Choosing a Health Plan

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Rising medical inflation and increase in lifestyle diseases have prompted many people to buy a health insurance policy. Most of them will not file an insurance claim immediately after buying the policy. Usually, it is only during a major medical procedure that the insured individual carefully analyses the policy. Hence, as advisors the onus of suggesting a comprehensive health insurance policy falls on you. As for the insured, who is already under a lot of health related stress, having a hassle-free claim experience is crucial.

Here are a few pointers to keep in mind you recommend a health insurance policy:

• Distributor help-desk

A responsive and effective distributor help-desk goes a long way in resolving client queries and ensuring that the claim submission and settlement process is painless for you and your clients. Recommend products from insurers known for having a helpful distributor service desk.

• Incurred claim ratio

This ratio indicates the amount that the insurance company has collected versus the claim they paid over the year. An incurred claim ratio above 100% indicates that the company has paid more claim than what they collected through premium. This is largely due to underwriting inefficiency of the general insurers. However, a higher incurred claim ratio is good for the policyholder.

• Assessment of insurance coverage

Keep in mind the medical history of the family and the cost of treatment of major ailments before arriving at the sum insured.

• Co-payment

A crucial clause in a mediclaim policy is 'co-payment'. It is the percentage amount, which the client will have to shell from his own pocket as medical expenses.

For e.g., if the hospitalisation expense has been Rs. 1 lakh and co-payment is 20%, then the insurance provider will only pay Rs.80,000 while the policyholder will have to bear the remaining expense of Rs. 20,000.

A policy with higher co-payment tends to be cheaper than a policy with lower co-payment. Currently, many standalone health insurers and private insurers offer policies with no co-payment clause.

• Sub-limit

This clause in a policy can aptly be nicknamed as 'the rude awakening clause'. Health insurance policies tend to have sub-limits, that is, the maximum amount that insurers can pay you for an expense such as room rent.

For instance, generally, the room rent sub-limit ranges between 1-1.5% of the coverage amount. That means if you bought a policy with sum insured of Rs.5 lakh, you will get only up to Rs.5,000 for the room rent irrespective of the actual cost. Another factor of this clause is reduction in other key expenses. That means, if you exceed the sub-limit by say x% then the claim payment even for other charges, such as doctor's expenses, is reduced by x%. In such a scenario, many clients may get upset on seeing the claim settlement amount. Thus, as an advisor, you should help clients select policy with no sub-limit clause and educate them on its impact on settlement.

Select a health insurance policy carefully so that you make a stressful time in a client's life easier to bear.

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