PARK Financial Advisors

The concept of medical insurance needs no introduction. However it is amazing how few people are actually adequately insured for medical care of themselves and their families! This is probably to do with several myths about medical insurance that people harbour. We debunk some of the common myths surrounding medical insurance in this article.

The concept of medical insurance needs no introduction. Anyone whose family member or friend has been admitted for illness or accident would probably be aware of the financial stress that accompanies emotional trauma in these cases. Yet, it is amazing how few people are actually adequately insured for medical care of themselves and their families! This is probably to do with several myths about medical insurance that people harbour.

Myth 1: I am too young for medical cover

There are atleast three reasons why nothing could be farther from the truth. For one, needless to say, age is no bar for accidents! Second, it is very likely that you have other dependents (children, elderly parents, etc), who are more vulnerable to illness. It is more convenient then to cover the entire family under a single plan.

The third reason is slightly more involved. Mediclaim policies do not cover pre-existing illnesses. However, if policies are renewed continuously without a break, any illnesses developed subsequent to commencement of policy are also covered. Thus, it makes sense to start your cover when you are hale and hearty. This gives you the widest possible coverage of diseases and also results in a lower annual premium if you start young.

Myth 2: I have a long standing Mediclaim cover – that should suffice

This is a common refrain, especially among the more elderly. People often have long standing policies that provide cover of as low as Rs. 20,000 - 30,000. While this may have been a good policy in the early 90s, the healthcare costs in the last decade have galloped. Moreover, the probability of illness and cost of treatment increase with advancing age. Thus, and a cover of atleast Rs. 2 lakh - 3 lakh would be more prudent today.

Myth 3: Application process is time-consuming

In today’s fiercely competitive insurance environment, companies (even public sector insurers) have made the application process painless and simple. As an applicant, all you need to ensure is that you fill the application form and provide proof of age. Health check-up, if applicable, is freely arranged for by the insurer at a location very convenient for the applicant. Policy renewals are straightforward and require not much more than a signature. If, however, you miss renewal premiums and allow the policy to expire; then reviving the policy would require medical tests again.

Family floater policies cover all members of the family under a single plan thereby reducing documentation and involvement needed. In this case, the insured amount of, say Rs. 5 lakh, is available to one or more members of the family who need to be hospitalised and treated. For the member who contributes the premium, an income tax benefit of up to Rs. 10,000 of premium per year (Rs. 15,000 for senior citizens) is available.

Myth 4: There are too many hassles with claims processing

Yes, it is true that claims processing requires a diligent process of going to approved hospitals, preserving bills and getting requisite certificates. It is also true that disputes arise on the nature of the disease (that it was pre-existing). However, several insurance companies have now made claims processing smooth and with minimal hassles. There are also insurance ombudsmen who are known to speedily and effectively resolve any disputes.

There are also mediclaim schemes that pay a flat compensation on illness or accident. They are distinct from reimbursement type Mediclaim policies in that they do not require detailed bills and reimbursement. On diagnosis of a disease among the covered set or on accident, a flat amount is paid to the insured, irrespective of how much he / she spends on the actual treatment.

In fact, this further reinforces the point that mediclaim should be started before a person contracts any chronic illnesses. For instance, if a person starts a mediclaim policy after contracting diabetes, it is not uncommon for the insurance company to attribute almost any problem to this pre-existing diabetes and thereby disqualify claims.

Now policies are available that cover hospital room and operation theatre charges, diagnostic tests, cost of medicines, blood transfusions, oxygen cylinders as well as cost of appliances like pacemakers, artificial limbs, etc. A majority of policies cover medical expenses 30 days prior to hospitalization and 60 days post hospitalization. Mediclaim policies provide cover any major illness/diseases, accidental death and permanent total disabilities.

But yes, it is important to know the terms of the policy while entering into one. Pre-existing illnesses and those that occur within the first 30-90 days of a new policy are typically excluded. Insurance companies also exclude any illness where the patient may try and delay the treatment till he starts an insurance cover – since this obviously defeats the spirit of insurance. As a result, diseases like cataract, benign prostatic hypertrophy, hernia, hydrocele, congenital internal disease, fistula in anus, sinusitis and related disorders are excluded in the first year. Use of intoxicants is not covered; and many schemes exclude terrorism / war related cases too.

In summary, a mediclaim policy for an informed policy holder is a great protection against unforeseen expenses on the health front. Competition has now ensured that the entire process has been made smooth and hassle free; thereby further increasing its attractiveness.

PARK Financial Advisors
www.parkfinadvisors.com