. Under a typical base health insurance plan, the insurer pays for claims up to the coverage amount i.e. the Sum Insured. A top-up policy is applicable when your insurance claim passes the threshold limit (deductible). The top-up plan typically covers expenses relating to a single hospitalisation and the claimed expenses have to cross the threshold deductible, and anything beyond the threshold can be claimed subject to the limits of the Top-Up cover. For eg., if the top-up plan of 5 lakh cover has a deductible of 2 lakh, then only when the single claim amount exceeds 2 lakh will the top-up plan be triggered.
As seen, the primary /base health insurance is supplemented using top-up health insurance. In the event that your current health insurance policy's maximum sum insured is reached, the top-up plan will provide you with the desirable medical coverage. This is an add-on policy with a lower premium and high coverage limit that provides flexibility in deductibles and can be a great choice if you feel that your current sum insured or coverage amount is insufficient.
3) Super Top-up:
A Super Top-up plan covers the total amount of all hospitalisation bills in the policy period, above the deductible amount. After the deductible is paid, the Super Top-up plan becomes active for all subsequent claims, just like a base plan in one policy period. Unlike a Top-up plan, there is no limit at a particular claim level, once the deductible threshold is crossed. This plan functions at a cumulative level and becomes effective once the first portion of the deductible is covered by the base health plan. Thereafter, the super top-up coverage becomes active for further claims once your deductible is paid/exhausted in a policy year.
As can be understood, it is advisable to align the policy period of your base policy and super top-up policy. It means if your base health policy’s coverage period is from 15 January to 14 January every year, you should buy your top-up policy in a similar period to avoid any claim-related hassles.
What does an ideal health insurance cover look like?
A health insurance portfolio will differ based on an individual's age, needs, and budget. Age is an important parameter based on which the amount needed for health insurance coverage is determined. When someone is young and in good health, the need for higher health cover will be minimal but this will increase as people grow old and become more prone to diseases & ailments. Thus, additional coverage can be arranged in the form of a top-up or super top-up health insurance plan. It is important to understand that getting adequate & comprehensive health insurance is recommended when you are young & fit, otherwise, health Insurance companies won’t give health insurance cover when you are old & unfit or develop a medical condition.
There is no scientific formula to get ideal health insurance coverage. However, the following age-wise categorisation of plans and the minimum coverage necessary can serve reference purposes.
- For ages 18-30 years, a Base Policy of 5 lakh + Super Top-up of 5 lakh
- For ages 31-45 years, a Base Policy of 5 lakh + Super Top-up of 10 lakh
- For ages 45 years and above, a Base Policy of 5 lakh + Super Top-up of 25 lakh. A Senior Citizen Policy can also be taken once the person becomes eligible.
Ideally, one should choose a comprehensive portfolio with a coverage of Rs. 50-60 lakhs that includes add-ons like OPD, routine health checks, maternity coverage, etc. But adding these features to your portfolio requires shelling out a larger premium. Therefore, a person on a tight budget should pick a base cover of at least Rs. 5 lakh along with some significant add-ons like the NCB (Non-claim bonus) and restore benefits. Although this will increase your basic coverage premium, it can still be an ideal way to improve your coverage with minimal costs. While planning, one should also keep in mind that the premium for health insurance increases due to age and medical inflation. Hence, you should make the necessary provisions while planning your health insurance portfolio.
In addition, there are other factors, such as location, that may have an impact on your portfolio. The needed coverage for a person/ family would be higher than that of Tier 2 or Tier 3 cities in this case since Tier 1 cities have high medical costs and lifestyle diseases are more likely to affect an individual. There might also be a case to protect yourself from specific diseases if you are prone to the same or have a family history. In such a case, you should ensure that your policy covers any of such likely diseases. Moreover, in case of pre-existing diseases, you should check the waiting period and the degree of coverage provided by the policy.
Keeping these things in mind as you plan for your health insurance portfolio becomes crucial. Although one person cannot comprehend all of these nuances, it is thus important to engage an insurance advisor for a portfolio of health insurance that is specifically outlined.
Bottom Line
Usually, health insurance policies are upgraded every 2-3 years by the insurance providers and new features are added to them. As one needs to stay updated with the new technologies & skills, in a similar way, we may need to upgrade our health insurance as well. Either by paying the same premium or a few hundred more, you can upgrade your health cover to a much more comprehensive & feature-rich policy. The cost of health services has increased as a result of the advancements in the treatment of numerous ailments and disorders. And, this rising cost of medical care has further heightened the necessity for health insurance.
As the proverb goes, "Health is Wealth", taking care of your health and the health of your family members is crucial. With the rising expenses of medical care and hospitalization, having health insurance is essential. Health insurance will serve as the safety net for you ensuring that you have access to quality health care and the necessary treatment by removing /reducing the dependency on your personal financial situation. It also acts as a financial safety net for the big, unexpected financial shocks that may arise due to rising medical costs, subject to the amount of coverage available.
We all are aware of the usual benefits and coverage of health insurance policies like hospitalisation charges, pre & post-hospitalization expenses, day care treatments, Ayush and mental health care. However, it would be interesting to note that a health insurance policy may also offer several other benefits. There are plans available today that offer greater flexibility, more comprehensive features and coverage through add-ons and riders. Let’s keep reading to explore some of these useful add-ons/riders that can be attached to your policy to help you gain more benefits from your health insurance plans.
1. Wellness benefit:
Some plans offer wellness benefits such as Regular/Preventive health check-ups and preventive healthcare services. These benefits encourage individuals to lead a healthy life and prevent the onset of any fatal diseases. Certain plans offer discounts on maintaining good health. For instance, if you walk 10,000 steps, you can avail of approximately a 10% discount on renewal premiums.
2. Non-Payable Items:
During a hospitalization, certain expenses are not covered by health insurance and need to be paid out of pocket. These are known as non-medical or non-payable expenses. The most common non-medical expenses are food, laundry, thermometer, bandages, nebuliser kit, toiletries, etc; These expenses can account for up to 10% of the total hospital bill that you have to pay from your pocket. By taking this add-on cover, such expenses can also be covered under your health insurance policy. So, you can expect the entire hospitalization claim to be paid without deduction.
3. OPD (Out-Patient Department /Treatment):
This feature provides coverage for medical expenses incurred on outpatient treatments, which do not require hospitalization or an overnight stay in a hospital. Depending on the policy, an OPD add-on can provide coverage for a range of expenses, including doctor consultations, diagnostic tests, pharmacy bills, and other outpatient medical expenses in such OPD cases too. An example of OPD is root canal treatment. Instead of being hospitalized, you can visit your dentist regularly for evaluation and treatment.
4. No claim bonus (NCB) and Cumulative Bonus (CB):
NCB and/or options CB add-on rider enables you to avail more coverage from your health insurance policy if you do not make any claims in the previous policy year. Companies now offer a 5% to 500% of progressive increase on the sum insured every year under such add-ons/policy features. For example, Rs. 5 lakh base sum insured can increase up to Rs. 20 lakh in 4-5 years with no claim. Some plans give a cumulative bonus irrespective of claims. In such cases, the coverage increases every year even if you make a claim.
5. International benefit:
Some health insurance policies cover the medical expenses incurred during travelling abroad and while staying there. Under this benefit, you can plan for your treatment abroad (sometimes with the choice of your hospital), without worrying about the treatment costs. Such plans help you to upgrade your affordability to get the best treatments in the world. The global cover is available at a reasonable premium of around Rs. 1.5 -1.8 lakh for a family of 2 adults & 2 children with a sum insured of Rs 1 Crore.
6. Restoration benefits:
This add-on enables your health policy's sum insured to be restored up to 100% as soon as it is reduced following a claim. It is very useful in the event of a second hospitalisation within a single policy year where you get to enjoy extra coverage. For instance, if you have a SI of Rs.5 lakh, due to a claim on the policy, the cover of 5 lakh is reduced, so on partial or complete utilization of Rs 5 lakh, this benefit restores another Rs.5 lakh for the subsequent claims.
7. Maternity Coverage:
Under this add-on, the policy covers the costs associated with the pregnancy (childbirth) up to the risk cover or a fixed amount. Both normal and C-section births are covered. Certain insurers offer pre and post-natal expenses and newly born baby coverage for a specific amount of maternity insurance.
The Bottom Line
With the rising cost of healthcare and medical emergencies in India, it has become increasingly difficult for people to pay medical bills, often compromising the quality of medical care received. Moreover, lifestyle-related medical conditions caused by factors such as sedentary life, poor diet, pollution, stress, and other external factors have become more prevalent. Fortunately, health insurance policies have evolved to meet the increasing demand for better and more comprehensive policies. Today, the policies not only cover hospitalization expenses but also offer many other covers and add-ons which can be customised. Additionally, health insurance policies in India offer a tax benefit that can be claimed under Section 80D of the Income Tax Act. While specific features may differ from one policy to another, one can evaluate the options available and select a suitable policy to match their needs.
People generally assume that because they have a health insurance policy (HI), they would not require personal accident insurance as HI covers hospitalization due to an accident as well. Although this is a correct notion, accidents frequently result in losses that are not typically covered by health insurance.
A personal accident insurance helps to recover losses impacting due to accidents like loss of income, child education, loan protector, animal bites, body burns etc. which makes it different from health and other insurance covers. Later on in this article, we shall examine it in further detail.
Personal accident policy provides you and your family round-the-clock protection of any uncertainties occurring due to accidental injury or disability. This insurance shields the policyholder with the basic coverages of Accidental Death, Permanent Total Disability (PTD) and Permanent Partial Disability (PPD). It also has a variety of optional add-on features. Let us explore some of the important additional benefits under this policy:
1. Loss of Income: One cannot afford to lose his/ her income when there are numerous expenses happening post an accident. This add-on compensates for loss of income due to an accident, by paying a weekly amount for the period the insured person is unable to work. For instance, add-on cover is Rs. 25,000 per week. If an insured is unable to work for about two weeks due to an accident, he/she will receive Rs. 50,000 as a benefit under this add-on.
2. Fracture Care: Usually fractures are excluded from health insurance policies. Whereas, personal accident cover provides it as an added benefit. Further, a claim can be received depending on the severity of the fracture under this add-on. For example, the fracture cover is Rs. 1,00,000. Insured facing a minor fracture can receive an amount of Rs. 25,000 under this add-on.
3. Loan Protector Cover: One would be most negatively affected for loan defaults at the time of an accident. Yet, if the accident resulted in a death, the scenario could become worse. The family of the insured will suffer both a financial and an emotional loss as a result of this incident. Here, the loan protector add-on can offer financial protection by covering a balance due for the holder in the event of a sudden death or total disability.
4. Adventure Sports: People are fond of participating in adventurous sports while going on a leisure trip. One can insure themselves for death and permanent disability with adventure sports cover. This comprises a variety of sports like rock climbing, scuba diving, bungee leaping, auto racing, etc.
5. Body Burns: It could lead from minor to major injury leading an insured to die or get severely injured due to fire or any chemical burns, and other similar burns. Hence, a fixed amount can be provided to the insured if this add-on is opted.
6. Other add-ons: Coma benefits, air ambulance, wheelchair or crutches charges, artificial limb costs, and child tuition benefits are some add-ons available under personal accident insurance.
Along with these advantages, your insurance cover may increase due to a no-claim bonus (approx. 10% - 20%). One would now wonder that covering so many risks and providing numerous benefits could be pricey while buying this insurance. Fortunately, the premiums are affordable. We will understand this with an example.
Mr. Rajinder holds a personal insurance coverage of 50 lakh rupees. In addition, his two children are each protected for Rs. 10 lakhs, along with his wife for Rs. 25 lakhs. He has decided to choose TTD (Temporary Total Disablement) benefits of Rs. 50,000 for himself and Rs. 10,000 for his wife per week. He also included a 10 lakh rupee fracture cover. He pays an annual premium of Rs. 21,231.
Let’s check what happens if Mr. Rajinder falls from stairs and his legs get fractured.
Mr. Rajinder has been advised bed rest for 28 days by the doctor. In such a case he is eligible to claim the following from his personal insurance policy.
| Benefit | Calculation | Claim Amount (Rs.) |
| Fracture Care (10 Lakhs) | 1 fracture paid for 5% of SI | 50,000 |
| Loss on Income | Rs. 50,000 per week for 4 weeks | 2,00,000 |
| Total Payable | 2,50,000 |
Moreover, the premiums are decided on the basis of occupation of the insured person. The riskier the occupation (job profile) of the insured, higher will be the premium. Unlike health insurance, the premium does not change due to a change in age or city. For example, a doctor is less prone to risk for an accident as compared to manual labour. Hence, the premium for a doctor would be less than that of manual labour. Therefore, the policy has categorized insured into levels of risk classes like Risk Class-I, Risk Class-II and so on. The premiums for the age 18 to 69 years will remain the same. Instead, the premium is varied depending on the profession.
An individual will get personal accident insurance cover according to his/her annual or monthly income. For example, 10 times of the annual income for salaried and 20 times for the self-employed. Also, while purchasing a policy or filing a claim, insurance firms may ask for income-proof documents such as an IT return or a Form 16.
Conclusion
Personal accident insurance is indeed a good option altogether for covering various accidental risks. These risks can result in modest to substantial losses. In reality, other people's mistakes can also contribute to some of our uncertainties. As a result, one must also be cautious to secure themselves against any costs or losses that may result from such an incident.
Insurance is an agreement between the insurer and the insured (policyholder). This agreement is based on the information the insured provides in the proposal form, making it the most important part of the entire insurance policy. An insurance company offers a policy on the basis of a proposal form and other information related to the insured. It seeks all the relevant information from the policyholder in order to underwrite the risk.
The proposal form includes the insured’s basic information such as an address, age, name, education, income, and occupation besides his medical history. Depending on the level of coverage you choose or your age group or occupation/family background, you may be required to undergo a medical examination.
Insurance operates on the principle of utmost good faith. This means that everyone who enters into a contract has a legal obligation to each other to disclose any material facts that may affect the contract's subject matter. The person must therefore provide the insurance company with accurate, complete and honest information.
There are many points you need to take care of when filling out the insurance proposal form, but here are some of the most crucial ones.
1. Mention Correct Details
Many people become casual while filling up the form and do not provide the correct details related to age, contact details, income, qualification, etc. Mentioning the correct details is extremely important.
The insured must provide the correct address, contact number and e-mail id because the insurer will contact you using these details when a claim needs to be settled - the address is required for underwriting as well as any communication. Crores of claims and maturity amounts remain unpaid as insurers are unable to reach policyholders at the numbers and addresses provided by them. Further, the age, height, weight, health status, family medical background, income, occupation, qualification, etc; of the proposer/insured members have a significant impact on the decision of the insurance underwriter. It could result in the rejection of the proposal or a hike in the rate of premium.
2. Disclosure of Medical Condition
Many times, people do not disclose their current health condition in the proposal form so as to obtain better coverage for a lower premium or to avoid the waiting period or rejection. However, the entire medical history should be mentioned in the medical history/questionnaire section. While making the claim, if it is found that the medical history does not match, the claim might get rejected and/or the policy may be cancelled ab-initio. For example, Mr. Raj had diabetes for a long time but did not mention it in the form. However, when he was admitted to the hospital for treatment of heart disease, the fact that he had diabetes was revealed and as a result of which the entire medical claim got rejected. He had to bear all of the medical expenses himself because he did not mention diabetes in the proposal form while buying the policy.
3. Disclosure of Personal Health Habits
Insured member must disclose his/her habits regarding the consumption of alcohol, tobacco and other drugs. We are all aware that addictive substances such as tobacco and alcohol have a negative impact on health. So, if you are a tobacco user or alcohol consumer, insurers will charge more. The premium amount charged to such individuals is determined by their frequency, quantity consumed and type of addiction.
4. Disclosure of existing insurance policies
It is essential to mention all the policies taken from the same insurer as well as other insurers.. If you already have an insurance policy, the insurer will offer only the balance of the cover, that is, max cover allowed as per eligibility & underwriting guidelines - sum assured of the existing cover. Non-disclosure or improper disclosure of existing policies may result in proposal cancellation. In fact, if the insurer comes to know about a pre-held policy that was not declared at proposal stage, it can reject the claim and/or cancel policy on the basis of non-disclosure of material facts.
5. Mention occupational details accurately
People often do not mention the nature of the job or service they are involved in. Occupation is a parameter used to assess accident risk and wellness. For example, if you work in aviation, the risk to your life will be higher and the declaration needs to be done to the insurer. So, the nature of work is critical for risk assessment and the premium will depend on that information. Individuals with hazardous occupations or dangerous hobbies like paragliding, parasailing, rock climbing, etc. are charged more. The insurer can even refuse them coverage.
6.Mention Nominee Details
It is important to fill the nominee details in the proposal form in order to make sure that the benefit reaches the right hands.
Conclusion
From the above points, it is clear just how important the proposal form is. Hence, it is paramount that those buying an insurance policy should pay close attention while filling their details in this important document, failure of which may lead to adverse consequences such as rejection of claim.
In case you have any questions regarding the understanding of the proposal form, it is important to get it clarified from your insurer/insurance advisor. To let the underwriter assess your risk appropriately, it is imperative that you furnish the right appropriate details. It is better to be safe than sorry at the time of filing a claim.
Having a basic health insurance policy is a great start to protect yourself from rising hospitalization costs and receive hassle-free, timely treatment at high-quality medical facilities. Standard health insurance plans, however, may not be sufficient on their own as it is not “one-size-fits-all” in terms of catering to the diverse healthcare needs of each individual and family. This is where health insurance add-ons or riders come into play!
What is Health Insurance Add-On?
Health insurance add-ons or riders are additional coverage options that you can purchase to extend the scope of your standard health insurance policy. You can buy add-ons to suit your needs at the time of buying the policy or when you renew it, by paying an additional premium. These covers will help cover medical expenses that aren't covered by the regular plan.
Types of Add-on Covers in Health Insurance
There are several add-on covers in the market that cater to the various needs of the policyholders. Here are some add-on covers you can choose to boost your health insurance coverage and maximise its benefits.
1. Room Rent Waiver: In a standard health insurance policy, hospital room rent is capped to a particular limit. If you include a room rent waiver add-on to such health insurance policies, it either raises that limit or imposes no limit. In the case of no cap, room rent can be as high as the sum insured.
For example, Mr Rahul buys a health insurance policy of Rs. 5 lakhs with a room rent cap of 1% of the sum insured. After a few years, he had to be hospitalized for bypass surgery. His insurance policy allowed him a room that cost Rs. 5,000 per day. His hospital stay was 5 days long and he chose to stay in a room costing Rs. 8,000 per day. Rahul’s total hospital bill was of Rs.3,00,000. Nows, the claim calculations however work on the principle of proportionate deductions, except on medicines, as it is a non-associated expense. As one can see from the details below, the insurance company finally pays Mr Rahul Rs.1,96,875 even though the hospital bill was Rs. 3,00,000 only because of the room rent cap.
|
Bill Particulars |
Actual Expenses |
Claim Amount |
Claim Ratio |
|
Room Rent Charges |
Rs. 40,000 |
Rs. 25,000 |
62.5% |
|
Cost of Bypass Surgery |
Rs. 1,75,000 |
Rs. 1,09,375 |
62.5% |
|
Doctor Visits |
Rs. 30,000 |
Rs. 18,750 |
62.5% |
|
Tests |
Rs. 30,000 |
Rs. 18,750 |
62.5% |
|
Medicines |
Rs. 25,000 |
Rs. 25,000 |
100% |
|
Total |
Rs. 3,00,000 |
Rs. 1,96,875 |
65.63% |
2. Unlimited Restoration: This add-on replenishes the sum insured upon exhaustion due to claim/s. With this add-on, the customer can claim multiple times without worrying about the risk cover exhausting. For example, you purchased a health insurance plan, with a cover of Rs. 5 lakhs. You had to undergo a heart surgery that uses up the whole sum insured. Let’s say, within the same year, you get hospitalised again for another ailment which requires a medical expense of Rs. 2.5 lakhs. Without the Restore Benefit, your health insurance plan will not cover the cost of second hospitalisation, and you’ll have to pay the bill from your own pocket. However, if you opt for the restoration benefit add-on, the cost of the second hospitalisation will get covered by your insurance plan up to the base sum insured, relieving you of any financial burden.
3. Consumables Coverage: Nebuliser kit, hand gloves, syringes, belts/braces, registration/admission charges, etc. are not covered under the standard policy. The customer has to bear the expense of such items out of the pocket. By purchasing an add-on/rider at an extra cost, customers can get coverage of non-payable items as well.
4. Cumulative Bonus Booster: This add-on increases the sum insured by a fixed percentage if no claim is filed during a policy year. For eg; If your Sum Insured is Rs. 5 lacs and you have not registered any claim within the first policy year then your insurer gives 50% booster addition in base cover upon renewal. This means your sum insured becomes Rs. 7.5 lacs upon renewal without any increase in premium. So, with this add-on the insured need not worry even if the claim amount after renewal exceeds Rs. 5 lacs but up to Rs. 7.5 lacs.
5. OPD Care: OPD treatment is usually not included under the basic health insurance plan. The OPD care add-on covers costs associated with OPD visits, diagnostics, and medications. Please note that in order to claim this add-on benefit, the policyholder must submit a cashless or reimbursement claim.
6. Reduction in Waiting Period: Almost all health insurance policies include a waiting period for pre-existing diseases. By selecting this add-on, insured members can reduce or, in some cases, waive off the PED waiting period for an extra premium, thus allowing them to claim related expenses sooner than the stipulated time period.
Benefits of Buying Add-on Covers
On purchasing health insurance add-on covers, you will get:
- The ability to design or customise your policy to meet your specific medical needs.
- Less hassle during claims.
- Enhanced coverages and benefits.
- Tax benefits as per Section 80D of the Income Tax Act, 1961.
Conclusion:
Buying add-ons is a cost-effective way to cover the specific risks that are not covered under your standard health insurance policy. Now that you know about the various add-on options, ensure that you assess your existing medical conditions, family’s medical history, lifestyle, etc. before deciding which add-ons would be appropriate for you. It is also advisable that you go through all the terms and conditions in detail before you make the final decision.
