Insurance is an integral aspect of overall financial planning. Wrong investments can be rectified, but if your health insurance planning goes askew, you may have to pay a high price to get it back on track, or worse still, there could be no second chances at all. If your health insurance planning goes awry, you may have to compromise on quality healthcare for yourself and your family, or your savings may get exhausted trying to manage high medical expenses.
Here are some of the most common, but grave mistakes people usually commit when it comes to health insurance, and what you can do to avoid them:
Rising healthcare costs make medical insurance mandatory. However, health insurance buyers often want to keep their health plan’s premium outgo as low as possible and hence buy a health insurance policy with insufficient coverage. Doing so defeats the purpose of having health insurance because in case of a medical emergency, the low cover will be exhausted in no time, leaving no choice but to dig into savings or even liquidate assets if the need arises. It is, therefore, advisable to thoroughly assess yours and your family’s healthcare needs, research, understand, and compare different plans and coverage provided by different insurers and then zero in a policy that matches your needs and budget.
Some insurance buyers conceal their medical history/background for fear of the policy getting rejected or having to pay higher premiums. This must be avoided at all costs - it is best to be absolutely honest about your health history and lifestyle. Non-disclosure of your general habits and existing medical conditions could lead to rejection of your insurance claim when the time comes. Concealing crucial medical facts from your insurance provider will also adversely affect your profile and may even qualify as fraud.
Although health insurance purchase does lower tax liabilities (Health insurance premiums are exempt under Section 80D of the Income Tax Act), the main objective of getting health insurance should be to cover health and be prepared for medical exigencies. Investing in health insurance solely to save taxes could lead to buying a policy that is not right or getting inadequate coverage. Buy health insurance to safeguard yourself against untoward health emergencies and not just to save taxes.
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Several health insurance companies price their policies as per city zones. Compared to Tier-I cities, health insurance premium outgo will be relatively lower for those living in Tier-II & III cities. City-specific health insurance is helpful for those having restricted income and if there are no reputed and well-equipped hospitals in their city of residence. It is important to remember that some insurers may restrict the policy’s coverage if a policyholder from a lower zone moves to a Tier-I city for advanced medical treatments.
The co-payment clause in a health insurance policy is aimed at keeping a check on the claims outgo. The clause is usually levied on those having specific medical conditions, for highly expensive medical treatments, for treatment in metro cities and non-network hospitals, and for medical treatment of senior citizens. According to the co-payment clause, the policyholder has to share the cost of medical treatment with the insurer, which could range anywhere between 10 - 20%, depending on the policy terms. The premium outgo becomes relatively lower if you opt for a higher co-pay payment percentage.
Contrary to popular belief, buying an additional health insurance plan to get higher coverage is not cost-effective when compared with other, better alternatives. It makes more sense to opt for a super top-up plan (an improved version of a top-up plan) to boost your health plan’s existing coverage. The difference between top-up and super top-up plans is that while top-up plans extend benefits after you cross the threshold limit, super top-up plans cover all medical expenses incurred in a policy year.
It is important to read the policy’s fine print in detail, and look at coverage, all inclusions, exclusions, etc. The fine print gives details about various health problems/illnesses not covered in the policy, which can help avoid unpleasant surprises at the time of making claims.
You may also like to Read: 4 Clauses Hidden in the Fine Print of Healthcare Policies
Relying completely on employer-sponsored group health cover is not a wise decision. Firstly, group health cover is usually between just 2 to 4 lakhs for the entire family, which is low, especially in bigger metro cities. Secondly, the employer may suddenly decide to cut down benefits, which will defeat the purpose of having insurance. Lastly, if you leave the company, you lose the employer-provided health cover too. Therefore, along with the company group insurance cover, it is important to have an individual health insurance policy with sizable coverage.
While it is true that younger people are generally healthier, it is also true that having adequate health insurance is a must, irrespective of your age. A major advantage of getting health insurance earlier in life is that the premiums are significantly lower and one also gets the policy easily since it is assumed that younger people are less prone to health problems.
Committing any of the aforementioned mistakes while purchasing health insurance will have reverse effects and it will become more of a financial burden rather than security. To avoid this, steer clear of these insurance blunders and pick the right insurance plan to protect your family and you.
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