It’s been a while since I posted — yet again due to travel, this time a planned one — and by the time I got back there were some super-awesome comments on some of the recent posts.
First up, reader Ashwin introduced me to the concept of a “Restore Clause” in a health insurance policy (read the comments on that post for details). And as with any fancy-sounding marketing verbiage there’s more to it than meets the eye. Simply put, health insurance companies explain the terms and conditions of their restore clauses in gobbledygook. You simply can’t figure out what you’re getting into.
Next up, reader Madhu introduced me to the Reliance ATM Card (read-up details on this concept here and here).
I was hooked in an instant because –
The underlying primary mutual fund schemes have returned around 7% per annum.
No-fee cash withdrawal at any domestic ATM. No limit on the number of free transactions.
International cash withdrawal at Rs 69 + Service Tax. I recently paid Rs 125 + Service Tax for withdrawing cash from my Bank’s debit card. Ouch!
I like it a lot on first glance and if I like it some more I’ll give it a shot.
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 –
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.
Amidst all the other hectic things going on in our lives, our individual Star Health Medi Classic policies completed their first policy anniversary. This happened way back in July. Since my annual expenses planning system works exceptionally well, I simply issued a check for the premium due. Seamless. I’d opted for individual policies to keep things simple and to avail higher coverage. None of the family floaters were to my liking — I either found the terms and conditions unfavorable or the coverage to be too low.
Funny thing is, sometime in June, I actually had a dream in which I completely forget the premium due date and the policy lapses. I recollect springing out of bed and running to the cupboard — and the file inside it — to check the due date! I’ve been intending to create a personal finance calendar but haven’t got around to doing so. Now’s as good a time as any.
Any suggestions? Google Calendar?
Consider these Risk Factors copied verbatim from a Unit Linked Health Insurance Policy ad that I happened to see on this blog itself (snarky comments mine):
The premiums paid in unit linked plans are subject to investment risks associated with capital markets. (Means we’re going to have fun gambling on your health with your own hard-earned money; means we’re also going to get our fat-fee no matter what happens to your health.)
The value of the units (and in direct proportion, your health) may go up or down based on the performance of the fund.
Other factors influencing the capital market affect the value of the units. Hence you, as the policyholder, are responsible for all your decisions. (Means we really have no idea why we’re in this business in the first place…wait…oh yes, we do, for the fat-fee.).
None of our funds offer a guaranteed or assured return. (Means you better pray to the Almighty that you fall sick when during a bull-run.)
The past performance of our other funds does not necessarily indicate the future performance of any of these funds. (Again, we really, seriously, have no clue why we’re in this business to begin with, except for that…umm…fat-fee.)
I doubt you’d want to fall for these [legalized] scams.
[Posted on priority and out of turn due to many reader requests.]
Who’d have thought that Health Insurance could be this complicated?
If you opt for LIC’s Jeevan Arogya health insurance policy, be prepared to have a Statistician and a Doctor living with you full-time. Because when you’re hospitalized, you’d need the Doctor to tell you whether you need a “intracranial transection of the cranial nerve” or a “craniotomy for drainage of extradural, subdural or intracerebral space” or a “microvascular reattachment of penis following traumatic amputation.”
Now, once the Doctor tells you what reattachment you’re up against, the Statistician takes over.
Because, you’d be in no shape to interpret statistical terms and conditions such as:
If you or any of the insured lives covered under the policy is hospitalized due to Accidental Body Injury or Sickness and the stay in hospital exceeds a continuous period of 24 hours, then for any continuous period of 24 hours or part thereof, provided any such part stay exceeds a continuous period of 4 hours (after having completed the 24 hours as above) in a non-ICU ward/room of a hospital, an amount equal to the Applicable Daily Benefit (ADB) available under the policy during that policy year shall be payable subject to benefit limits and conditions mentioned in Para 11A and exclusions mentioned in Para 15 below.
Para 11A? Para 15? WTF?
Or how about:
In the event of an Insured under this plan, due to medical necessity, undergoing one of the surgeries defined in Major Surgical Benefit Annexure, within the cover period in a hospital due to Accidental Bodily Injury or Sickness, the respective benefit percentage of the Major Surgical Benefit Sum Assured, as specified against each of the eligible surgeries mentioned in Major Surgical Benefit Annexure, shall be paid subject to benefit limits and conditions mentioned in Para 11B and exclusions mentioned in Para 15 below.
Para 11B? Para 15 — again? Seriously, WTF? I doubt if you’d have the patience to pull out that PDF Annexure when you’re lying on a hospital bed.
My advise:
Stay away from this policy. Stay away from these complexities. Buy a simple health insurance policy for each member in your family who you wish to insure.
And before I forget, that “microvascular reattachment of penis following traumatic amputation” pays out only 60% of the sum assured. Ouch! Don’t you think it deserves more?
The maximum that they can do is to fire me — that’s OK!
Recently, I overheard a colleague say this and it’s really stuck in my mind since then. To me, that’s a sign of someone who’s financially well prepared. In fact, very well prepared. The day that you come into work and say this is the day that you truly are well prepared. Then, you don’t need your job to live.
Quick suggestions on how to get to that day.
Have an Emergency Fund: I’m not particularly bothered about specifying an exact amount that you need to set aside in your emergency fund. You know what’s best for you (how quickly can you get another job, what your average monthly expenses are, how many financial dependents you have, etc.). Just plan for the worst case that you can think of. Then double that if you’re in debt.
Have Independent Health Insurance: No job. No employer-provided health insurance. And it’s a disaster if your plan is to rely on your employment forever for health insurance. I’m a strong advocate for not having any financial link with your employer — and this happens to be one. Get rid of it.
Strive for zero-debt: This one’s ideal but tough in today’s world. At the very least, you ought to get rid of your non-essential debt (personal loans, overdrafts, and credit cards). For the other essential debts, don’t forget to include your EMIs in your monthly expense estimates (a key input to what you’d need in your emergency fund — see how these tie-in?).
Have Multiple Streams of Income: Again, this one’s ideal but certainly not tough in today’s world. And it won’t happen overnight. Just as it takes you sufficient time to get your salary to where you want it to be, building multiple streams of income will take its own time. But when you get there, you really will want to scream out “The maximum that they can do is to fire me — that’s OK!”
Out of the three components of my first resolution, perhaps the toughest one is buying health insurance cover for our parents. It’s easy to increase my emergency fund (save more each month). It’s easy to stay out of debt (don’t spend money that’s not mine). But it’s close to impossible to buy health insurance cover for your parents.
Actually, buying isn’t the issue. Convincing is.
Here’s the issue. Most health insurance policies require your parents to undergo medical tests if they are over 45-years of age. Most parents, however, refuse to undergo medical tests citing various reasons. Catch-22. The problem is more psychological than it is real. Reasons for not undergoing a medical test range from “Can’t you see that there’s nothing wrong with me? I am completely fit and fine. Look for a policy without a medical test.” to “I don’t want to undergo a medical test. I don’t trust doctors these days.” And parents can get quite stubborn. :-)
Here’s our situation. D currently has excellent health insurance cover for her parents through her work. Since you can’t predict when these benefits will be withdrawn, I want to buy individual health insurance cover for her Mom and Dad too. Mom is presently 56 and fit and fine. :-) Dad turns 60 this April and he has the non-serious type of diabetes. Mom has only one answer to the question on medical tests: “NO.” Dad is open to at least exploring the idea of a medical test but given the fact that he has diabetes, there are not too many health insurance policies on offer.
I had the same problem when I wanted to buy health insurance cover for my mother a few years back. Even she had only one answer to the question on medical tests: “NO.” Finally, I bought a policy that didn’t require a medical test (implies high premium, low cover, co-pay, lots of ifs and buts).
We’ve tried every trick in the book. For a couple of them, we received responses that straightaway classify under “emotional blackmail.” So, here’s what we have finally decided:
For Dad, we’ll buy a health insurance policy that doesn’t require a medical test as soon as he turns 60 this April. I’ve settled on this policy.
For Mom, we’ll continue to try convincing her. If nothing works, we have no option but to wait for a few more years and buy the same policy as we did for Dad.
How about you? Have you ever had to convince your parents for undergoing a medical test so that you could buy health insurance cover for them?
When I first asked “What’s Your Fallback?”, it was meant to be a one-off topic. But the more I think about this question, the more questions it leads to about one’s personal finances: How would you deal with the financial setbacks that happen in your day to day life?
A case in point:
Health Insurance [in most cases] is supposed to be a cashless facility. But looking at recent events, there’s really no guarantee and you might have to pay the bills upfront. So, what financial fallback mechanisms should one have in place to deal with such an event?
A couple of options that I could think of:
A separate emergency fund meant solely for such major emergencies. This would be on top of your regular emergency fund and can be replenished once the claims are settled. I’m not sure if this is a good idea.
Credit Cards. Would push you into temporary debt but can be paid off once the claims are settled.
I’ve experienced first-hand and also repeatedly advised acquaintances and readers of this blog, the benefits of having independent health insurance — health insurance that’s not tied to your employment — for yourself and your dependents.
However, amidst all the events that have happened in my life in the past few months, I let my own health insurance lapse. I simply forgot to renew it — it’s another matter though that the insurance company conveniently forgot to remind me.
A reminder that personal finance is not a one-time activity. It’s a lifelong journey. And the onus is on you to be in charge.
If you can lay your hands on a copy of Businessworld’s February 02, 2009 issue, pay special attention to the case study published on pages fifty-three through fifty-six. The same case study has been published online too.
Of special interest is this particular statement:
Today’s young are worse off than today’s older. The older have insecurities of health and ability to pay for it, the young fear life itself.
Tip Tuesdays is an initiative to share practical personal finance tips — every Tuesday. I’d be delighted if you could share a tip or two from your own experiences. Drop a comment or use this form to submit your tip. And, as always, do spread the word if you find this useful.
One of the steps in your hunt for health insurance should include a quick visit to the hospitals in your locality and approaching their insurance desk to find out which health insurance provider offers the best service in that hospital. Most insurance desks would have dealt with multiple health insurance providers and their insights will certainly be valuable in making your decision.
The past one-and-half months have been traumatic as my mother’s health has steadily deteriorated into a critical condition. We’ve given her the best medical care possible — probably that’s what has kept her going this far. I couldn’t have afforded this medical care if it were not for three things:
Clearing my debts and keeping out of debt,
Building a substantial emergency fund, and
Having independent health insurance.
Just a couple of years ago, I had a lot of debt to be repaid, no emergency fund, and no independent health insurance for my mother. I’m not sure what I’d have done — without going deeper into debt — if the present emergency had happened back then. In fact, I don’t even want to think about it. All the personal finance reading and research that I have done and the financial plans that I have executed over the past couple of years have proved their worth — many times over — today. Just imagine if one has to bear both psychological and financial traumas in such a situation.
If you haven’t yet got your financial house in order, there’s no better time to start than today. Believe me. It’s never too late to be prepared. I’d be glad to share my experiences and help.
Following my request to be contacted, a branch manager got in touch, came down to my residence, and spent a significant amount of time explaining various policies and options. Another health insurance company I spoke to mentioned that they do not have such options — everything’s online and faceless.
The branch manager did not behave like a fanatic salesman desperately trying to meet his targets. He acted more like an adviser, giving us information and sharing his thoughts, but allowing us to make the decisions — and that’s how insurance should be sold. The other insurance company I spoke to wanted me to check everything online and use my credit card online then and there! I almost said, “WTF mate?”
My mother is a senior citizen and she did not have an existing health insurance cover. Star Health offers a great policy tailored to senior citizens. This was a BIG factor in my decision. I didn’t like the policies offered by other health insurers.
Star Health has a good network of hospitals, some of which are located quite close to my residence. But this is generally true of most health insurance providers.
On a related note, RGA — a very long time reader of this blog, commented:
My parents are covered in my health insurance policy and it’s sufficient for now. But now, you’ve made me think about getting an independent policy.
It gives me immense satisfaction to receive such a comment. Because that is my objective. To get people to think about their personal finances and make wise decisions.
I should have independent health insurance for myself and for my dependents.
I thought I should clarify the term “independent.” In saying independent health insurance, I am referring to a health insurance cover that is not provided by my employer. Normally, employers provide group health insurance cover for employees and their families. The term “family” has a wide definition — some employers define family as yourself, your spouse, up to two of your children, and your dependent parents; some keep your dependent parents out of the purview of family. In my case, my mother does not qualify as family!
Health insurance provided by your employer is a great benefit to have, but the benefit stops the moment you leave your job. What do you do then — at least until you find your next job? What if your next job does not provide the right health benefits? What if you turn an entrepreneur? Given the increasing levels of health problems and the ever rising levels of medical costs, these are questions that you must answer today. Having an independent health coverage means that you’re not tied to your employer just for the health benefits. It lets you be “free from worry” when you’re out of a job or are thinking about entrepreneurship.
I am a strong advocate for independent health coverage. Get one as soon as you can, because health insurance premiums go up with age.
Yours Truly is a Software Product Manager by profession and a Personal Finance Blogger by non-profession.
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