Given how the prices of healthcare facilities are going up, having a health insurance policy is quite critical. Now imagine that a seemingly small mistake, like not reading all the terms and conditions, becomes a reason why your claim request was rejected. It would be devastating financially; you have to pay out of pocket for treatments. Explore more about the common health insurance mistakes that can derail your financial plans.
Introduction
Many people think buying a health insurance plan means they don’t have to go through all the minute details. This is where they are mistaken. Suppose the policyholder feels a sharp pain in the abdomen and is rushed to the nearest hospital. While filing a claim for the medical expenses, the family realises that the policy doesn’t cover this treatment. The policyholder has to pay the entire cost out of pocket. Similarly, buying inadequate insurance plans, overlooking policy exclusions, and not comparing premiums can lead to financial losses during medical emergencies.
Key Mistakes to Avoid When Purchasing or Renewing Health Insurance
1. Inadequate Coverage
When buying health insurance, you must carefully assess your medical needs and choose a plan for comprehensive financial protection against medical expenses. If you choose a plan with inadequate coverage limits, you will end up paying from your pocket, which can affect your financial planning. Look for policies that offer comprehensive benefits, such as pre-and-post hospitalisation expenses, preventive health check-ups, daycare procedures, domiciliary care, critical illness coverage, etc.
2. Not Doing Enough Research
Don’t go blindly by what your friends or insurance agents suggest because medical needs differ from person to person. Also, insurance agents usually recommend plans for which they get more commission. Listen to their suggestions, but do your research and compare different policies based on parameters like cost, benefits, network hospitals, deductibles, etc. This will help you choose a plan that aligns with your needs. Not comparing policies can lead to higher premiums or not getting enough benefits.
3. Focussing only on Premium
This is a big mistake people make when buying health insurance – to solely focus solely on the premium. Low-cost insurance plans come at low coverage and low-sum insured, which may benefit you financially while purchasing the policy but not during a medical emergency. Selecting the affordable plan without considering the benefits, network hospitals for cashless health insurance, and the reputation of the insurer, will eventually lead to financial distress.
4. Not Buying Health Insurance Early
If you buy health insurance at a later stage of life, it is only going to cost you more. There are reasons for this – emergencies can occur anytime, even when you are young, and not having health insurance can wipe out your savings. Second, as you age, medical needs increase and insurers charge higher premiums to cover the risk. So, investing in health insurance at an early age will not only provide financial security against medical emergencies and planned treatments but also have lower premiums.
5. Not Disclosing Pre-existing Conditions
Suppose you raise a claim for a hospitalisation related to diabetes and the insurer discovers that you have not disclosed this pre-existing condition while purchasing the policy, the claim will be rejected. The policy can also get cancelled. Don’t make the mistake of hiding your medical history, including pre-existing ailments, to save on some premium costs.
6. Ignoring Sub-limits
A health insurance policy comes with sub-limits, such as the cap on hospital room rent, ICU beds, certain medical procedures, and ambulance services. Even if you have a high sum insured, the insurer will pay only up to the limit. For instance, if the room rent is capped at Rs 2,000 and you want to opt for a premier room costing Rs 5,000, you have to bear the additional Rs 3,000. So, check the sub-limits before buying a policy, as it can impact your finances.
7. Having Corporate Health Insurance is Enough
Many people assume that being covered by employer-sponsored health insurance is good enough and that investing in personal individual or family health insurance is a waste of money. They don’t realise that corporate health insurance will provide coverage as long as they are working in the company. When they quit, they are left unprotected. If there is any emergency during this period, it will have to be borne by them. Considering medical inflation, a single hospitalisation can shake your financial plan significantly. Hence, it is advisable to have personal health insurance even if you are covered by a group health policy.
8. Not Reading the Fine Print
You must read the fine print carefully and clarify any doubts with the insurer. This will ensure you are adequately covered and the risk of out-of-pocket expenses is low.
9. Not Checking the Exclusions
Being mindful of what is not covered is as important as knowing what is covered as it can save you from unpleasant surprises. For instance, standard health insurance plans do not cover maternity, dental treatments, or critical illness. These have to be purchased as add-ons or as standalone policies.
10. Purchasing Health Insurance only for Tax Benefits
Some people buy health insurance only to avail of the tax benefits. While it’s true that you can claim a tax rebate on the health insurance premium, but this should not be the sole purpose of purchasing health insurance. The reason is you will end up buying a plan that may not provide sufficient coverage, increasing your out-of-pocket expenses during a medical crisis.
Conclusion
A health insurance policy safeguards you financially against rising medical costs. But certain mistakes can defeat the very purpose of health insurance and derail your financial plans. By regularly assessing your needs, reviewing your policy, and staying informed of policy updates, you can avoid these mistakes.
Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.