Health insurance plans can prove to be a financial lifesaver for individuals, especially in case of emergencies. However, navigating the insurance plan complexities can prove to be daunting. This means without having a clear understanding of the accompanying terms and conditions of an insurance plan, individuals might have to bear unexpected and out-of-pocket expenses when they require financial help the most. This chaos typically stems from relying entirely on insurance providers, who might often prioritize closing their insurance plan deals over helping find the best fit for their client’s insurance needs. They might also recommend insurance plans based on their current budget rather than their actual healthcare needs, leading to the purchase of insurance plans that come with limited benefits that often leave them disappointed when an insurance claim arises. To help avoid such gaps, it is deemed crucial to become an informed insurance buyer. To begin with, they should find out details about factors such as coverage, network hospitals, co-pays, deductibles, claim settlement ratios, deductibles, and more.
Read along to learn more about how the key factors influence life cover and individual coverage.
Tip 1 – Deductibles:
The deductible on insurance plans sits at the top of this list of crucial health insurance terms to understand. Notably, deductibles are the upfront sum that individuals pay out-of-pocket typically before their insurance coverage kicks in for their covered medical expenses. For instance, with a comprehensive Rs.10 lakh health insurance plan and Rs.1 lakh deductible, individuals need to handle their first Rs.1 lakh of expenses themselves every year before their plans become active.
Notably, deductibles are deemed to be tempting, as they often translate to help lower premiums, making their insurance plan more affordable. However, it should be noted that this pays less now, to potentially pay more later, stance has its share of downsides. For instance, a high hospital bill coupled with an unplanned deductible might lead to financial stress.
Tip 2 – Copayment:
Copayments are another crucial term that one must understand before getting a health insurance plan. Typically, copayments are fixed percentages of an insurance claim amount that the insured pays out-of-pocket, regardless of their total bill. For instance, a 10% copay on their Rs.10,000 medical bill would mean that the insured will pay Rs.1,000 and their insurer would help them cover the remaining Rs.9,000.
Copays can lower the premium, making the insurance plan more affordable. However, they are not without their set of drawbacks. It is indeed true that some individuals, especially those who do not understand how the concept of copays works, may be surprised by out-of-pocket payments when they file an insurance claim. It is vital to remember that the concept of copays is not a trick, but essentially a pre-agreed cost-sharing deal between the insured and the insurer.
Tip 3 – Policy Sub-limits:
It is highly recommended to know one’s sub-limits. This is because they are essentially the key restrictions in a health insurance policy, like limits on specific diseases or caps on daily room rates, so they can heavily impact the policyholder’s insurance life cover. If an individual’s insurance plan comes with a room rent cap, it’s vital to opt for a room within that given limit to avoid shelling out extra money from the pocket. Unfortunately, there have been many instances where individuals have upgraded their hospital rooms, expecting they will get full coverage, only to end up surprised by the high additional charges. This makes it vital to find out about all the sub-limits in detail, be it in life insurance, health insurance, or unit-linked insurance plans, to understand how the expense outflow and coverage support would be during emergencies.
Example of How Policy Sub-Limits Impact Your Coverage
Suppose Raj’s health insurance policy covers a hospital room rent of a maximum of Rs. 5000 per day. However, at the time of hospitalization, he decides to stay in a better hospital room that comes at a cost of Rs. 10,000 per day. Raj assumes that it will be a 5-day stay, and he will just need to pay the difference in the hospital room rent, which would be Rs. 25,000 for 5 days out of his pocket.
However, in reality, Raj’s hospital bill inclusive of other charges would also become twice as costly, following his room upgrade from the preset limit of Rs. 5000 to Rs. 10000 per day. In such a case, his insurance policy will account for other covered charges such as his doctor’s fee, surgery cost, nursing charges, and others, that correspond to the hospital room rent they are typically eligible for.
In such a case Raj will end up paying a substantial amount than he thought he would. This is why it is crucial to remember two things in mind – first, buy an insurance policy where there is a limit on room rent or stay in a hospital room that is covered under the insurance plan. This will ensure that your policy accounts for your expenses and does not necessarily make you pay out of your pocket during emergencies. In turn, it also helps to protect savings from eroding and does not add to financial strain. Factoring one’s financial capability before getting an insurance plan with sub-limits is useful in many ways and more importantly, helps make arrangements to avoid situations that could add to financial strain or erode saved corpus during emergencies despite having insurance coverage.
That said, deductibles, copays, and sub-limits on hospital room rents are crucial components of health insurance plans that can help determine one’s financial responsibility when they receive treatment in a hospital. This makes it crucial for everyone to understand the clauses related to these factors to understand how they are used in the coverage and what repercussions they hold.
Individuals can also opt for a unit linked insurance plan which gives dual benefits of investment along with insurance life cover. With ULIP plans, you can be protected with a life cover whereas invest your hard earned money for wealth creation.
Such knowledge will help make an informed choice not only about the choice of health insurance plan but also about the budget set for potential expenses. This way, individuals can use their coverage more efficiently and manage their finances with more effect.
