6 Common Health Insurance Mistakes You Should Avoid

by Vinaya HS on January 15, 2016

in Finance

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While availing health coverage you need to evaluate your specific needs to really enjoy the benefits of insurance. In addition, you must assess the risk you can afford to assume against your financial situation, to ensure that you will neither be over-insured nor under-insured.

Health plans play an important role in preventing financial disasters due to high cost of medical procedures. Having to make payments, even for a short hospitalization, can be very expensive resulting in severe financial distress. Most health plans provide coverage for you and your family in case of hospitalization due to illness or accident.

While purchasing a mediclaim policy, you need to evaluate your needs and risks to make the right choice. Research and compare policies offered by different insurers, but don’t just look for the cheapest option. Understand the features, coverage, and premiums on various products before making your decision. Working with a reliable and reputed insurance company is very important to prevent problems in the future.

Users must avoid some of the common mistakes that policyholders make when choosing a health plan. These include the following:

  1. Hiding health-related information: Most people believe that the insurer will not discover any falsified information provided at the time of purchasing the policy. Individuals often hide or provide misinformation about pre-existing diseases to avoid paying higher premiums. However, even if the information remains undiscovered by the insurer, there is a possibility of doctors discovering the existence of the condition before the start of the health coverage. In this case, you may have to pay a significantly higher premium or may even lose the coverage.
  2. Failing to check the hospital network: Cashless hospitalization is an important feature of health plans and is also very convenient. With this feature you do not have to pay hospital bills at the time of hospitalization, nor do you have to file claims. However, this service is only available if the hospital is on the insurer’s network. Check the list of network hospitals with your insurance provider in advance. It is advisable to compare the hospital networks of the various insurers before buying a policy, as hospitals on the list should be conveniently located.
  3. Paying higher premium to avoid co-pay: Co-payment is the amount the policyholder will need to pay for the hospitalization before the insurance benefits become available. Some plans have flat co-payments, while others include co-pay after a certain age or they may have other terms and conditions. One of the commonest health insurance mistakes made by users is to pay a higher premium amount to avoid such co-payments. It makes more sense to evaluate the requirement of the additional premium for co-pay when choosing the appropriate health policy.
  4. Buying more coverage than needed: Another mistake commonly made is to buy more than required coverage or to choose unnecessary riders. While it is important that you purchase adequate coverage for yourself and your family, it makes no sense to buy more coverage than is necessary.
  5. Higher deductible insurance plan: High deductible insurance plans require policyholders to pay more before the benefits become available. Lower premium on these plans makes them attractive to many, but you should be sure that you will be able to meet the higher deductible amount in case the need arises. If you fail to pay your share of the expenses you will not be able to claim any of the benefits of the policy.
  6. Failure to review current health policies: Buyers must also review their current health plans before opting for additional coverage. Thoroughly evaluate the existing policy, your health and financial status to determine your needs for a new plan. Failing to do this can result in over-insurance or under-insurance, both of which can prove more expensive in the long term.

Choosing the right policy, based on all of these considerations may be time consuming and tedious, but it is absolutely necessary. Health insurance can be a life-saver, but to truly enjoy all of its benefits, you need to choose your policy wisely.

About HDFC Health:

HDFC Health is an initiative by HDFC Life, a life insurance company in India to help increase awareness, spread knowledge and enshroud myths surrounding the health insurance sector in India. As a wholly owned subsidiary of HDFC Life, HDFC Health offers health insurance policies in India that cover individual, family floater, critical illness and cancer care insurance plans.

Further reading:

  1. Health Insurance Riders
  2. Commonly Used Terms and Phrases in the Health Insurance Sector
  3. Lesser Known Facts about a Mediclaim Policy
  4. All You Need to Know About Cancer Insurance in India

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.

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