You don't have to look too far to find someone who has some woes or other to narrate about health insurance. Why, even you, or a close relative, might have been a 'victim' of claim rejection.
One of the most common reasons for rejection of claims is that not many people are aware of ailments that are covered by their health insurance policy and those that aren’t. For instance, not all critical illnesses are covered under a critical illness policy. A policy taken from one company may cover an end-stage lung disease or liver failure, but that from another company may not. To weed out these last-minute surprises, you must carefully examine the policy details before buying it. The best way would be to buy a policy with the fewest exclusions.
Says Antony Jacob, chief executive officer, Apollo Munich Health Insurance: “It is imperative for all policyholders and prospective customers of health insurance to remember that every health insurance policy is unique and is guided by underwriting principles, making the coverage and exclusions vary from plan to plan and insurer to insurer.”
It is important to note that the coverage of pre-existing diseases and waiting periods differ from plan to plan and company to company. Says Subrahmanyam B, vice-president and head, health vertical, Bharti AXA General Insurance: “There are certain standard exclusions, such as pre-existing illnesses, maternity expenses and congenital diseases, which are excluded under all conditions. Then, there are certain exclusions which are time-based, that is, they are excluded only for a certain number of years.” (See No-Go Area).
There are different kinds of health insurance policies available in the market—indemnity, critical illness, daily cash hospital, unit-linked health policies, and so on. Before buying, be clear about what the policy is about and what ailments it covers. Says Sanjay Datta, head, health insurance, ICICI Lombard General Insurance: “It's prudent to get things clarified before buying a policy. For instance, a policyholder should know that pre-existing diseases are excluded as a general rule from health insurance policies. Then, there is a 30-90-day waiting period followed by various time and permanent exclusions.”
These are traditional policies which mainly cover hospitalisation expenses, subject to a minimum 24-hour stay. Some of the expense covered are room fees, consultant fees and surgeon fees, among other things. The traditional policies are of two types: individual health policies and family floaters (FF). While in an individual policy, only the policyholder can avail the sum assured, an FF is a combination of several individual health policies. So, under FF, the sum insured can be availed by any or all members of the family and not just a single person. For example, in an individual policy, you need to buy a cover of Rs 2 lakh separately for each member of the family of four for a total cover of Rs 8 lakh. On the other hand, in an FF, for Rs 8 lakh, each person covered under it can avail benefits up to Rs 8 lakh as opposed to Rs 2 lakh in the earlier instance.
Exclusions. Be aware of the sub-limits under different heads, such as room fees and consultancy fees, to avoid last-minute surprises. This is important because most of these plans now come with sub-limits, which is usually 1 or 2 per cent of the sum assured. Also, these plans do not cover pre-existing diseases or complications arising from them for the first four years of the policy. Claims for specific ailments, such as cataract and age-related eye ailments, arthritis and stone in gall bladder, may not be allowed in the first or second year. Before buying, always check the list of standard and time exclusions.
Critical Illness policy
Under this policy, a lump sum is paid if the insured acquires a serious ailment, such as cancer, or has a stroke, and the policy terminates after that. You need to check the list of diseases covered under a policy. Each policy has a list of ailments, usually 10-20 of them. Keep in mind your and your family's medical history before buying a policy. The critical illness policy can either be purchased in the form of a rider attached to a life insurance cover, or as a standalone policy from a life insurer or a non-life insurance company. If this cover is bought from a life insurer as a rider, the policy term is usually for 10-20 years. When bought from a general insurer, it's for 1-5 years.
Exclusions. To receive the payout, the insured has to survive for at least 30 days after the diagnosis. Like in other cases, a critical illness policy doesn't cover pre-existing diseases and no claim can be made during the first 60-90 days of the policy coming into force. Hospitalisation expenses due to accident may or may not be covered. So, you need to check all these details before buying a policy. Various permanent and time exclusions apply to critical illness policies as well.
Daily Hospital Cash Policy
Instead of reimbursing your hospital bills, a daily hospital cash (DHC) policy pays you on the basis of the number of days spent at the hospital. The policy has a predefined limit in most cases, say, Rs 500 per day for up to 50 days in a year, and up to 250 days during the entire term. This should be the last layer of your insurance cover.
Exclusions. DHC offers the benefit after discharge from hospital and only after the policyholder produces proof of the hospital stay. These policies, too, have pre-existing illnesses and waiting period exclusions, along with a list of permanent and time exclusions.
Unit-Linked Health Plans
Here, the payout is not dependent on the costs incurred on hospitalisation as these are defined benefit plans. Unit-linked plans consist of two parts—a health plan and a unit-linked investment plan. Out of the premium one pays, a portion goes towards medical coverage and the rest is invested in a fund that operates like a mutual fund.
Exclusions. Unit-linked policies do not cover pregnancy, infertility, congenital external diseases and genetic conditions. Similarly non-allopathic, cosmetic surgery and plastic surgery, hearing impairment correction, self-inflicted injuries, STDs and AIDS are not covered under the policy. There is a waiting period of 30 days. For the investment plan, the lock-in could be as long as three yeas with subsequent cap on withdrawals.
While it may be difficult to find out exactly all what your policy covers, the best option is to be aware of all the exclusions. It might be a time-taking exercise, but it's worth the trouble.