An Unexpected Two-Fold Increase In Our Health Insurance Coverage

by Vinaya HS on June 25, 2012

in Finance

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You know what, it’s really been ages since I last wrote on the topic of health insurance. It’s probably because my thoughts on and approach towards health insurance haven’t changed much and are based on these simple rules –

One thought, however, has changed because I realize that I was a bit overboard in asking what’s your fallback when your health insurance provider refuses to pay cashless. After all, you cannot really be prepared for every risk in life. I now realize that simply having access to a credit card would suffice in such emergencies.

Enough digress. Now back to the actual point I wanted to make.

As it happens, I just renewed our individual Star Health Medi-Classic Health Insurance Policies. Since the policies crossed their second anniversary, Star Health unexpectedly offered to double the individual coverage from 5 lacs to 10 lacs. They even offered to throw in a 10% discount on the premium. I wanted to think about it and so asked them to call me back in a day’s time along with the exact premium calculations.

They did and I agreed and so I now have individual health insurance coverage worth 10 lacs for both D and for myself. The premium for the same worked out in total to Rs 15,100 (Rs 7,550-odd per head). The additional coverage does not have a fresh waiting period, all exclusions have been waived on account of the policy completing its second anniversary, and the renewal is guaranteed up to the age of 80. I’m looking forward to receiving the renewed policy documents so that I can go over them with a fine comb.

Premium per lac of coverage is down to Rs 750-odd from the earlier Rs 1,000-odd.

Now health is one area where I personally feel that over insurance is a good thing. Unlike life insurance, you’re the one who stands to benefit.

But, what do you think?

Bonus readSome interesting facts I came across when researching health insurance two years back.




Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

{ 14 comments… read them below or add one }

Rakesh June 27, 2012 at 9:31 PM

@Vinaya,

Its good to have adequate health insurance, we never know when we would need it.
I am grossly under-insured when it comes to health insurance, not sure what is stopping me from increasing my health insurance.

Vinaya H S June 28, 2012 at 8:47 AM

@Rakesh –

I think you need to hike-up your health insurance coverage immediately. Like I said, health is one area where I personally feel that over insurance is a good thing. Unlike life insurance, you’re the one who stands to benefit.

What policy/coverage do you currently have?

Rakesh June 28, 2012 at 9:39 PM

@Vinaya,

I have one lakh sum insured policy from National insurance. Also my employer provides 3 lakh group insurance.

Vinaya H S June 30, 2012 at 11:25 PM

@Rakesh –

By how much would you be increasing your [non-employer] health insurance coverage?

Rakesh July 2, 2012 at 10:15 PM

@Vinaya,

Not sure, when it was up for renewal last August my agent asked me to increase by 1 lakh but i did not, let me think over it this time.

Vinaya HS July 3, 2012 at 8:27 AM

@Rakesh –

Let us know how it goes and what you decide. Good luck. :-)

Roberto el Sandriano October 8, 2012 at 11:37 PM

Hi Vinaya,

If I understand this correctly, you have 1 individual policy each for you and your spouse. How is this beneficial over having a 1 floater policy for both together?

I know you evaluated policies from other companies as well. What was the next on the list if not Star?

The only thing which keeps me holding from going for Star is that it is a private body and usually the rejection rate is high among private companies compared to the public ones. I am not sure about Star though.

Regards,
Roberto

Vinaya H S November 1, 2012 at 3:12 PM

@Roberto –

Kind of worst-case insurance planning and to keep things simple. :-) What if both of us have a need at the same time? Also, with the recent increase in coverage, I could not find a floater policy offering such a high amount.

Ashwin November 28, 2012 at 3:57 PM

There are a few floater policies which gives something they call as “Restore” policy. Say, your cover is 3L, you have used up 2L. Incase your spouse needs to claim for another 2L, your cover will be restored by 2L (Sum insured/cover). so that both of your claims are honored. So its like having 2 individual policies. The premiums are same or lesser than individual policies. Even star has this option in its “Floater” policy.
Also, the policies are renewable lifetime. No “Co-pay” even after 65. I am not sure about star, the agent i checked with said after 65, you will have 20% co-pay, even if yours is a continuing policy.
For a cover of 5L, the premium is around 8k. What do you say? Is there a catch somewhere?

Vinaya HS November 28, 2012 at 7:35 PM

@Ashwin –

I believe there is. :-)

Here’s an example Restore clause from Apollo Munich (http://www.apollomunichinsurance.com/optima-restore-individual.aspx)

“If you use up your coverage in an individual policy and fall ill with another illness, we will restore the entire sum insured for you to use, at no extra charge. So, if you have a Rs. 5 lakhs policy and exhaust the entire amount, we will restore Rs. 5 lakhs, which you can use for some other illnesses if needed.”

Suppose your health fails and you make a claim for 4 lakhs. Now, because you did not exhaust the 5 lakh limit of the policy and still have 1 lakh available in that policy year, the restore clause does not even apply. Suppose immediately your family member’s health also fails and he/she makes a claim for 3 lakhs. You will have to shell out 2 lakhs from your own pocket!

Clever marketing. :-)

Ashwin November 28, 2012 at 8:52 PM

That’s interesting and nicely hidden!
Infact i came to know of this from my Star Health Agent (I have Red carpet for my parents). I was looking around and came to know “Religare” has this kind of policy as well and without the “Use only after it exhausts” clause. Here is the illustration from their prospectus –

Sum Insured : 3,00,000

Claim 1 on May 2012
Claim Made : 2,00,000
Claim Eligible Amount : 2,00,000
SumInsured Utilized : 2,00,000
Total Claim Payable : 2,00,000

Sum Insured Balance : 1,00,000

Claim 2 in Sep 2012
Claim Made : 2,00,000
Claim Eligible Amount : 2,00,000
SumInsured Utilized : 1,00,000
Recharge Applied : 1,00,000
Total Claim Payable : 2,00,000

Sum Insured Balance : 0
Recharge Balance : 2,00,000

http://www.religarehealthinsurance.com/siteupload/doc/67125care_-_health_insurance_Prospectus.pdf

But then, this company is brand new and we dont know how they will perform!

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