Things to know before buying medical insurance policy

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Medical insurance is commonly termed as mediclaim among us in India. It, in general, provides financial cover for treatment arising out of any sudden medical conditions, diseases, and accidents, if covered. Further, no one will deny that securing financial losses due to any kind of illness, is need of the hour. This is primarily due to the rising cost of treatment on one side and lack of proper treatment facilities at government hospitals on the other side.

Broadly speaking, you can secure any of your financial losses that may arise out of un-wellness that needs medical attention and treatment thereafter. They are medical insurance and health insurance. We will confine to mediclaim in this blog.

Though for some both mediclaim and health insurance term are same, in reality, they are distinct. You will come out with the factors that make them distinct after reading this blog article. In addition, this blog will equip you in deciding what kind of policies to look for and what special kind of features to consider, before actually buying any of the various policies, that fits your requirement.

But before that just glance at the below paragraphs to understand why in actual we need a financial cover that oozes out of health-related issues.

What is the need for a medical insurance

Instances of health issues related short hospitalization are increasing substantially not only among urban but also among rural. No one knows in advance when this situation will creep in one’s life. These kinds of hospitalizations put an additional burden on the pockets.

The quantum of expense also varies drastically with the quality of hospital and the locality one chooses. Hospitalization for short duration in tire-III cities may be comparatively cheap then tire-I or tire-II cities. Thus, the need of insurance to cover such short term but abrupt huge expenses is a necessity nowadays.

Mediclaim is one such policy which helps you relax for such worries at least from the monetary aspect. Nowadays, in addition to individual mediclaim, medical insurance for the whole family is becoming popular. This saves money and covers entire family in one go.

Before proceeding further let us deep drive a little more into a typical medical insurance policy.

What is medical insurance?

Mediclaim basically gives a hospitalization benefit to its policyholders. It is offered by public and private sector general insurance companies. The terms and conditions for availing facilities are always there and needs to be understood properly before purchasing.

Key feature of medical insurance

  • Covers hospitalization and treatment towards accident
  • Some covers pre-specified illnesses for a specific sum assured limit
  • The premium is mainly based on the sum assured
  • The amount paid towards premium for self/spouse/children provides tax exemption under section 80D
  • Tax exemption is a maximum of Rs.25,000 (for individual) and additional Rs.25,000 for parents (Rs.30,000 if parents are senior citizens).

Covered under mediclaim

  • Domiciliary hospitalization expenses for illness/disease suffered
  • Accidental injury sustained during the policy period
  • Room, boarding expenses in the hospital/nursing home
  • Nursing expenses, surgeon, anesthetist, medical practitioner, consultants, specialist fees
  • Anesthesia, blood, oxygen, operation theatre charges, surgical appliances
  • Medicines, drugs, diagnostic materials and X-Ray cost
  • Dialysis, chemotherapy, radiotherapy
  • Cost of pacemaker and artificial limbs
  • Cost of organs and similar expenses
  • Day-care treatment including medical expense towards specific technologically advanced day-care treatments
  • Surgeries where 24-hour hospitalization is not required
  • Ambulance charges for shifting the insured from residence to hospital
  • Ayurveda/Homeopathic and Unani system of medicine charges
  • Pre-existing diseases after a specified period of the policy or on payment of additional premium
  • Pre-hospitalization expenses for few days prior to hospitalization
  • Post-hospitalization expenses for the specified days as per policy terms
  • In case of any injury due to natural disasters like earthquakes, flood etc

Excluded from mediclaim

  • Any disease or sickness existing before the mediclaim policy is taken
  • Most do not offer mediclaim for obesity-related illnesses, expenses arising from HIV or AIDS or the use of alcohol or drugs and expenses due to attempted suicide
  • Expenses associated with the treatment due to war, riots or a terrorist attack

A word of caution! Pre-screening of available mediclaim is very important as each mediclaim is unique and provides a bundle of facilities but not all the features. Depending upon the need of individual and family, it is highly recommended to choose any such policies.

Criteria of premium calculation

  • Disease history, if any
  • The age of the proposer
  • Geographical area of the treatment
  • Some discount in premium for family cover
  • Loyalty discounts, and no claim discounts etc
  • Top up to increase Sum assured

The mode of a claim for any mediclaim could be either cashless or a reimbursement. Short-term hospitalization may be due to any sickness, disease or accident. Mediclaim, in general, are costlier than other health insurance mainly because of rising in proportion and rising cost of treatment.

Cashless or reimbursement?

Mediclaim comes with features of cashless as well as reimbursement. In cashless treatment the insurance company pays directly to the network hospitals. And the insurance company settles part or entire claim with hospital directly, depending upon the kind of policy. While under reimbursement policies, the policyholder has to inform during or before hospitalization and pay all the expense during treatment. After discharge, the policyholder has to claim the expenses against original bills relating to treatment.

Top-up and add-on facility 

Add-on or riders cover only a few serious illnesses. On the other hand, top-up policies cover all treatment costs but post exhaustion of base policy amount. you can purchase add-on covers along with your base policy itself. The top-up is independent and you can buy it separately, even from different insurers. You must make yourself clear with the procedures and offerings by the issuers before finalization.

Agent commission in mediclaim

Insurance companies pay commission to the agent/broker on the medical insurance policy you buy from him. The commission depends on the age of principal policyholders. The slab is more or less same for every company. For example, up to 35 years of age 15%, 36 to 55 is 10%, 56 onwards is only 5%. The commission is paid out of the base premium excluding the service tax and education cess etc.

It is not about the commission which is important to consider. What makes sense is the choice of an agent or an insurance broker from whom you buy a mediclaim. This is quite important because he is the main link between you and the insurance company. His service did not end with the closure of sale of the policy. But the process of rendering services just began with the purchase of any policy with that agent.

In the situation of claim from the medical insurance, he is the one who comes in handy. And so a trustful relation with the agent is very important. Search an agent in near your vicinity unto which you can depend on Moneydial. Moneydial is a web-based portal where you can find an IRDA certified insurance adviser for your every financial need including mediclaim. Browse Moneydial to find credible insurance advisor near your area.

Convinced! And decided to have a medical insurance policy?

Hold on!

Before going to buy a mediclaim, just understand the two broad types of mediclaim and give a thoughtful thought ahead of choosing.

Individual medical insurance policy or family floater – decide judiciously

Mediclaim can be broadly grouped into two subgroups, i.e., individual mediclaim policy and family floater policy. In case of the individual, the policy covers for a defined amount. Whereas, under family floater, each member of the family is covered.  Let us understand the basic difference between individual and family floater policy with an example.

An example to understand why family floater is beneficial

Suppose there are three family members in a family, Mr. Shyam, the husband, Mrs. Meera, his wife and their kid Master Rohit. Mr. Shyam plans to cover each one with mediclaim policy. He has two option. The first one is for each member he chooses the individual cover of Rs.one lac. In this case, each one can claim up to a maximum of Rs. one lac in case of medical need. This is the maximum each of the three insured can claim towards individual treatment.

Whereas, if Mr. Shyam opts for family floater then there will be floating sum assured for each member with a cap for the three members of the family as a whole. Thus, each one of Mr. Shyam family under this policy will allow any one of them to claim medical claim up to Rs.3 lacs at a time.

Thus, suppose in case Mrs. Meera and Master Rohit, both need hospitalization in any particular year. In the floater policy, a maximum claim of Rs.1.5 lac each or in any other combination but not exceeding total claim of Rs.3 Lacs can be made. Comparing the same case with individual policy coverage, Mr. Shyam had to arrange for Rs.50 thousand each in case treatment exceeds Rs.1 lac.

Just before checking out the checklist to buy a mediclaim, clear your confusion that most people have on medical insurance and health insurance policy.

Is mediclaim different from health insurance policy?

Medical Insurance Policy Health Insurance Policy
Reimburses actual medical expenses Gives a lump-sum amount on diagnosis of any of the pre-specified critical disease.

Actual medical expense could be less than the lump-sum amount

Have wider scope than critical illness.

Covers hospitalization and treatment towards accident as well

Covers only critical diseases like heart attack, kidney failure, paralysis, etc.
It bears all hospitalization expenses in case of hospitalization Covers hospitalization expenses, pre, and post hospitalization expenses, ambulance charges, compensation for the lost income and more.
Hospitalization is required to claim expenses.

The upper cap on the sum insured does not exceed Rs.5 Lacs.

An eventuality is required for the claim. It might not necessarily be hospitalization.

The upper cap on the sum insured can go up to Rs.60 Lacs.

Works on indemnity principle.

Here the hospitalization expenses are reimbursed, thus making up for his loss

Works on benefit principle.

Here a lump-sum is paid in case of any eventuality.

Allows to make ‘n’ number of claims till the sum insured is exhausted. Entire sum assured is paid after the claim, so no other claim during the same policy tenure

Checklists before buying a Medical insurance  policy

Assay your medical need before buying a mediclaim. Here is a checklist for you that may help in choosing one for yourself –

1. Coverage & exclusion- First of all you must look for treatment specific coverage and exclusion of the policy under consideration. Like maternity, cardiac treatments or cataract coverage, etc. And at least select 3-4 similar coverage policy before purchase.

2. Co-payment option –  Always look for this facility and tax claim benefits associated with it. This is more important when both husband and wife are working and have planned for the family floater.

3. Network hospital – Check for the hospitals in your near vicinity and the policies that cover them. Generally, each policy cover selected few hospitals and nursing homes in any locality.

4. Renewal option – First decide that up to what age do you want to renew your policy and see which policy gives renewal option at least till your consideration.

5. Waiting period – See for any clause in the policy for the waiting period before making any claim or is the policy covers just from the 1st day of the policy period. Policy without waiting period is good. However, it may come with some additional cost.

6. Free Look period – You should prefer a policy that gives you an option to return policy within a stipulated time frame and get a refund on the paid premium. Keep in mind that in such case, there is a minimum deduction. This timeframe is known as free look period. Check for this option as well with your agent before the decision.

7. Compare premium – Last but not least, it is always advisable to compare the premium of the selected policies. Give weight to one which offers more facilities along with coverage and then go for purchase.

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