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Health Insurance EBook

Medical Expenses

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Contents of this EBook

1. What is health insurance? 2. Types of Health Insurance Covers available 3. What is the Ideal Health Cover? 4. Employer health cover, is it enough? 5. Tax Benefits of Health Insurance 6. How to make a claim? 7. How Health Insurance protects your wealth 8. Loading and Co-pay in Health Insurance 9. Health Insurance for NRIs 10. How to choose Health Insurance 11. Myths about health insurance 12. Important points to note before buying Health Insurance 13. Examples of Policies 14. Health Insurance Exclusions 15. Top up Vs Additional Policy Vs Upgrade 16. Why one should take Health insurance for parents early in life 17. Health Insurance portability

This eBook is part of 100moneyactions Program designed & prepared by Jagoinvestor team for its premium members only . Any part of this eBook should not be copied and should not be used anywhere without permission from . Note that this eBook is only available for those who have paid the subscription fees for 100moneyactions Program at

- Jagoinvestor Team

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What is Health Insurance?

If we rewind our lives by few decades, when the blessing of Health insurance was not showered in India, what was the scenario? The patient who was treated for some illness was expected to pay for all and every medical expense that was incurred to cure his illness. Patients were expected to pay for such expenses from their own pocket as a fee charges against the services provided by the hospital. So, to ensure that patients are saved from paying for such high costs, this risk is covered by Health Insurance. In simple words, health insurance avoids the situation where you might have to sell your assets or dig deep into hard saved money to pay for medical expenses. It can cover individuals as well as families. Health insurance covers against the risk of incurring medical expenses for individuals. The overall medical expenses are estimated and that becomes the sum assured for which the premiums are to be paid as long the insured wants the cover to remain active. It is a year on year contract that needs to be renewed and premiums generally increase with age as the cost of providing such insurance rises. In many countries, health insurance is a must and many a times the government sets up some initiative to provide basic health cover and promotes to opt for private medical insurance for higher benefits against health expenses. Health insurance in India is offered by many private as well as government backed Health Insurance Companies. Some Rules of Health Insurance The minimum age limit to be eligible for health insurance is 18 years For family floater policies, the primary person insured has to be 18 years or more and other family members if below 18 years are covered If the applicant is above the age of 45 years, mandatory medical tests are applicable

The policy works as a legal contract between the insured and the insurer and all legitimate and

employers can also provide such basic health insurance to their employees as an added benefit. There is no deep thinking or complex logic required to understand the importance of health insurance. With raising inflation figures, it is quite obvious that medical expenses are far more costly than they were a few years ago.

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Types of Health Insurance

For health insurance, there two main types of covers available. 1. Individual Cover 2. Family Floater The basic difference between the two is given in the below table


Individual Cover

Family Floater Cover

Health Cover

Just Yourself

Self + Spouse + Kids + Parents


Must be above 18 yrs

The primary insured needs to be above the age of 18 years Covers all the members listed under the policy Little low as the Sum Assured Floats between 2-3 (or more) members Till the oldest member covered under the policy reaches the maximum age of renewal allowed by insurer Children will be covered up to the maximum renewal age allowed for

Sum Assured Cost of insurance Renewal Age Limit

Covers the Insured only

High compared to Family Floater Till the individual reaches maximum age of renewal allowed by insurer

For children

Minimum age of entry is 18 years

children usually 21 to 25. Thereafter separate insurance policy is to be bought for them

Separate Medical history is maintained Advantages Sum Assured is only for the individual

All the family members are covered under one policy. Sum Assured floats between members so the cost works out a little cheaper

It is always advisable to buy Notes individual health insurance cover for all the family member

Family Floater is to be chosen if you have kids in your family.


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Ideal Health Insurance Cover

It is never a surety that when and how much money will be required for medical expenses. If proper and adequate health insurance is not in place then such ungreat extent. The level of health insurance cover required varies from person to person and the financial circumstance and the number of family members and their respective ages. The most important point to note here is that the premium cost is not the criteria to decide the level of health insurance your need! Example Ajay is 30 years old and has health insurance cover worth 2 lakhs since last 7 years. He bought the basic cover thinking that he will never require hospitalization that would cost more than 2 lakhs and he was reluctant to pay little more premiums to get a higher cover. 2 years later, he is hospitalized for some surgery and the bill is Rs. 4 lakhs. Now, the insurer will only reimburse up to the limit of the Sum Assured i.e. 2 lakhs and the balancing 2 lakhs needs to be borne by Ajay. 1. Health Insurance cover should be such that if hospitalization is required then the dependents are not footing all the healthcare bills out of the savings or by selling assets or redeeming investments. All such expenses should be covered through health insurance policy (depending on the exclusions and conditions of the health insurance). Also note that many health insurance policies provide additional benefits such as daily allowance, ambulance charges, etc. for hospitalization. Not only are such benefits superfluous, they tend to drive the premiums higher. So it is best to avoid such plans and stick to something basic and simple.

2. To calculate the amount of health insurance required, a small exercise can be done. Calculate the average cost of common medical procedures carried on in the locality. This average cost acts as the prime assumption for the ideal health insurance cover. Next, assessment of self health condition and any prevailing medical history in the family should be accounted for and add this to the previous calculation. Sum of all these two steps will work out as the ideal cover for an individual.

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Health Insurance is a must because Health is Wealth! So insuring your health is equivalent to insuring your wealth prior warning Costs of Medical treatments are rising in double inflation figures It acts as a safeguard against your assets and investment getting used up to pay for medical expenses So that while getting treated for any illness you are not worried about monetary issues and can concentrate fully on recovery It is proved longhappen after a few years Health only deteriorates with age Lastly, because you have read and understood all the above points!

Employer health cover, is it enough?

It is seen these days that many employers provide health cover to its employees as an added benefit to the terms of employment. This makes sure that every employee is covered for some basic health cover. This is just an added benefit that is provided by employers that is offered mainly to claim tax deductions for the premium paid by the employer. So, the type of cover chose is very basic and at times many restrictions and exclusions are there. If you have employer cover then three aspects need to be considered in such a case--

Primary concerns
Terms of Loading & Co-pay All family members are covered Sum assured floats evenly for all members? Illnesses covered under such policy

Secondary Concerns
The cover is sufficient? Is the insurer good enough? What happens while switching jobs?

Health insurance is provided as a perk to the employees. So it is important to understand the policy a bit more in detail and to check for coverage conditions. The best way is to ask the HR Department for policy details. Get into details of what is covered and what is not covered? Many times Employees just think that they have Health Insurance and are just relaxed only to find later that it does not cover X and covers Y only up to a certain limit.

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Also, these days the cost of providing health insurance cover to the employee is huge. So, many overed or the health insurance cover is available up to maximum of 1 child only. Employers have started limiting the health cover for the type of health expenses that are covered. All these details are to be looked into much depth and these limitations necessitate having personal health cover and seeing employer health insurance just as an added benefit. In the event where the individual is in between switching jobs then the employer cover ends from the first employer and the individual is left uninsured and is exposed to the risk of health expenses until the employer cover starts from the new employer. see an example and 2 kids. He does not have any personal health insurance. Ajay is not paying any premium for this health insurance. After 4 years, Ajay leaves his current job and joins another employer. The new employer provides health insurance similar to the previous employer but Ajay joins this new company after 2 months. So, during this transition period, Ajay is left un-insured for health insurance. Any expense made for hospitalization during this period is to be borne by Ajay. Also, he may have to undergo medical tests for the new health insurance cover and any preexisting diseases will be covered after completing some specified waiting period (generally 4 years). Getting a personal health insurance cover helps to maintain a history with the insurer. So change in medical condition after buying the health insurance is covered under the policy. So when new medical insurance is bought after relying on employer cover for the term of employment, all the all the medical changes are considered as Prevailing for the purpose of setting up new health insurance. This may restrict an individual from getting any health insurance and it may result in increased premiums. So considering all the above facts, it can be concluded that detaching health insurance cover from employer and buying personal health insurance is more sensible and that way individual can be covered for the purpose of health insurance at all times.

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Tax Benefits of health insurance

Health Insurance is important whether or not it attracts any tax benefit. This concept needs to be understood so that you not only buy health insurance that is covered under the deduction criteria but it has to be adequate cover as well. The premiums paid for Medical Insurance of Self, Spouse or Children or parents is eligible for deduction under Section 80D up to the limit of Rs. 15,000/If you pay for health insurance premium for your parents who are Senior Citizens then such premium is allowed for deduction up to the limit of Rs. 20,000/In the proposed DTC bill, the premiums paid on life insurance, health insurance and Children Tuition Fee is capped to the total of Rs. 50,000/Example - Ajay pays health insurance premium for individual policy for himself and wife costing Rs. 12500/- per annum. He is also paying Health Insurance premium of Rs. 18000/- for his parents who are Senior Citizens. The total deduction Ajay can claim under Sec 80D is Rs. 12500 + Rs. 18000 = 30500/-

As per the current Tax Act, if the individual is paying Rs. 10,000 as yearly health insurance premium, and falls in the tax bracket of 30%, the tax savings works out to be 30% of 10,000 = 3,000/-. So, the actual health insurance premium that is paid is lower after considering tax benefits.

How to make claim for health expenses

It is very important to know the claim settlement procedure preferably before signing up for the policy. This information is printed well in the brochure or you can contact the insurance company helpdesk for exact details. The claim procedure remains unchanged no matter what type of health insurance cover is bought i.e. either individual or family floater. These days, majority of the Insurance Companies have set up a 24/7 helpdesk service for the assistance of customers.

The claim procedure can be of 2 types

1. Reimbursement Claims - Insurance Company is notified of the need of hospitalization is intimated and the insured is taken to either any hospital or one of the hospitals from the

such bills are presented along with the claim form to the insurance company for a reimbursement.

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The standard procedure is To intimate the insurance company helpdesk as soon as the need for hospitalization arises Any family member or friend can make this intimation in case the insured cannot do this formality Information of policy number, Name of insured, Contact Number, Name of Sickness and the date since the symptoms of such sickness were noted and the need for hospitalization If hospitalization is due to accident, then the time, location and date of such accident needs to be disclosed So, if there are 4 members in a family and each of the members has a separate health insurance cover. It is suggested that one document is prepared where in health insurance policy number, name of insurance company, sum assured, help desk number and other such details are noted. Make sure all the family members are aware where this document is placed so that they can manage things well at the time of emergencies. 2. Cashless Claims - This facility is provided by majority of the insurance companies wherein if the hospitalization happens in one of the hospitals from the network of different hospitals, the al expenses either at the time of admission or at the time of discharge, they are taken care of through the cashless facility between the hospital and the health insurance company. A separate form is to be filled for requesting cashless facility at the time of admission at the network hospital. This request form is then taken up to the TPA for approval by the hospital. Insured needs to attach the medical insurance card that is issued by the insurance company along with a photo ID at the time of making such request. Approval of such requests rests at the discretion of the TPA, it may be denied under the following conditions made available or not. If in the case where cashless facility is denied, the insured can still get treated for the sickness and manual claims can be sent to the health insurance company at a later stage.

If the information detailed in the request form is insufficient The ailment/condition (sickness) is not covered under the health insurance policy If the request of pre-authorization is sent at a short notice In case the TPA wants to get more information from the health insurance company regarding the sickness/condition that needs to be treated getting admitted to be assured, if the facility is

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In the case where hospitalization is done in Emergency then the health insurance company needs to be notified at the earliest to avoid any complication at the time of making claim. Domiciliary Hospitalization means medical treatment for a period exceeding three days for such illness/disease/injury which in the normal course would require care and treatment at a Hospital/Nursing Home but actually taken whilst confined at home in India under any of the following circumstances, namely o The condition of the patient is such that he/she cannot be removed to the Hospital/Nursing Home or o The patient cannot be removed to Hospital/Nursing Home for lack of accommodation therein For smooth claim process, just take care that all your documents are in place and to be on a safer side have a report from your family doctor, stating that this person cannot move to nursing home/hospital due to such and such reasons. It just provides the proof and makes the process simpler. Note that every company does not offer this facility; you should check your policy document.

How Health Insurance works as Wealth insurance

Health is Wealth ! This concept is often missed out while understanding the need of health insurance

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So, every time health insurance is bought or the policy is renewed, the actual protection is made for the wealth. There can be million reasons as to why NOT opt for adequate health insurance cover, be it high premiums etc... So every time the decision to buy health insurance is postponed or denied, it is obvious that if any medical emergency happens, the individual is ready to pay for the expenses (which may be to any level) from his own pocket. With all the advancement in science and technology had led to 2 things: We are living longer Medical costs are rising by the day

Both of these are the major reasons as to why one need to get health insurance organized early in life

lakhs and crores has wiped out with one major illness to one family member. Example - Ajay is 30 years old and has no health insurance cover. He suffers an illness where he is hospitalized for 8-7 weeks and the cost comes out to be 5 lakhs. In this case, Ajay will have to pay the balancing 5 lakhs from his own pocket. This Rs. 5 lakhs can mean his savings for last 2-3 years is wiped out -- Clean Sweep! Also note that due to hospitalization Ajay is unable to attend office which means he has missed out on salary for those weeks. So, protecting wealth is easy through health insurance but protecting health can be done by eating right food, daily physical exercise, having a positive and a good life style. Health Insurance only covers for the medical expenses that are made to treat your health. It is no way to protect your health. In fact, the only person who can protect your health is YOU!

Loading and Co-pay in Health Insurance

The concept of Loading and Co-pay are explained in the health insurance policy document. Majority of the individuals neglect and avoid reading the policy document this leads to no knowledge about the inclusions and exclusions of the policy.

Loading - It is the extra amount charged by the insurance company from the policyholder after a
claim has been made. So, it is the increase in the premium once a claim is made. Any such increase depends on the terms and conditions of the policy. Loading is applicable with every claim made and if in the policy document it is mentioned that loading is 50% then with every claim that is made, the premium is increased by 50%. This increase is charged based on the philosophy of the Insurance Company that once a policyholder has made a claim for sickness/illness then the chances of the policyholder making a second claim in the future increases.

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So, by charging a higher premium, the insurance company safeguards itself against the future recurring claims. Details about the loading charge are mentioned in the brochure as well as policy document. If these details are not read at the time of signing the declaration, the insurance company is at no fault!

Co-Pay - Here, the payment is made by 2 parties (not in equal proportions) i.e. the insurance
company and the policyholder. This is another important factor to be kept in mind while selecting the Mediclaim policy. As per this clause, the insured is required to bear a certain % of expenses incurred on illness while hospitalized under specified conditions. Co-pay usually starts once the insured has reached a certain age and most of the insurance companies levy this clause once the policyholder enters the Senior Citizens category i.e. after the age of 60. So, if a claim is made for Rs. 1 lakhs, the insured is required to pay 20% of 1lakh i.e. 20000 and the rest is beared by the insurance company. The basic understanding behind this clause, is that the company is expecting an increase in claims from this particular section of the policyholders, -- the senior citizens. ng sick increases. The expenses on his treatment for a given complication will also be higher as compared to the same treatment for someone who is much younger, say age 38 or 40. Some other companies, preferably PSUs, charge this co-pay clause if the policyholder is taking treatment in out of network hospitals. Earlier, they would apply this co-pay concept, in case the policyholder chooses a higher-end hospital with air-conditioned services or someone from smaller city getting treatment in costly cities like Delhi, Mumbai, Chandigarh, Bangalore etc. At that time, co-pay clause was built in to ensure that the policyholder choose the appropriate hospital/doctor/room level relevant to his economical status as well as the premium paid by him to ensure there is no overspend just because of the existence of the Mediclaim policy.

Health Insurance for NRIs

have those documents, then they are not eligible to get insured in India. The cost of treatment in India is different and cheaper than countries like USA, UK and other European countries. The premium amount computed depends on Indian conditions and parameters. So if a NRI has health insurance form Indian company, that person would be paying premium as per India actuaries and obviously cost of treatment in his residing country would be higher than India.

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For e.g. If a person gets dengue and he is very critical and requires urgent hospitalization the cost of treatment in India would come up to 1-2 lacs (and this is on higher side.) The same treatment would cost around 10-15 thousand dollars in US so this b

foreign country. If the primary bread winner has NRI status and resides in another country but has his family living in India are residents for tax purposes, then Family Floater can be opted for with primary insured as the spouse and secondary person insured as himself. This way health insurance can be organized with much ease and the sum assured floats to cover both husband and wife. Even kids can be added to such family floaters. But, if the individual is expected to stay in a foreign country for a long term, it is always advisable to get health insurance cover in that particular country. Also, in majority of the countries, it is mandatory to be covered for health insurance. So, if you are frequently travelling to and fro from India, it is always advisable to get your residential status checked for tax purposes. You can call health insurance company helpdesk or contact any tax agent for this.

How to choose Health Insurance

There are various factors to be considered before going solid with the type of health insurance and the insurance company. Premiums charged are not the only factor to be considered while selecting a Mediclaim policy as there are many other clauses and concepts that needs a proper assessment before finalizing the decision. Basic Health cover - These days, brochures of almost every type of health insurance cover offered are available over the internet. This should be read in detail to ascertain the exact treatments covered under the policy. All the defined benefits offered by the policy should be understood well. If needed, the insurer can be contacted and they can email the brochure or can have one posted to your address too. Another way is to contact agent and get a proper understanding on the exact cover offered by the policy. Reading the brochure yourself, can help double check the details provided by the agent.

Avoid comparing premiums - It is a common practice to get quotations from 2-3 different health insurance companies and compare the premium that is to be charged. Health Insurance is long-term purchase and it is more than a Mumbai-Delhi Air Ticket, which you can compare and buy from comparison/aggregator websites.

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Health Insurance is a long-term complex contract coupled with complex services. Comparison of premiums could be largely misleading and could result in a disaster. Comparing Health Insurance requires deeper insights into the overall insurance contract (called policy wordings) over and above price comparison. Either you need to get yourself into comparing the features in detail, or take help of an unbiased health insurance advisor.

Maximum Renewal Age Limit - Maximum Renewal age is the age at which the coverage on your health insurance would discontinue. This could be for all members or for a specific proposer/member, depending on the product you choose. Remember, your core goal, when you buy Health Insurance is to save yourself from mounting healthcare costs all through your life. A product, which ceases renewal at an early age or while you are still alive and it the time when you need assistance from such health insurance the most, is not a suitable product. So, avoid buying policies that ceases health insurance at an early age. Shift through all products and find out the maximum renewal age. Better, look for Lifetime products. Rule out all products, which do not cover your family members for a reasonable lifetime. As medical science progresses and becomes more accessible to the common man, life expectancy in India will move higher from the current average of around 70 years. A product with a lower renewal ceasing age than 70 years can be blindly avoided.

Limit of Treatments - Treatment wise limits basically cap the amount you can claim for a particular surgery under the policy. Say, there could be limits for Cardiac treatments of Rs. 1.50 Lakhs or for Cataract for Rs. 20000 per eye. Such limits would cap your claim, even n when you have a large sum insured under the policy. You need to weigh this in, before you sign up. It is very important to know what all treatments are not forming part of the policy!

Cash Limit - There are some products marketed and sold as Health Insurance (Aegon Religare Life, Tata AIG General are the popular ones) which provide a daily cash benefit for the no. of days one is hospitalization. Most surgeries require an average of 6-10 days, so at the Rs. 5000 per day limit multiplied by 10 Days would pay Rs. 50000 per hospitalization, irrespective of the actual charges incurred. An Angioplasty in this will unknowingly burn a big hole in your pocket. Please avoid this product for your core healthcare expenditure risks or as an alternative to a Standard Health Insurance product. This product is more like an add-on cover, than the bigger solution.

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Switching to a higher Sum Assured - Since this is a long-term product, you should look at the maximum available cover you can afford. Remember, a sum insured of Rs. 2 to 3 Lakhs will have no value, by the time you start using it. As per a very recent report on Healthcare in India by Tower Watson, the medical inflation in India is rocketing anywhere between 17 to 20% annual. The option of upgrading the cover at a later stage when you are older is dicey and complicated. There could be a requirement for a medical test. Moreover, if you or any of the family members contact a new disease in the interim, the ailment would be excluded for the upgraded amount. Upgrade would be almost like taking a new policy at that age, which I would not recommend.

Insurer credibility check - If it is a new company, you could look at the history of the promoters and their businesses. Generally, a company or set of promoters known for their ethics and excellent governance, venturing out into Insurance would be a decent bet. Get information from your advisor, on the overall claims experience, on responsiveness, about changes and number of changes in the product, since it was launched. Too many or too large changes, indicates there could be more tomorrow.

Third Party Administrator - TPAs are independent companies that provide administrative services and work as intermediary between the policyholder and the insurance company to settle claims. It is a common point of contact for the insurance companies as well as the policyholders. TPAs are not brokers as brokers only sell health insurance and are not involved in the process of settling any claim; whereas TPAs work for the health insurance company as well as the policyholder. Policyholder needs to contact TPA at the time of using the cashless -house settlement process is done in your city or in your state. Some of the General Insurance companies having in-house TPAs are:

Bajaj Allianz General Insurance Company (Basic)

b) Star Health And Allied Insurance Company c)

ICICI Lombard

d) Max Bupa Health Insurance


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Network of Hospitals - In the case of hospitalization, the hospital to be visited should be listed on the Network of Hospitals. The quality of services provided by any such network hospital should also be considered. It is important to know that in the event of hospitalization, the medical treatment and facilities will be up to the mark. Such list is commonly available on the health insurance company website, or this information can be gathered by contacting the helpdesk.

Relation between the Insurance Company with the Network of Hospital note, how fast the Insurance company/TPA makes the settlement with the Hospital in case of cashless hospitalizations. The Insurance Company may provide cashless hospitalization, but if the Insurance does not settle the Hospitals claims on time or only has a partial payout, then ount. If the company pays the claims on time and in full, then the Hospital would not try to increase the bills as they know that particular insurance company is a prompt paymaster.

Government Vs. Private Companies - Some consider Private Insurers better due to their modern infrastructure, their responsiveness. Some consider Public Sector to be more reliable. Private Sector would run for business and hence would be very responsive. Public Sector, are infrastructure, and hence somewhat have a social angle, changes in the policy are not driven only by profits but also need to socially acceptable. You need to understand the pros and cons diligently and hence set your own expectations right for your choice.

Ensure to have a good Advisor - Ensure you spend good time in deciding, who is your intermediary. Once you have taken pain to finalize a good advisor, you are more than half way done. A good advisor is one who would provide a) Unbiased advice, without any special affiliation to any Insurance Company. b) Provides Routine services like Pickups, Renewals etc. c) Assists and Guides you at the time of Claims. Health Insurance industry is witnessing huge changes both in products, price as well as processes, being an insider, it is sensible to have an expert on your side, who updates you on changes, their impact on your coverage and suggest change in course, in case necessary.

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Health Insurance for the aged - Till a few years back, health insurance companies were very reluctant to provide cover for the aged. But nowadays there are a lot of insurance companies providing policies for the senior citizens. Insurance cover paid for a person of age 60 years and above can provide additional tax exemption of up to Rs.20,000 but the premium rates are higher for such policies. For the employed, another option is to approach the employer to negotiate with the official insurer to provide an option for additional cover to parents. Since the volumes are high, the insurer can provide such added cover at attractive premium rates. Many Private and Government Health Insurance companies have launched various attractive health insurance products for the aged. Also note that any individual applying for health insurance aged 45 years and above has to undergo mandatory medical tests. The premiums vary as per the results of these tests. Some insurance companies and policies for Senior Citizens:

Star Health Insurance: Senior Citizen Red Carpet

b) National Insurance: Varishtha Health Insurance

Myths about Health Insurance

There are some common myths prevailing about the concept of Health Insurance and its workings. Health Insurance is a new thing in India and many concepts of it are not explained and marketed correctly which creates Grey-Area amongst the common people. 1. If I make a CLAIM, insurance company HAS to accept the request This myth holds true in the following circumstances: a) Where you Claim request is legitimate b) Your Claim request is authentic Majority of the claims are rejected because many a times the policyholder has absolutely no clue what exactly is covered under the policy that he is paying the premium for! This happens because they have relied on their agent to an extent that is equivalent to Blind Trust ; they have signed the documents without taking a proper look at the terms and conditions; they have not double checked if the disclosures made on the application form are correct! . A lot of times agents fill up the forms and the client does not cross check what is filled and what information is given . What if you are smoker and

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the agent did not tick mark correctly on Do you smoke? . In which case it will be assumed that you have not disclosed the right information and it will lead to claim rejection at some point of time. So make sure that you fill up all the form yourself or cross check each and every information after your agent has filled it . To ensure that your claim requests gets settled hassle free, you have to take a few steps before signing up for health insurance. Below is the exercise that is MUST for every person who is planning to buy health insurance? 1. Read the product brochure and make sure you understand all the terms and conditions 2. Approach authorized agent or contact the insurance company to get clarity on your queries 3. Fill the application forms yourself and avoid signing the documents blindly 4. Make all the correct disclosures about current health condition and any family history

2. 24 hour hospitalization is a must to claim on health insurance This is definitely a clause for making a claim for health insurance, but the logic behind this clause is to be understood. There is a pure understanding that most hospitalizations that are for less than 24 overed under a Standard Mediclaim cover. Hospitalizations (like Cataract), earlier required 2-3 days, which are now possible due to advancement in medical science in less than 24 hours are covered, while, hospitalization by an insured for more than 24 hours for getting his routine diagnostic tests done, where no active treatments are being carried out, would not be payable under Mediclaim. The thumb rule of a whether a claim is payable is not 24 hrs hospitalization but whether the hospitalization was medically necessary or not. 3. Comparison of Pre-existing waiting period This is a clause that majority people who are browsing around for a Mediclaim are confused about. Their one of the many important requirements from a Mediclaim is that they do not want a waiting period for pre-existing ailments even though their entire family is completely fit and healthy, without any ailment! Somehow, the clause again being so popular has brought in its own confusions for customers. In reality, the 4 year Pre-existing exclusion on ailments is applicable to ailments existing at the time of applying for the policy and not any other ailments. If you do not have any ailments or conditions, you have no pre-existing waiting period. So, when applying for a Mediclaim, if you are completely healthy, the Pre-existing exclusion clause is not applicable.

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4. Cashless is an on-call Emergency Service

Ever since the Cashless facility was introduced as a value addition to Mediclaim, it has become a prefix, or, even synonymous to Mediclaim. The reason for the cashless concept getting popular was obvious; it was a great value add, which helped customers tide away the burden of large payments on their bank accounts, documentation and of course, the stress of waiting for the claim cheque. Yes, Cashless can do all this, but expecting it to work when there are emergency funds required for Hospitalization is asking for too much. Understand the Cashless mechanism as a concept to know why it should not be considered and relied upon at the time of emergencies. Cashless is an arrangement between the Health Insurance Company/TPA and the Hospital where the Hospital agrees under contract to grant credit facility to the Insurance Company/TPA against authorized claims. Such an arrangement is only for authorized Claims, and not for all claims. TPAs/Insurance Companies, hence, need to assess every claim received, against the policy terms and conditions, to authorize payment. Such an authorization could require additional information as well as documents and hence can take anywhere for 4 hours to 2 days of time. In their role, the TPA or the Claims Team at the Insurance Company would have to do its job of evaluation of the claim, irrespective of how urgent the medical admission or treatment is. Cashless will help you save the burden of processing a reimbursement claim, but it cannot provide you the convenience of on-call emergency funds. Unlike the hospital cashier, Insurance Desks in hospitals (which coordinate for cashless claims) have fixed work-hours from 10.00 AM to 7.00 PM. Cashless process and approvals after 07.00 PM are processed by the Hospital the next day. Hence, though the TPA provides 24/7 service, the cashless process may not move, once the Hospital stops working on it. 5. Compare No. Of Day Care Procedure Most Insurance Companies (specially the Private ones) flaunt a large list of more than 100 Day Care Procedures being covered under their policy. In fact, it is a highlight of their product pitch. The truth is comparison of such numbers can be very misleading. One company could list every procedure, while another could list macro-level treatments, including the listed procedures of the former. For instance,

procedures, with an Oriental Happy Family Floater which covers only 26 procedures would feel that Apollo has wider cover on Day Care Procedures. Believe me, but it could actually be the reverse. How? Oriental promises to cover Eye Surgery (a broader definition) in its day care list, compared to say an Apollo which lists 15 specific eye treatments, which results in a larger number.

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Now, if the treatment being carried out is an eye surgery, which is day care but not a part of the 15 specific treatments, Apollo or many other Private players may not pay, whereas, in the case of Oriental it would get paid in the broad definition of eye surgery. By providing a specific list of surgeries instead of a macro area of treatment, the coverage under Apollo may actually be more restrictive in the long

long one. Do not compare the no. of Day Care Procedures. 6. List of Network Hospital Many people select the Mediclaim product depending up on whether or not their preferred hospitals

new tie-ups are made. What is clear from this is that there is no fixed or contracted list of hospitals between your Insurance Company and you -- which means there is no assurance that the hospital name in the list, which you are depending when you buy the policy, would exist in the network when you have a claim, say 4 years down time. Network List of Hospitals are not fixed or contracted through policy terms. The list could change even tomorrow, in fact it could change any moment. 7. Capping on Room Rent is not preferable Public Sector (PSU) Mediclaim products and their current terms and conditions are evolved from experiencing and analysing millions of claims spread over more than 20-25 years. Hospital Rooms are classified into various categories like General, Shared, Private and Deluxe Rooms. Earlier without the room rent limits, for the same treatment, a person with a sum insured of 1 Lakh paying a measly premium of say Rs. 2000, would have access to the same category of room, as a person who pays 5 times the premium, and takes a Rs. 5 Lakhs cover for himself. The 1% and 2% Room Rent Limits in Mediclaim brought a clear sync between the kind of premium one pays and the eligibility of room. With such capping, an individual who pays a high premium gets a better room, than one who pays a t with categories, like Indian Railways, providing you better facilities/services, as you move from 2 nd Class to 3rd AC to 2nd AC and so on. In my opinion, sooner or later, Insurance Companies would either have to hike premium for lower sum insured or bring in a capping of some kind. For instance, the newest health insurance company -- Max Bupa, has a restriction on the type of room according to the sum insured selected, instead of a no capping on room rent feature. Cappings are good for Health Insurance as a community fund. Cappings could actually be helpful to customers in the long run. 8. Health Insurance plans sold by Life Insurance are the same The highly advertised Health Plans from LIC are Defined Benefit Health Insurance Plans, sold as hassle free alternatives with guaranteed payments.

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These plans should not be considered as a substitute to Standard Health Insurance plans sold by General Insurance Companies. These plans provide fixed benefits against no. of days of hospitalization and/or surgeries. These plans do not take care of healthcare inflation. For instance, with 18-25% healthcare inflation, a fixed benefit for Angioplasty at say, Rs. 1,50,000/- would miserably fall short in 10 years. Defined Benefit products are actually supplementary plans which provide a cover over allied costs of hospitalization including loss of earnings, if any, but such products surely cannot be a substitute to the good old traditional Mediclaim. Read more about the difference here. A Traditional Mediclaim should be the first product you buy to cover the financial risk of healthcare expenses of the future. Defined Benefit Products are supplementary and not substitute to Traditional Health Insurance. 9. Health Insurance is Tax Savings Tool Large Healthcare expenditure can severely affect your financial planning for the future. The goal when you buy Health Insurance should be to financially insure your family against such large scale healthcare expenditure. Buying a health insurance product blindly, for the 80D tax benefits, is a widespread fallacy, which has left a large no. Of people underinsured or insured with products which are not suitable. The worst part is most of them are unaware of this. Health Insurance at its core is not a Tax Saving Instrument. It could save you much more than your tax, if you invest wisely. 10. Settling claims from more than 2 insurance companies It might happen that you get a health insurance cover wantingly/ un-wantingly from the employer and you have also organized personal health insurance. So, how to approach both the companies for claiming for health expense? Here, you need to understand that insurance cover is to make your loss good, so you will under no circumstances be paid more than what your loss is! E.g.: Ajay works for XYZ Ltd, where he is covered for Rs. 1lakh health insurance and he has persona health insurance policy of Rs. 2lakhs. Now, he is hospitalized and the bill worked out to be Rs. 2,80000/-. So, Ajay can claim: From Personal health insurance cover: Rs. 2,00,000/From employer cover: Rs 80,000/So, you will need the same set of documents to be presented for reimbursement from each of the insurance company. It is advisable to maintain photocopies of all the original documents and get them attested by authorized person. If you have submitted original copies with one company and the other company demands for the same documents, you can ask the first company to issue a letter saying that the

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original documents are with them and approximately how long will they take to clear the claim request. This will ensure that there is no unnecessary delay in settling the claim amount. 11. Mediclaim terms will not change with time Expect changes in the terms and features of the product. The Health Insurance companies and other stakeholders in India are going through a mindset change. Losses in Health Insurance are no longer acceptable by key stakeholders at Insurance Companies. A lot of streamlining and normalizing in premium, terms, benefits and procedures, which have already begun, is expected in the next 5 years. Group products would turn expensive, and restrictive. Parents would be out of most Sponsored Employee Mediclaim Covers. Large and small tweaks are expected in Retail/Individual products and processes, especially from new and private players who are till experimenting and understanding how to make a long term sustainable (read profitable) product for the Indian market. Ensure you are updated with changes in the terms and procedures of your Mediclaim Product. Ensure you have recruited a good advisor who keeps you posted on such changes. 12. Mediclaim policies once expired can be destroyed

divisions are infamous in the industry for changing their TPAs year over year. With TPAs being the custodian of claims, change in TPAs could result in scattered claims information amongst various TPAs

have information regarding how long you are continuously covered, an essential data point to approve claims, especially, and those treatments which had a waiting period at entry into the policy. TPAs for evaluation of continuity may demand policy copies of past 3 to 4 years. Hence, destroying policy copies records have cost many customers lot of stress in proving continuity of cover. Yes, we know that it is ridiculous for the Insurance Company or its representative to ask for their own record from the customers, but then this is how it is. A good health insurance advisor knowingly would keep a repository of all policy copies, to ensure such queries do not create roadblocks in a smooth claim settlement. In addition to the current one, keep copies of at least 3 previous year policy copies. Ensure your advisor also records them. 13. My Health Advisor is my friend It is noticed time and again, that most customers, who were found with a wrong health insurance

Most of these customers did not spend enough time in selecting an advisor and relied on pure reference. Most of these agents are Life Insurance agents, who do not have a detailed understanding

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of Mediclaim products neither do they provide any real expert assistance (beyond picking of forms,

the intention to provide unbiased advice. The advisor should forever own the product they sold you and provide services across the Health Insurance service cycle, including Purchase Assistance, Records management, Claims Assistance and Renewals. A good advisor would be able to hand hold you through the dynamic transformation that the Health Insurance industry in India, is witnessing and will continue to witness for the next 2-3 years. Select an advisor on merits and the services he demonstrated, and just not merely on reference.

Important points to be considered while going for health insurance:

Health Insurance covers for hospitalization from accident, surgery and normal hospitalization required to treat the illness that is listed in the policy. The insurance company will pay (reimburse or cashless) for the expenses and there are no exceptions. It is always better to stay with one insurer so that if there are any pre-existing diseases that the policy holder is suffering at the time of commencement of the policy, the treatment for such health conditions are treated within the policy after 4 years waiting period. Another advantage is the possibility to receive bonus or discount in premium if policy is kept active with one insurer over a long period. If accidental policy is taken as a rider with some Term insurance care must be taken that it covers everything what accidental policy should cover. Generally when a policy is offered as a rider it does not cover each and every aspect. For e.g. an accidental policy offers insurance against partial disablement, loss of limbs, hands and many other parts. But in a rider, many insurance companies offer insurance against permanent disablement only and not for partial disablement and loss of body parts. Also note that, because accidental rider is much less if taken with Term Plan as compared to the personal accidental policy taken stand alone. Under term plan, accidental death benefit could be taken for as little as Rs 1000 for a cover of up to 15 lakhs where as in a stand-alone policy the same amount will be available for a premium of around Rs 2000. The premium structure of the Mediclaim Company is such that either the premium increases every year or there are set premium slabs at various age levels. The current premium can/will increase irrespective of loading after certain age. It is possible to shift to another hospital for reasons of requirement, of better medical procedure. However, this will be evaluated by the TPA on the merits of the case and as per

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policy terms and conditions. Note that it would be prudent if you check the network hospital list and go to the best hospital in the beginning itself rather than changing midway. The Grievance Redressal Cell of the Insurance Regulatory and Development Authority (IRDA) looks into complaints from policyholders. Complaints against Life and Non-life insurers are handled separately. This Cell plays a facilitative role by taking up complaints with the respective insurers. Policyholders who have complaints against insurers are required to first approach the Grievance/ Customer Complaints Cell of the concerned insurer. If they do not receive a response from insurer(s) within a reasonable period of time or are dissatisfied with the response of the company, they may approach the Grievance Cell of the IRDA.

Exclusions under Health Insurance Policies:

1. Pre-existing diseases i.e. Any condition, ailment or injury or related condition(s) for which insured person had signs or symptoms and/or was diagnosed and/or received medical advice/treatment within 48 months prior to his/her health policy with the company. Pre existing diseases will be covered after a maximum of four years since the inception of the policy 2. Any disease contracted during the first 30 days of inception of policy except in case of injury arising out of accident 3. Certain diseases such as cataract, piles, hernia, and sinusitis etc. are excluded for specified periods if contracted or manifested during the currency of the policy. 4. Injury or Diseases directly or indirectly attributable to War, Invasion, Act of Foreign Enemy, War like operations. 5. Cosmetic, aesthetic treatment unless arising out of accident. 6. Cost of spectacles, contact lenses and hearing aids 7. Dental treatment or surgery of any kind unless requiring hospitalization 8. Charges incurred at Hospital or Nursing Home primarily for diagnostic, x-ray or laboratory examinations, without any treatment. 9. Naturopathy or other forms of local medication 10. Pregnancy & childbirth related diseases 11. Intentional self-injury / injury under influence of alcohol, drugs 12. Diseases such as HIV or AIDS 13. Expenses on vitamins and tonics unless forming part of treatment for disease or injury as certified by the attending physician. 14. Convalescence, general debility, run-down condition or test cure, congenital external diseases or defects or anomalies, sterility, venereal disease.

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Top-up Sum Assured vs. Additional Policy vs. Upgrade

It is very common situation that you may have organized some basic health insurance cover some years ago or may be your father had organized some basic health insurance cover for you and the policy has been active and now you realise that the sum assured is really low and basic against the rising medical costs. So, what options you have to increase the level of you sum assured? There are in all 3 options that you can choose from depending upon what suits your need! 1) Top-up cover - This is just a top-up sum assured to the existing health insurance company to take the medical cover beyond a threshold limit that is affordable. Top-up policies can be bought on an existing employer health cover or any other existing health insurance policy. Premiums paid on such top-up policies are eligible for tax deduction under section 80D. These policies can be bought from insurance companies other than the existing policy insurer. Example - Ajay has employer health cover of Rs. 2 lakhs (Oriental). He opts for a top-up of Rs. 7lakhs (New India Assurance), then in total Ajay has Rs. 10lakhs health insurance. If Ajay is hospitalized and the total expenses are Rs. 4lakh, the first Rs. 2 lakh will be settled by employer health cover (Oriental) and the other Rs. 2 lakhs will be settled through top-up policy (New India Assurance). Note that, top-policies do not cover medical costs for treatment of parents and there is exclusion period of 3 years for pre-existing diseases. (These terms may vary from insurer to insurer) 2) Additional Policy - This is a new policy that is bought from the same or different insurance company. It is not related or linked with the existing health insurance policy. So, at the time of making a claim, you need to decide that which company you want to claim for the expenses. This option works out a little expensive as it similar to opting for fresh health insurance and building a new health history from scratch! Example - Ajay has Rs. 2 lakhs health insurance cover from Oriental. Now, he opts for Rs. 5 lakhs cover from MaxBupa. Both these policies are not related and the premiums will vary as per the conditions of the each of the insurance company. Buying additional policy works out better when either you have no other health insurance cover (existing) or when you are buying personal health insurance along with the employer cover. You may have to go for medical tests all over again! 3) Upgrade - This means that you level up your sum assured on the existing policy. This option may or may not be available with every insurance company.

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So, it is one of the important things that you need to check before hand. If you increase your sum assured, surely your premiums will increase. Example - Ajay has health insurance cover for Rs. 2 lakhs from Oriental. Now, he opts to upgrade this policy to a Rs. 5 lakhs cover. This increased his premiums to the new applicable premium cost for Rs. 5 lakhs cover. This option is preferred when you want to continue with the same insurance company as your health history is maintained and is carried forward to the new level of sum assured.

Why one should take Health insurance for parents early in life
Most of the companies deny the health insurance cover to old aged individuals , because obviously they are very prone to illnesses and medical problems in life . Even though the premiums will be high still the chances of companies paying the bills at some point of time is very high, so companies are too hesitant to give any medical cover to people with higher ages. They completely deny the cover for parents above 65-70 yrs and most of the times even if a person is above 55 yrs or 60 yrs, it becomes too difficult to get a decent cover for them. Because of this reason one should always try to make sure that their parents take health cover earlier in life and do not wait for long because once the age threshold crosses, it will get tougher and tougher to get a policy for them.

Health Insurance portability

The concept of portability means switching from once company to another. Just like you can port your mobile numbers from one network provider to another, similarly you can switch between health insurance companies. Portability for health insurance means that the policyholder can switch to a different health insurance company if he is not satisfied with the current company. This may sound simple and easy to be done, but there is more to it. Health Insurance policies that are currently offered have different features and are bound under different terms and conditions and also no two health insurance policies offered by one company have similar guidelines. So porting of such complex

porting is feasible? IRDA has come up with this facility because all the current Health Insurance companies denied coming up with a simple and standard policy that will be offered by all the companies.

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When to apply for the switch ? The application for proposal along with the porting form needs to be filled with the new health insurance company 45 days before the due date of renewal of current health insurance policy. Upon receive of your application; the new insurer will contact the previous company within the next 7 days to collect information on medical and claim history within 7 days of the request made by the new insurer. This data nee new insurer fails to respond within 15 days time frame, the proposal is considered to have been accepted. Issues There are no set guidelines on the actions that can or cannot be taken against the previous insurer if it refuses or fails to release information on time. At times the authentication of the information and medical claim history is questionable. If some discrepancy is noted, the process may take longer than estimated timeline. If so, there are no instructions on the actions that need to be taken. Porting Pre-existing Diseases If a policyholder is all fit and healthy and free from any diseases at the time of getting health insurance organized from the current insurer. But through the passage of time, 1-2 diseases are infected for which the current policy provides claims. So, now when porting this policy to the new insurer, the the new insurer to cover for. No Claim bonus For every claim-free year, the insurer increases 5% (usually) sum assured on the existing policy without any extra charge. As per the current guidelines, at the time of porting the policy the limitation will be to port the sum assured along with bonus. There is some clarity needed if the new insurer will accommodate such porting of bonus with or without extra charge. Overall, this is a good facility that IRDA wants to provide to policyholders who are dissatisfied with their insurance companies. But before taking any further actions, it would be better to wait for further clarifications to come through.


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Examples of Policies
We have listed a few Health Insurance Products which can be considered as good policies

MaxBupa Heartbeat Policy Oriental Happy Family Floater Apollo Optima Restore Policy Bharti Axa Smart Health Insurance Plan -- You can also visit for all your health insurance needs. is a health insurance broker which represents the policy holders. You can buy the policy from online or offline and they will help you identify the most suitable policy as per your requirement. Best of luck for your financial life. We hope this eBook was able to clear a lot of your health insurance questions and also help you gain some knowledge on this topic.


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communication with each over comments section which keeps them informed over their financial issues. You can visit us at and read articles in different areas of personal finance ranging from Health Insurance, Life Insurance, Mutual Funds , Taxation, Behavioural psychology and financial planning related articles.

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I must say that I started learning about the whole world of managing personal finance through JagoInvestor blog. As I began to read and follow the blog more, I got completely convinced of the sound understanding and stronghold of the Jagoinvestor team in improving your financial health. As soon as I came across this opportunity to speak to Nandish and to work with him on my personal finance situations, I jumped on the opportunity and I am glad I did so. Most people can relate to two key things involved in running a business: Increasing revenue or optimizing costs. Nandish helped me view myself (& my family) as business. He helped me think through ways to reducing unnecessary expenses and provided ideas for increasing revenues. Also, he helped to plan to optimally utilize the profits i.e. savings to be invested in SIP or Loans etc. Before talking to Nandish, I would always wonder at the concept of planning for long term goals because I used to think that my goals are always flexible and depends on lots of things. Nandish helped me re-define my goal to be Wealth Generation & thats perhaps my single best learning from him. I sincerely thank Nandish and Jagoinvestor team for the tactical support to improve my financial life. More importantly, I think the real value of counselling with Nandish is the physiological shift that I trust will continue to help me in future as and when things change. I wholeheartedly recommend Jagoinvestor services to anyone genuinely interested in making smarter financial decisions.

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