Health Insurance PDF

Melvin Joseph
Investment Adviser || SEBI Registration Number: INA 000000342
Let me start with my own story. After working for 20 years in life insurance sector,
I decided to quit the job and start a financial planning firm. Before leaving the job,
I purchased a family floater health insurance of 5 Lakhs in December 2009 at the
age of 42.
Within 8 months of leaving the job, I had to undergo a surgery to remove a cyst in
the brain. I was scared but was happy too because I have the health insurance. The
surgery was successful and the bill was 3.5 Lakhs. When I applied for insurance
claim, it was rejected by the insurance company. The company replied that any
diseases which are there from birth (congenital diseases) are not covered and it was
clearly mentioned in the terms and conditions of the insurance policy. I had to pay
it from my pocket.
I am still continuing that 5 Lakhs policy. I cannot increase the health insurance cover
because no insurance company is ready to offer higher cover after the surgery. I have
purchased a separate policy for my wife and children.
Let’s understand the concept of Health Insurance.
If you have a health insurance policy of 5 Lakhs, the insurance company will
reimburse the amount you spent in case of hospitalization due to any disease or
accident upto 5 Lakhs in a year. If the hospital bill is less than 5 Lakhs, you can
claim the entire amount, if the bill is 6 Lakhs, you have to pay 1 Lakh from your
pocket. You should be admitted in a hospital for atleast 24 hours to claim the
amount.
But there are many conditions which makes health insurance a complex topic.
Let’s first understand 20 common terms in Health Insurance
1. Sum Insured
Sum Insured (SI) is the maximum amount that your insurance company will pay in
a year in case you are hospitalized. It can be 2/3/5/10/50/100 Lakhs depending on
how much sum insured you have opted for in your policy.
2. Day care procedures

In normal cases, you will get claim from health insurance policy, only in case of
hospitalization of 24 hours or more. But there are many procedures which don’t
require hospitalization with advancement in technology. For example, cataract
surgery does not require hospitalization. Insurance policies list out certain
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Personal Finance Simplified for You – Health Insurance
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procedures like this as Day Care Procedures. Claim is paid in these cases even
though there is no hospitalization of 24 hours.
3. Domiciliary treatment
This is the treatment which is done at home (at the advice of medical practitioner)
which otherwise would have been done at hospital. Claim settlement depends on the
conditions mentioned in policy document.
4. Network hospitals
Each health insurance company will tie up with many hospitals for providing
cashless claim settlement. The list of such hospitals is mentioned in the website of
the company and they are called Network hospitals. Before purchasing an insurance
policy, you have to check whether the good hospitals in your locality are listed as
network hospitals in the website of that insurance company.
5. Blacklisted hospitals
Some hospitals charge very high and deal in unfair practices. Such hospitals are
blacklisted by insurance companies. Health Insurance Company will not pay claim
if you are treated in these hospitals. The list of blacklisted hospitals is mentioned in
the website of the insurance company.
6. Free look Period

In some cases, you may not be happy with the policy you have purchased. You have
a window of 15 days (after the customer receives policy document – e-
mail/physical) within which you can cancel the policy, if not satisfied with the terms
and conditions of the policy. It is called free look period. Insurance company will
refund the premium paid by you after deducting cost of pre insurance medical check-
up (if any), stamp duty charges and proportionate risk premium for the insurance
cover.
7. Ayush Cover
It covers Ayurvedic and Homeopathic treatment. This is normally not an inbuilt
feature in most of health insurance policies. You have an option to choose it in
certain policies with certain limitations.
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8. Claim Settlement Ratio (CSR)

The ratio of claim settled divided by claims received in a year is called claim
settlement ratio. For example, if total number of claims received is 100 and 90 claims
are settled, the claim settlement ratio of that company would be 90%. This is a
measure you should look for before purchasing a policy.
9. Incurred Claim Ratio (ICR)

Total value of claim paid by the company divided by total premium received in a
year is called incurred claim ratio. For example, if total value of claim paid by
company is 9 Crore and premium collected is 10 crores, the incurred claim ratio is
90%. If the ratio is above 100, it shows the business is not viable for the company.
If this ratio is less, there can be many claim rejections. If the company is very strict
in selection of lives, then also this ratio can be less.
10. No Claim bonus
If you don’t make a claim in a year from your policy, the insurance company will
add a certain percentage of the sum insured to your sum insured. This additional
amount is called No Claim Bonus. For example, if the No Claim Bonus for a claim
free year is, 20% in a 5 Lakhs policy, the policy value will be increased to 6 Lakhs
in the second year. If there are no claims in the first 5 years, the value of the policy
from 6th year will be 10 Lakhs. In case of future claims, added No Claim bonuses
will be reduced. Some policies don’t reduce the accrued No Claim bonus in case of
future claim.
11. Co payment
In some policies, you have to pay part of the claim amount from your pocket and the
insurance company will pay only the balance. This means the company will not settle
the full claim. This is called copayment. 20% copayment means, for a claim of 100,
you will get 80 from the insurance company and 20 has to be paid by you.
12. Free medical check up
Some health insurance companies offer free medical check once in a year or once in
2 years as a good will to the policy holders. This is allowed only to the adult
members covered in the policy.
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13. Life Time Renewal
Once purchased, the insurance company is liable to give you the insurance cover
every year till you live if you keep paying the premium on time. This is called life
time renewal.
14. OPD cover
OPD cover (Out Patient Department) is normally an add on cover in health insurance
policy. Normally, these costs are not covered in the policy if you are not hospitalized.
Health Insurance plans that offer OPD cover assists the insured to claim expenses
other than that incurred during hospitalization. This policy also covers doctor visit
charges and pharmacy bills. Most policies are not offering OPD cover.
15. Maternity cover
It covers delivery expenses, both normal and caesarean. Some policies also cover
the medical bills of the newborn baby for a particular period like 1 - 3 months.
Policies offering this cover are coming with many limitations and are not cost
effective in most cases.
16. Pre-existing conditions
Any medical condition or disease before purchasing the health insurance policy is
called pre-existing disease. Any hospitalization due to pre-existing condition is
covered after 12 months - 48 months as per the conditions in the policy. You are
supposed to disclose all health issues and medical conditions in the past and present
while purchasing the policy. Otherwise, it can lead to claim rejection and policy
rejection in future.
17. Permanent Exclusions
There are some cases which are not covered under health insurance. They are called
permanent exclusions. Claim arising due to participation in hazardous sports,
infertility treatment etc falls under this category.
18. Congenital health issues
Congenial health issues are also known as birth defects. Congenital health issues are
also permanent exclusions in most policies.
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19. Pre & Post Hospitalization expenses
Pre-Hospitalization Expenses - These are the doctor consultation charges,

diagnostics test charges etc before the hospitalization.
Post Hospitalization Expenses: These are the follow up consultation charges,

diagnostics and medicine expenses etc. after discharge from hospital.
20. Restoration Benefits
The original sum insured is restored if the existing sum insured get exhausted due to
hospitalization. But there are many restrictions in availing this restoration benefits.
You cannot claim restoration benefits for the same disease where you have
exhausted the base sum insured.
Let me explain Health Insurance in detail
Day by day new diseases are appearing. Day by day new treatment procedures are
emerging. Many diseases which were dangerous in the past are curable now with the
advent of new medicines and procedures.
But how any of us can afford a treatment in a corporate hospital for 15 days? In Navi
Mumbai, where I am staying, the daily rent for a single room in a decent hospital is
in the range of 6000 -7000 per day. In the case of ICU, it is almost double. The
hospital bill can run into many lakhs for a 15 days treatment. The rate at which the
health care expenses are increasing is alarming. Recently my friend paid 4500/- for
a second opinion from an expert doctor.
In the absence of a decent health insurance cover, we will be forced to avoid such
treatment and compromise on the quality of treatment and be happy with an
affordable hospital. I am aware of a person who underwent a major surgery in a low-
quality hospital and subsequently developed post-operative issues due to the lack of
care during the surgery. He is bedridden from 2015.
In many developed countries, you should have a decent health insurance, if you want
to get proper treatment in hospitals. Recent data from COVID 19 issues from many
countries support this. India is also moving in that direction.
Everybody knows Insurance is not bought but it is sold. But there is one type of
insurance, which is bought now a days and it is Health Insurance. We are forced to
meet doctors very often and undergo the ‘essential tests’ for anything and
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everything. The modern stress life and junk food has created lot of young patients,
who will be getting life style diseases at a young age. The inflation in health care
expenses is much more than the general inflation, making health care unaffordable
without a health insurance. Increase in longevity also makes health insurance a must
for everybody.
It is in our own interest that all of us should have a decent health insurance for all
members of the family. It is also our duty to educate our extended family and friends
to opt for a policy.
Types of Health Insurance
There are broadly 2 popular types of Health Insurance Cover: Individual Policy &
family floater policy
Individual Policy
The simplest form of health insurance is the Individual Health Insurance policy. It
covers the hospitalization expenses for an individual up to the sum insured. The
insurance premium is dependent on the sum insured and age.
Example: If you have 4 members in your family, you can purchase an individual
cover of Rs 2 lakhs each. In this case, all of you are covered for 2 lakhs. All the 4
policies are independent.
Suppose one of you have an accident and there is a hospital bill of 3 Lakhs- then the
insurance company will pay only 2 Lakhs. Balance 1 Lakh has to be paid from your
pocket. If in the same year, there is another claim of 50,000 for the same person, he
will not get anything from his policy because the 2 Lakhs limit is already exhausted
in the first claim itself.
Family Floater Policy
Family Floater Policies are improved version of the Mediclaim policy. The sum
insured value floats among the insured family members. Each family member comes
under the policy and it covers expenses for the entire family up to the sum insured
limit. The premium in family floater policy is decided mainly based on the age of
the senior most person in the policy.
In what way your benefits differ in a Family Floater Health Insurance?
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Let’s assume in the above example, you have opted for the Family Floater Policy of
Rs. 5 lakhs. In that case, your bill of Rs. 3 lakhs will be paid in full and your next
bill of 50,000 also will be paid in full. This is because, in a Family Floater Health
Insurance, total cover of Rs. 5 lakhs will float between all members covered.
Anybody in the family covered in the policy can claim the amount. The only
condition is that, the total payout in a year will be limited to the sum insured. In our
example, it is Rs. 5 lakhs.
Which is better? Individual Policy or Family Floater Policy
If you are young, the chances of all members in the family getting hospitalized in a
year will be remote and Family Floater Health Insurance will be cost effective. Any
member hospitalized can benefit from the full sum insured of the Family Floater
Policy.
But, if any of the family members is having any health issues, it is better to opt for a
separate individual policy for that person and family floater policy for others.
Don’t include your parents in your family floater policy - It will increase the
premium outgo. Purchase separate policy for parents.
What will happen to the Family Floater policy, in case of death of a member?
You can inform the insurance company and the policy will continue without that
member. Premium will be adjusted accordingly.
Health Insurance - How much I should insure for?
How much is the ideal health insurance cover required? There is no standard answer
for this. One has to look at his lifestyle, health condition, age, life stage, family
history of illnesses and affordability and decide the amount. Another important
criterion is your place of stay. If you are staying in a metro city, there is a need for
high cover to manage the high cost of treatment.
Now I am suggesting a cover of 30 Lakhs for my clients to start with. This is

suggested through a combination of base policy & super Top up policy. The annual
premium for this 30 Lakhs family floater cover for a 35-year-old person, wife and a
child will be around 18,000/- per year. Premium will increase with age.
Some insurance company increases the premium marginally every year. But other
companies increase it in age band – higher increase may be once in 4 years.
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Also note that many health insurance policies “provide additional covers” such as
daily allowance, ambulance charges, etc. for hospitalization. Not only are such
“covers” superfluous, they tend to drive the premiums higher. It is better to avoid
such plans and stick to something basic and simple, if you are looking for value for
money.
I have a 30 Lakhs family floater policy now. Can I increase it to 50 Lakhs at age
55?
This is a million-dollar question. If you have 30 Lakhs policy, you can continue to
renew this 30 Lakhs policy till you live because most companies allow life time
renewal. Suppose you or any other insured members in the policy are affected by
any health issues after 5 years of purchasing this policy, still you can continue this
30 Lakhs policy till you live. But if you want to increase the cover from 30 Lakhs to
50 Lakhs, it can be difficult. The decision to increase the policy value or not is taken
by the insurance company subject to the health condition of all members insured in
the policy. The insurance company will decide on this based on your declaration and
subsequent medical checkup. If there is a health issue, your request for increase in
cover can be rejected by the insurance company.
This is exactly the reason why I am unable to increase my policy value from 5 Lakhs
after the surgery.
If you are having a 30 Lakhs policy now, it will be equivalent to a 12 Lakhs policy
after 10 years assuming an annual health care inflation of 10%. Purchase a high
value policy when you are young and gradually increase it to ensure decent health
cover for the long post retirement days.
Claim Settlement in Health Insurance Policies
There are 2 types of claim settlement in health insurance policies – Cash less
settlement & Reimbursement.
Cashless Settlement
Health insurance companies tie up with many hospitals to facilitate claim settlement.
List of such hospitals (Network hospitals) is published in the website of health
insurance companies. When you are purchasing the health insurance policy, you will
get a Health Card (for each insured member) which you can submit to the hospital.
If you are getting admitted in any of the network hospital, claim settlement can be
easy. Hospitals are having insurance desk to deal with health insurance. If you are
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getting admitted there, hospital will only collect a token advance of 5000/- to 10,000.
The insurance desk in the hospital will submit your policy details to the insurance
company. Insurance company will verify your insurance details and decide the
eligibility and approve the amount. Hospital will submit your bill directly to the
insurance company and insurance company will settle the bill.
There will be few expenses which are not covered under the insurance. You may
have to pay only those items directly in the hospital.
The hospital will refund the advance collected from you also.
Reimbursement
If you are getting admitted in a hospital which is not in the network of the insurance
company, there is no cash less settlement of claim. In such cases, you have to settle
the bill directly in the hospital. Later you can submit the bills & discharge summary
to the insurance company. The insurance company will verify your policy details
and reimburse the claim according to the policy conditions.
Can I purchase a health insurance policy at higher ages?
My 40-year-old client was not ready to take a health insurance cover because he is
already covered under the Mediclaim through his employer. He was planning to
purchase the policy at age 55, closer to his retirement. I still insisted him to go for
one. Somehow, he agreed and applied for a family floater health insurance of 20
Lakhs and the story begins here.
His proposal for health insurance was rejected as both husband and wife were having
some health issues which they thought is minor. He was having hypertension (thanks
to his high paying corporate job!) and his wife was suffering from thyroid issues.
My client knew the issue beforehand and always thought it would not affect
anyways, at least in buying a health insurance policy. I suggested him to try it with
another health insurance company and finally he was able to get cover for his family,
with a higher premium. But the scope of cover is limited due to preexisting diseases.
Now, he has no other option.
In the last 10 years, I have seen around 15% of my new clients were denied the health
cover by insurance companies because of health issues. Would you like to know the
reason?
Family floater was denied because wife had thyroid issues, a very common issue
now days.
Melvin Joseph
A 30-year-old guy was denied health insurance because he has having OCD
(Obsessive compulsive disorder). Would you believe it?
40 years old person taking supplements for hair growth was denied health insurance
cover.
Insurance companies are rejecting proposal based on your health conditions. You
may think that it is a small issue, but for insurance companies it may be big. So, the
question is:
Should I purchase a health insurance policy even if I am covered through the

corporate health insurance of my employer?
Employers negotiate with insurance companies and purchase group health insurance
policy for the employees. Such group mediclaim policies provided by employers
(popularly called mediclaim) are a big source of relief to millions of employees of
organized sector. This is all the more useful to cover elderly parents, because the
scope of covering them in other policies is limited and the cost is very high. Of late,
lots of changes are happening in the corporate health cover which will affect the
scope of health cover. The so called office mediclaim is no more sufficient for you
in the long term.
What has changed in your office Mediclaim?
For many insurance companies, Health Insurance is a loss-making portfolio and now
they started changing the conditions. Some companies are introducing a Co-pay
clause, where you have to pay a pre-fixed part of the claim. The Co -pay ratio is
generally between 10% and 25%. So, for every claim of say Rs. 100/- made, you
have to pay Rs. 25/- and the balance Rs. 75/- will be paid by the insurance company
(if the co-pay ratio is 25%). Some organizations completely excluded the cover for
parents and others are charging the cost of cover of parents from the employees.
Some companies are adding health insurance premium in CTC. Restrictions such as
those on room rent and sub limit on claims, which were part of individual mediclaim
policies so far are slowly being added to group insurance covers also.
The employers are reducing the benefits because the insurance companies have
increased the premium substantially because of the high claim ratios. This has
forced the employers to negotiate for health cover with low premium by reducing
the scope of the cover!
Melvin Joseph
Restrictions in Parental coverage in office mediclaim
Most of the employers are now offering health cover for parents with some
restrictions.
If the employer is offering cover with Co-pay option, you have to consider it
carefully. If the benefits under such policy are coming with offers like pre existing
disease cover, which is not offered by individual health policies in the market, you
can go for it.
In most cases employer is charging the entire premium for parental cover from you.
The decision to go for it or not has to be taken after a cost benefit analysis. The terms
of the group cover are also important here. Often health insurers are more generous
while dealing with corporate Mediclaim policy holders. Most group policies cover
the pre-existing diseases, while personal health cover will exclude them during the
first 1- 4 years.
But, if you are leaving the employer, in most cases, you cannot transfer this cover to
an individual policy, which you want to purchase at that time. Purchasing an
independent personal policy will be always worth because you need not worry about
so many complications in future. There is no guarantee that corporate cover
continues for ever.
Changes in Hospital Network – No more 5 Star hospitals
Most insurance companies are now restricting the network of hospitals, you can
access in corporate mediclaim. If you are opting for other hospitals, then there will
be co-pay applicable. Another way the employers are considering is replacing the
expensive corporate hospitals in the network with comparatively cheaper ones.
There are hospitals which are charging higher rates to insured patients and this has
resulted in all these mess.
Disease wise restrictions
Don’t expect your entire hospital bill will be reimbursed in corporate Mediclaim in
future. Some of the companies are fixing sub limits for certain diseases. For common
procedures like angioplasty, cataract surgery, knee replacement etc. the company
will allow a fixed amount. The shortfall has to be paid by you.
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Why you should go for an extra health insurance policy beyond office
Mediclaim?
Most employees are not interested in purchasing an additional health insurance

policy because the entire family is covered under the corporate group health
insurance cover. They don’t want to waste the premium for another policy!
In the present job market, switching jobs are very common among employees.
What will happen, when you are changing the jobs?
• Will there be a cover when you are in between jobs?

• Will your new employer have a medical cover for you and family?
• What about the health cover after your retirement? Will you be able to
purchase a policy close to retirement?
Answer to all the above questions will point towards the need for going for an extra
health insurance policy in addition to the corporate health cover. With lot of life style
diseases and increasing corporate pressure and resultant health issues, we cannot
afford to be without a health insurance even for a day! The new organization, where
you are joining may have some restrictions in claims for some time. Most of the
startup companies are not having group health policy for their employees. All these
will expose you without a cover for some time, which is dangerous.
As we nearer retirement, most companies are reluctant to cover us even with high
premium. If at all it is available, there will be lot of restrictions and limitations. After
age 40, it is difficult to see someone without problems like hypertension, high
cholesterol, overweight, diabetic etc! Insurance companies are not ready to offer
policies in such cases.
Can you continue the office Mediclaim after retirement?
General insurance companies have started offering continuity of group Mediclaim

policies to employees after retirement. The catch is that it no longer remains a group
policy and the premium will be higher. But, features like inclusion of pre-existing
diseases and continuity clauses remain with the policy while waiting periods for
covering certain ailments are waived. But these policies are yet to catch up. Also
check whether the insurance company will insist on premedical check up at the time
of conversion from group policy to individual policy.
Melvin Joseph
It will be difficult to purchase a policy, when you are nearing your retirement. These
rules on corporate Mediclaim can change anytime and you may leave without any
health insurance after retirement! Think of a situation at age 60, not having a health
insurance of decent value! With huge medical inflation, the retired life can be
miserable! It is better to go for an extra health insurance cover in your personal
capacity now when health is on your side.
Health Insurance for returning NRIs
If you are an NRI, you will be having decent health insurance in the country of your
residence. But, if your idea is to return to India after retirement, be careful. There is
no guarantee that you can purchase a health insurance at the time of your return to
India. Life style issues are very common and the chances of getting a new policy at
higher ages are remote. The only option is to purchase a high value policy when you
are young and healthy.
Treatment taken outside India is not covered in these policies. Purpose of purchasing
a policy now is to ensure decent cover for the post retirement days in India.
Health Insurance companies are becoming strict day by day in issuing new policies.
Insurance is something which you cannot purchase when you really need it.
Purchase it at the earliest when you are eligible to purchase it.
Also ensure that your parents are having decent health cover.
Third Party Administrator (TPA)
TPA is a specialized health service provider rendering variety of services like

networking with hospitals, arranging for hospitalization and claim processing and
settlement. TPA is a middleman between the insurance company and the policy
holder. Customer can directly deal with TPA at the time of claim and TPA will help
with all the process of claim settlement.
Services rendered by TPA include maintenance of database of policyholders, issue

of identity card to policyholders, provide ambulance service, provide information to
policyholders about hospitals, check various investigations and provide cashless
claim processing.
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Major concerns in Health Insurance - Waiting Period and Exclusions
Mr. Sharma purchased the health insurance policy for 10 Lakhs.
He is working in a steel unit as a supervisor and was compelled to work in most

uncomfortable atmosphere. Within a week of purchasing the health insurance policy,
he was admitted in hospital where he was informed that he had been suffering from
lung disorder. It was a costly treatment and he was hopeful that his policy would
definitely help him in meeting the cost of medical expenses. The total bill for a 15
days treatment was around 3 Lakhs.
However, he was informed that he will not be entitled to claim from this new policy
since he had not completed the initial waiting period in health insurance policy as
per the terms and conditions of the policy. Though, he got 1 Lakh from his company
as per his corporate policy, balance 2 Lakhs was paid from his pocket.
Like in any other policies, health insurance policy contains many clauses and
conditions and one among such clauses is the “waiting period” and ‘exclusions’
The policyholder will not get coverage from day one of the policy and in order to
make any claim over the policy, the policy holder needs to wait for some time known
as “waiting period”.
It is the responsibility of the individual to carefully study the terms and conditions
of health insurance policy before purchasing it.
What is Waiting Period in Health Insurance Policy?
Waiting period in health insurance policy is the time limit after which the claim over
the policy is considered by the insurer. The terms and conditions regarding the
waiting period differ from one insurance company to another. During the waiting
period, no insurer will consider any claims from the policy.
The clause has been provided in order to prevent any false claims. Someone who has
been suffering from a major disease can purchase a health insurance policy without
disclosing the facts to the insurer. Once the policy is issued, he can get an admission
into a hospital and start claiming the medical expenses from the insurer. Waiting
period prevents the policy holder in making such false claims.
Different types of waiting period in health insurance plans
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• Initial waiting period
The initial waiting period may be the first 30 to 90 days from the date of
commencement of the policy and during such period the policy holder cannot make
any claims from his policy in case he has been hospitalized due to any illness. The
insured has to wait till completion of the initial waiting period for getting the benefits
from his policy. However, claims on account of accident are considered during this
initial waiting period.
• Pre-existing disease waiting period
Pre - existing diseases are those diseases which are disclosed by you in the proposal
form while purchasing the policy and specifically accepted by the insurance
company by adding it in your policy bond. The policy holder should disclose the
details of all diseases he is having at the time of/ before purchasing the policy and
such diseases are covered after waiting period provided for such diseases known as
“Pre-existing disease waiting period”. It varies from one year to four years subject
to the condition that the policy is covered continuously and the time limit for such
waiting period depends upon the medical history of the insured and the insurance
company from whom the policy is purchased. Again, pre-existing disease waiting
period differs from company to company. IRDAI is trying to standardize it for all
insurance companies in the interest of the policy holders.
• Disease-specific waiting period
A specific waiting period known as “disease-specific waiting period” is imposed for

some specific diseases namely- tumor, ENT disorders, hernia, osteoporosis etc, the
details of which have been mentioned in the policy. Certain procedures like Knee
Replacement are also covered after the waiting period. The waiting period and the
details of such diseases vary from company to company.
• Maternity benefits waiting period
Some insurance companies provide maternity benefits under the policy wherein the
waiting period is imposed.
Waiting period in corporate health insurance
In the case of corporate group insurance provided by your employer, normally such
waiting period is not imposed. In the case of maternity claim, a fixed amount is paid
in corporate policy. It is different for normal delivery and C Section.
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There are various factors which affect the waiting period in health insurance policy
depending upon the types of policies namely- the group health insurance, the
individual health insurance, family floater health insurance etc. Apart from the
above, the age of the insured and his medical history also play crucial role for
consideration of the benefits under the policy.
Exclusions in Health insurance
Surgeries
Surgeries such as cosmetic and dental surgery are normally not covered in a health
insurance policy unless it is required due to accident.
Homeopathy/Ayurveda
Only allopathic treatments are covered in health insurance policies. Normally,

homeopathic and Ayurveda treatments are not covered. Few policies cover it but
within certain limits.
Hospital costs
There could be some restrictions due to room rent sub limits, doctor fee or procedure
fee or ambulance costs etc. It is better to check these exclusions in the beginning.
Permanent exclusions
There are some permanent exclusion like injuries due to war, HIV, intentional
injuries like injuries due to suicide attempt, diseases since birth (congenital diseases)
etc.
Can I cancel a policy and get refund of premium after the free look period?
Yes. You can cancel the policy by giving 30 day’s written notice to the insurance
company, if there are no claims in that year. The insurance company will refund the
premium (excluding the service tax paid) provided free offers like medical checkup
or second opinion service is not availed by the policy holder. The percentage of
premium refund varies from company to company. Generally, if you cancel the
policy within 30 days, you will get refund of 75% of premium, it reduces to 50% if
the cancellation is within 90 days and 25% if the cancellation is within 180 days.
After 180 days, there is no refund.
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Grace Period in health insurance policy
Grace Period means the specified period of time immediately following the premium
due date during which the premium can be paid to renew or continue a policy in
force without loss of continuity benefits such as waiting periods and coverage of
Pre-existing Diseases. Grace period of 30 days is allowed in most polices.
Please do not get into the trap here – Insurance Cover is not available during the
grace period. If there is a claim during these 30 days, it will be rejected. So, renew
your health insurance policy before the due date.
How a super top up health insurance policy can help you?
But with increasing premium rates, is there any cost-effective option in health
insurance? Super Top up Health Insurance will be a better option in many cases.
The inflation rate in healthcare sector is much higher than the general inflation and
with improved medical technology, the healthcare costs are increasing day-by-
day. Even a 5 Lakhs health insurance policy may not be sufficient for you. Super
Top up Insurance will help you in this regard.
Before going forward on how super top up health insurance policies can help to
reduce your health insurance premium, let us see what a super top up policy is.
Super Top up Policy
In super top up health insurance policy, the additional coverage is provided only
when a threshold level (deductible) is crossed. Now, you will ask me what is
deductible.
Deductible is the threshold limit provided in the super top plans. These plans start
paying the claim over and above the threshold limit or deductible. Let us see it with
an example.
Imagine you have a family floater health insurance policy of 5 Lakhs and you have
also purchased another super top up policy of 20 Lakhs with 5 Lakhs deductibles.
Now, if one of your family members is admitted in the hospital and the bill is 7
Lakhs, 5 Lakhs will be paid by the 5 Lakhs health insurance policy. Next 2 Lakhs
will be paid by the super top up health insurance plan. This plan will only pay above
the deductible limit of 5 Lakhs.
Melvin Joseph
Confused! Let us understand it with a table. Here there are 6 claims in a year. This
can be for the same person or for different members in the family.
This is how super top up policy work. You can have different sum insured and
various deductibles options in super top up policy. So, if you have a base policy of
5 Lakhs and a Super top up of 20 Lakhs with 5 Lakhs deductable, the total cover will
be 25 Lakhs in a year. In the above example, the first 2 claims will be paid by the
base health insurance policy of 5 Lakhs, next 3 claims will be paid by the super top
up policy and the 6th claim will not be paid by any policy.
The deductibles start from 1 Lakh and can be 2 Lakhs, 3 Lakhs, 5 Lakhs and even
10 Lakhs.
The same is with sum insured. Most of the companies offer sum insured up to 50
Lakhs. Few companies are offering cover upto 1 Crore.
How Super Top up policy can reduce your premium outgo?
The premium in super top up policies is much lower than the normal health insurance
policies.
Melvin Joseph
Suppose I have a family of 3 (2 Adults and 1 Child) and I want to take a health
insurance of 25 Lakhs. There are 2 options
1. Normal Health Insurance Policy of 25 Lakhs.

2. Normal Health Insurance Policy of 5 Lakhs and a super top up policy of 20
Lakhs with 5Lakhs deductible. The 5 Lakhs policy is called the base policy.
What do you think, which one is better?
Option 1 - Normal Health Insurance Policy of 25 Lakhs
Adult 1 – Age – 40 Years
Adult 2 – Age -37 Years
Child 1 – Age – 8 Years
Sum Insured – 25 Lakhs
Annual Premium for 25 Lakhs Policy – Rs. 30,000
Option 2- Health Insurance Policy of 5 Lakhs and a super top up health insurance of
20 Lakhs with 5 Lakhs deductibles
Premium for 5 Lakhs Base Policy – Rs. 17,000
Premium for Super Top up Policy of 20 Lakhs with 5 Lakhs deductibles – Rs. 3,000
Total Premium – Rs. 20,000
So, there is a difference of Rs. 10,000 in premium for the same cover of 25 Lakhs.
There is a point of caution in super top up policies
You should buy it from the same insurer where your base policy is purchased, as it
is easy for cashless claims. Otherwise you have to pay the bill from your own pocket
and then reimburse it.
Do not confuse Top Up policies with super top up policies. Top up policies are trap.
In Top up policies threshold limit is applicable in each claim and not cumulative as
in the case of super Top up policy.
Melvin Joseph
Why you should avoid health insurance with room rent limits?
My friend Rahul had a heart attack last month and was hospitalized for 5 days in a
good hospital in Mumbai. He is a businessman and was in good health. He
underwent an Angioplasty and is doing fine now.
He is having a medical insurance policy of 3 lakhs and the hospital bill was 2, 70,000.
He submitted the claim forms to the insurance company immediately after his
discharge from the hospital. Within a week, he got a shocking letter from the
insurance company stating that he will get only Rs. 1, 42,500/- as claim. This is
because of the sublimit on room rent, as per his policy conditions!
What are sub limits?
Most of the health insurance policies available from PSU companies are having Sub
limits on room rent. Most companies are having a clause that restricts room rent to
1% of the sum insured or 5000 whichever is lower. This may sound like a simple
restriction and you may think that, it will not cost you much, even if you go for a
room with higher rent. But it is not so. This will cost you big amount like in the case
of Rahul.
Let us see how this sublimit operates in a medical insurance policy.
Rahul had 3 Lakhs policy which limits his room rent eligibility to Rs. 3,000/-But he
opted for a single room with per day rent of 6,000 to ensure good post-surgical care.
He was thinking that he will lose only the difference in rent of 3,000/- per day!
Most hospitals charge different rates for the same procedure depending on the type
of room you choose during hospital stay. In the hospital, where Rahul was admitted,
the angioplasty cost was 2 Lakhs for a single room!
He preferred a single room with a rent of 6,000/- and the bill was 2, 70,000 (Surgery
costing 2, 00, 000 + room rent of 30,000 + Doctor`s fee and tests of 25,000+
Medicine of 15,000 = 2, 70,000). Since his policy was for 3 Lakhs, he was confident
of getting the full amount after deducting the excess room rent of Rs.15, 000/- for 5
days. He was expecting 2, 55,000 from the insurance company and he got only 1,
42,500 /-.
Melvin Joseph
Where is the catch?
A small fine print in the policy condition states that, in the case of a sublimit in room
rent, all expenses other than the room rent will also be paid proportionately on what
you would have incurred, had you stayed in the room as per your eligibility. In the
case of Rahul’s policy with 3000 as room rent limit, he is not entitled to stay in the
single room with 6,000. The expenses will be paid in proportionate to the sub-limits
of room rent. Please see the chart below to see how the expenses will be reduced
proportionately:
Sum Insured 3,00,000

Room Rent Limit 3,000
Actual Room Rent 6,000
No. of days of
5
Hospitalization
Reimbursed
Actual Bill Rational
Amount
Proportionate as
Room Rent 30,000 15,000 per Room Rent
Charges Limit
Proportionate as
Surgery 2,00,000 1,00,000 per Room Rent
Cost Limit
Proportionate as
Doctor`s Fee 25,000 12,500 per Room Rent
and Tests Limit
Medicines 15,000 15,000 Actual/MRP
Total 2,70,000 1,42,500
Cost to be paid 1,27,500
from your pocket
Most people are unaware of the consequence of this clause and they will understand
it only when an actual claim arises like in the case of Rahul. The practice of hospitals
charging such high charges in a single room compared to a general ward makes
things difficult for people like Rahul. The small policy condition will not be read by
anybody in normal cases.
Melvin Joseph
Nobody is penalizing the hospitals when they are charging such widely differing
rates for the same procedure based on the room status.
The best way for Rahul is to avail the portability facility and to migrate to an
insurance company which offers policies without any sublimits. But there are
conditions attached in portability also. After the Angioplasty, most companies will
not consider him for portability.
Most of the private companies are offering policies without such Sublimits while all
PSU companies are still having such sub limits.
Portability in health insurance
Health insurance portability was introduced by the IRDAI in 2011. Portability makes
it possible for a policyholder to transfer the credit gained for pre-existing conditions
and time bound exclusions when switching from one plan to another of the same
insurer, or from one insurer to another.
If you are not happy with your existing health insurance policy, you can use the
portability option to move your policy from one company to another company
without losing the accrued benefits in your policy.
Suppose you have the policy from Company A and you want to move it to company
B. This is possible only at the time of renewal of your existing policy. You have to
apply to Company B atleast 45 days before the renewal due date. You have to submit
the portability application form along with details of your existing policy. Company
B will collect the details of your policy, claim history etc from Company A and
decide on your application.
The decision to accept your case and issue the policy under portability will be
decided based on the underwriting guidelines of Company B. There is no guarantee
that the Company B will accept your application.
Health Insurance policy offered to bank account holders
These policies are very popular because of the low premium. This is a group
insurance policy purchased by the bank for its account holders. Since the group size
is big, insurance cover is offered at lower premium. But there is a catch.
Melvin Joseph
This is a group policy purchased by the bank. The insurance company will assess
the claim experience from the group and adjust the premium every year. If the claim
is high, the premium can be increased to high level. At that stage, it will become
unattractive.
There is no guarantee that such policies will be continued always. Being a group
policy, bank can opt out of this anytime. If this happens to you at a higher age, you
may find it difficult to purchase a new policy. It has happened in many cases already.
But, if you are not in a position to purchase any individual policy due to heath issues,
these policies can be purchased because it is the only option available for you.
Health Insurance policy from Life Insurance Companies
Few Life Insurance Companies are offering health insurance policies with many
restrictions and limitations. In most of these policies, insurance cover is available
only upto a particular age like 65 years, that too with many restrictions. It is in your
interest to avoid such policies.
Purchase health insurance policies from general insurance companies or a standalone

health insurance company only which offers life time renewal.
Health Insurance for Parents (Senior Citizens Policies)
They gave their best to you when you were young, but what you can give them back
when they are aged? This is a question which everybody asks while thinking about
their parents. More than anything else, their requirement is health insurance. Yes,
health insurance for parents should be a top priority, if they want to lead a dignified
life.
Nikhil is a troubled man these days. His mother was hospitalized and was under
treatment for the last 3 months. She is a diabetic and is having heart complaints also.
Nikhil already spend 2 lakhs and may require another 3 lakhs for a surgery next
month. There is no health insurance for her and Nikhil has to pay from his pocket.
Can we ignore health insurance for parents?
In India, the health care costs are increasing fast. In the absence of health insurance,
many parents are living a difficult life. They are either avoiding treatments or are
forced to depend on their children for funds.
Melvin Joseph
There are many companies offering health insurance to senior citizens. But it is not
easy to get a policy at that age. When you are young, all companies are ready to give
you a policy, but at advanced age there are many restrictions. There is a saying –
Insurance is a product which you cannot buy when you are in need, so buy it when
you are in good health.
Health insurance for parents – restrictions in policy conditions
The health insurance policies offered to parents came with many restrictions. The
most important restrictions are:
• High premium: The premium rates for health insurance for parents are high.
But the chances of hospitalization are also high at that age. Living without
health insurance may put you in a situation where you spend your entire
savings in hospital.
• Co-pay clause in health insurance for parents: In most senior citizens’
health insurance policy, part of the claim amount has to be contributed by
them while the balance will be paid by the insurance company. This means
the company will not settle the full claim. This is called co - payment. Co-
payment of 10% to 50% is common in health insurance for senior citizens.
• Limits in Insurance amount: Companies are very selective in offering
health insurance for parents. The insurance amount is generally restricted to
amounts like 1 lakh - 10 lakhs. Few companies are offering higher cover.
Health insurance for parents – options available
PSU insurance companies like New India, National Insurance etc. are offering
policies of lower sum insured. These policies are having low co-payment clause. If
your parents are staying in a small town, you may opt for such policies because of
the lower medical expenses in such areas. But in cities and metros, these covers will
not be sufficient. Companies like Star Health Insurance, Bajaj Allianz, Apollo
Munich and Max Bupa are also offering health insurance for senior citizens. If you
can manage the higher premium, it is worth taking those policies. But some policies
have high co- pay clause and lengthy waiting period for pre existing diseases.
Get health insurance for parents through your corporate health policy
Another option to ensure health insurance for parents is to add them in your
corporate Mediclaim policy given by your employer. Most corporate health
insurance schemes cover parents on liberal terms and conditions. Some schemes are
fully sponsored by the employer while in most cases, you have to pay the premium.
Melvin Joseph
If your parents are not having any health insurance, it is better to add them in your
corporate policy.
Medical emergency fund for parents
Since there are lots of restrictions in health insurance for parents, it is better to create
a medical emergency fund, if you have aged parents at home. This will come handy
in situation where the health care expense is high and is not fully paid by the
insurance company.
Not having health insurance for parents can put you in financial trouble like Nikhil.
Health Insurance Premium - Tax benefits
Under Sec 80D, you can get exemption up to Rs. 25,000 in a year for health
insurance premium paid for self, spouse and children. This limit is 50,000 if you are
a senior citizen.
You can claim another Rs 25,000 as health insurance premium paid for Parents. It
is 50,000 if one of the parents is senior citizen.
Critical Illness policy
With rise of life style diseases and ever-increasing health care cost, the lack of
adequate health cover can severely affect your financial goals. You should think of
supplementing your existing health insurance cover with a Critical Illness policy.
What is a critical illness policy?
Critical illness policy offers insurance cover against certain specified critical
diseases. In this policy, the insurance company pays the lump sum cash amount
(insured amount) when the specified disease is diagnosed irrespective of the amount
spent on the illness. While your mediclaim policy reimburses the actual amount
spend in the hospital, critical illness policy will give you a lump sum amount, as per
your policy value. Mediclaim cuts down your hospitalization cost where as critical
illness policy helps in compensating your financial loss during a serious illness.
Diseases covered
The diseases covered vary from company to company and one needs to check the
exact details before buying the policy. Most common diseases covered are - Cancer,
Melvin Joseph
Major Organ Transplant, Heart Valve Replacement, Total Blindness, End Stage
Renal Disease, Kidney failure etc.
Survival Period in Critical illness policy
There are certain exclusions which vary from company to company. The major
exclusion is that the policy holder should survive for a minimum period of 30 days
after having critical illness. It is important to know the exclusions, while taking the
policy to avoid any confusion later.
Personal Accident Policy
This policy offer coverage against death or disability due to an accident. In case of
death of the policy holder due to accident, the nominee will receive the full sum
insured. The policy also pay the full sum insured in case of Permanent Total
Disability (PTD) due to accident. This is really a support when the policy holder is
disabled, and is not in a position to carry out his normal work. No other policy will
be useful in such conditions.
If a policy holder met with an accident and loses his body parts – may not be able to
work in future. In case of Permanent total disability 100% sum insured is given to
the insured person. It covers:
• Loss of both hands or both feet or one hand and one foot
• Loss of a Limb (hand/foot) and an eye
• Complete and irrecoverable loss of sight of both eyes
• Complete and irrecoverable loss of speech & hearing of both ears
The policy also pays a certain percentage of the sum insured in case of permanent
partial disability.
In case of Temporary Total Disability (TTD) due to accident, you will get 1% of the
sum insured for 100 weeks. This is available as a rider in certain policies. This is
very useful during such testing time while you are unable to earn after the disability
like coma after an accident.
Certain policies reimburse the hospitalization expenses due to accident and also pay
a daily allowance for each day spends in the hospital. This policy covers different
types of accidents like road, rail accidents, accidents due to natural calamities and
arising out of terrorism/ terrorist acts. There is no medical examination to purchase
this policy. Please read the policy conditions before taking the policy to see the scope
of cover.
Melvin Joseph
The health insurance policy will act as the base policy, in case of a hospitalization
and will reimburse the hospital expenses. Critical illness policy will come to the
rescue in case of any major diseases, which will make us unfit for some time from
performing the routine work. Personal accident policy will support in case of an
accidental death or disability. All these complement each other and a combination
of these 3 will act as a comprehensive insurance cover.
But selecting the right health policy from the many policies available in the market
is very important from the customer’s point of view.

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Melvin Joseph

Investment Adviser || SEBI Registration Number: INA 000000342

Let’s understand the concept of Health Insurance.

Let’s first understand 20 common terms in Health Insurance

2. Day care procedures

6. Free look Period

8. Claim Settlement Ratio (CSR)

9. Incurred Claim Ratio (ICR)

10. No Claim bonus

12. Free medical check up

13. Life Time Renewal

14. OPD cover

15. Maternity cover

16. Pre-existing conditions

17. Permanent Exclusions

18. Congenital health issues

19. Pre & Post Hospitalization expenses

Pre-Hospitalization Expenses - These are the doctor consultation charges,

Post Hospitalization Expenses: These are the follow up consultation charges,

20. Restoration Benefits

Let me explain Health Insurance in detail

Types of Health Insurance

Family Floater Policy

In what way your benefits differ in a Family Floater Health Insurance?

Which is better? Individual Policy or Family Floater Policy

Health Insurance - How much I should insure for?

Now I am suggesting a cover of 30 Lakhs for my clients to start with. This is

Claim Settlement in Health Insurance Policies

Can I purchase a health insurance policy at higher ages?

Should I purchase a health insurance policy even if I am covered through the

What has changed in your office Mediclaim?

Restrictions in Parental coverage in office mediclaim

Changes in Hospital Network – No more 5 Star hospitals

Disease wise restrictions

Most employees are not interested in purchasing an additional health insurance

What will happen, when you are changing the jobs?

• Will there be a cover when you are in between jobs?

Can you continue the office Mediclaim after retirement?

General insurance companies have started offering continuity of group Mediclaim

Health Insurance for returning NRIs

Third Party Administrator (TPA)

TPA is a specialized health service provider rendering variety of services like

Services rendered by TPA include maintenance of database of policyholders, issue

Major concerns in Health Insurance - Waiting Period and Exclusions

Mr. Sharma purchased the health insurance policy for 10 Lakhs.

He is working in a steel unit as a supervisor and was compelled to work in most

What is Waiting Period in Health Insurance Policy?

Different types of waiting period in health insurance plans

• Initial waiting period

• Pre-existing disease waiting period

• Disease-specific waiting period

A specific waiting period known as “disease-specific waiting period” is imposed for

• Maternity benefits waiting period

Waiting period in corporate health insurance

Exclusions in Health insurance

Only allopathic treatments are covered in health insurance policies. Normally,

Grace Period in health insurance policy

How a super top up health insurance policy can help you?

Super Top up Policy

How Super Top up policy can reduce your premium outgo?

1. Normal Health Insurance Policy of 25 Lakhs.

What do you think, which one is better?

Option 1 - Normal Health Insurance Policy of 25 Lakhs