Which is the Best Health Insurance Policy?

Why You Need to Buy Health Insurance?

The medical inflation rate in India is around 17% annually which is much above the general inflation level. This means that a single hospitalisation can exhaust your lifelong savings!

This is why health insurance is becoming increasingly important to create a cover to protect you or your family from the financial crisis that occurs due to a medical emergency or a serious illness. But, whatever plan you choose,

make sure that it fits your unique needs and suits your wallet at the same time. For that you need to understand how your policy will pay for the claim – because the ultimate goal of purchasing any health insurance policy is a hassle-free claim experience!

What Defines the Best Health Insurance Policy?

Now that you are convinced that you need to purchase a health insurance policy, it is time to choose the best health insurance plan! But what defines the best health insurance policy? Why do people purchase the best health plan? It is because they want the best quality of medical care and ultimately the maximum payout for the premiums they’ve paid every year.

How Health Insurance Policies Pay for Claims

Health insurance plans are indemnity plans that reimburse your hospital expenses and are designed to insure individuals and families. Indemnity plans cover hospitalization and surgical expenses up to the sum insured. To buy these types of plans, you need to pay a certain amount as premium and the size of this amount is directly related to the size of your policy cover. These plans may also include hospicash as a benefit where the policyholder is provided a lump sum amount per day, regardless of the hospital expenditure.

Surprise Elements in a Health Insurance Policy

Most people don’t read the fine print of their health insurance policy and file a claim only to learn later that they’re not covered because of an eligibility issue. To ensure such a thing doesn’t happen to you, you need to know what surprises may crop up during the claim settlement process. Knowing what these surprises are, will help you in making a smart decision while buying a health insurance plan.

Proportionate Deductions Due to Room Rent Capping

Most health insurance policies have a cap on room rent. To understand proportionate deductions better, you first need to understand how hospital charges and room rent limits work. Hospitals charges vary depending on the room type you choose - General, Shared, Private, Deluxe, Super Deluxe etc. Now if your policy has capped the room-rent at a certain percentage of the sum insured, then regardless of the total sum insured, the policyholder has to pay out-of-pocket if the room rent for a specific category exceeds that given percentage of the sum insured.

Let’s take an example of Mr. X to understand how proportionate deductions are made:
Mr. X has a health insurance plan with ₹ 6 Lakh as Sum Insured with a Room Rent capping of₹ 4,000/- per day. When he gets hospitalized, Mr. X doesn’t like the ₹ 4,000 per day private room and opts for a deluxe room that is charged at ₹ 8,000 per day.

Now in this case, Mr. X is eligible for only 4000 out of 8000 actual room rent. This translates to 50% eligibility. All service charges in the hospital bill, therefore, will be deducted in proportion to this 50% arrived at, here.

So this is how Mr. X’s hospital bill after 5 days of hospitalisation looks like:

Factors Hospital Bill How Much Insurance Company Paid Explanation of the Payable Amount
Room Charges ₹ 40,000 ₹ 20,000 As per eligibility ₹ 4,000 per day X 5 days
Doctor Visits ₹ 5,500 ₹ 2,750 50% proportionate deduction
Surgery Costs ₹ 1,00,000 ₹ 50,000 50% proportionate deduction
Medical Tests ₹ 4,500 ₹ 2,250 50% proportionate deduction
Medicines ₹ 10,000 ₹ 10,000 MRP product, hence no deduction
Total ₹ 1,60,000 ₹ 85,000 -

Mr. X thought that the deduction will be only on the additional room rent which is ₹ 20,000 – but he didn’t know about the differential price structure that hospitals operate on. What the insurance company did was, deducted all differential charges proportionately, as shown in the table above. Mr. X’s insurance company paid only ₹ 85,000 out of the total hospital bill of ₹ 1,60,000, in spite of having a cover of ₹ 4 Lakh.

So, it is recommended to go with a health insurance plan which puts no capping on room rent, or at least gives you access to a single private room category without imposing any limit on it. Most people, who don’t read the policy terms carefully at the time of purchase, make the costly mistake of assuming that every expense up to the sum insured is covered. So, they fail to stick to the prescribed limit and end up paying a big amount out of their pocket.


Most health insurance policies include a co-payment feature which makes it mandatory for the policyholder to pay as much as 20% of the treatment and hospitalisation expenses. So, it is important that the policyholder is aware of his/her liability and the payment does not come as a surprise at the last minute!

Waiting Period & Preexisting Conditions

When it comes to pre-existing illnesses, every health insurance plan has its own set of terms and conditions. If your disease was pre-existing when you purchased the plan, you can claim for taking the treatment only after you serve a defined waiting period. The waiting period may range from 2-4 years. But, the lifelong premium increases when the waiting period is reduced from 4 years to 3 years. So, you wouldn’t want to save 1 year and pay higher premiums for life!

Non-covered Medical Conditions

Every health insurance policy has certain exclusions like pre-existing diseases which are not covered during the waiting period. Apart from PEDs, cataract, hernia, hysterectomy, congenital internal diseases, sinusitis, fistula in anus, piles, contact lenses, hearing aids, dental treatments, cosmetic surgeries, and other medical conditions that have a high rate of occurrence are also not covered during the first year. Any intentional injury or harm to self, injury due to the use of intoxicating substances or under the influence of alcohol, and all the diagnostic tests that are not consistent with the medical condition leading to hospitalisation, are not covered under the health insurance plan. However, the actual exclusions may vary from policy to policy, depending on the insurance company.

Accident Details, if Applicable

When you need to file a claim, the experience should be seamless and you should be able to receive maximum value for the annual premium you’ve paid. After all, it is a protection against the unfortunate medical incident. Isn’t that the reason you pay hefty premiums?

But, when customers lack knowledge about policy terms and conditions, insurers can create all kinds of hassles even in the case of valid claims. While it may not lead to your claim being rejected, a lot of back and forth in the process can be certainly frustrating for the policyholder who is already dealing with a stressful situation. And, if you are dealing with a TPA, the process becomes all the more tedious and time-consuming as you have no direct access to the service provider of your insurance policy.

This is exactly where having a SureClaim expert can help you sail through the process without any stress or hassles! So when you file a claim, make sure you consult an expert who understands the process inside-out and get the maximum sum insured.

Considering all of the above-mentioned factors will help you choose a health insurance plan that makes the claim process easy and seamless for you. And if you still face any issues at the time of claim processing, you can count on SureClaim for expert guidance at every step.

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Factors to Consider When Choosing a Health Insurance Policy

Consider the following factors to ensure that you choose the best insurance plan:

Read the policy terms carefully to check if the room rent is linked to sum insured as a percentage. To avoid any surprises, take a policy which specifies a room category or does not apply a cap on the room rent.

If you want your claim settlement process to be faster and transparent, it is recommended to purchase an insurance policy provider that does not rely on a TPA because a TPA is not accountable to make payments. When a third-party is not involved in the claim settlement process, the entire procedure is handled in-house. This makes the claim settlement process much quicker and easier for the policyholder.

Let us understand the concept of no claim bonus with the help of an example where you have two policies – Policy A and Policy B. Now policy A offers 20% acceleration in your per annum if you do not claim and Policy B offers a 5% acceleration per annum if you don’t claim. While the coverage of Policy is substantially higher as compared to Policy B, the amount of premium varies just by a few thousands!

Policy A (Sum Insured – 5 Lakh) Policy B (Sum Insured – 5 Lakh)
Acceleration rate 20% - Acceleration rate 5% -
No Claim Bonus 1st Year 1,00,000 No Claim Bonus 1st Year 25,000
No Claim Bonus 2nd Year 1,00,000 No Claim Bonus 2nd Year 25,000
No Claim Bonus 3rd Year 1,00,000 No Claim Bonus 3rd Year 25,000
Total cover at the end of 3 years 8,00,000 Total cover at the end of 3 years 5,75,000

So if you are investing in Policy B assuming that it has a lower premium, then you are simply being penny-wise but pound foolish!

If you read the terms and conditions of your chosen health insurance policy, you will come across a specific list of treatments which have pre-determined costing. This is because the insurance company wants to cap its liability on certain common procedures like hernia, cataract or fistula.

For instance, if the fees of the attending doctor are capped at 2% in a health policy that is worth Rs. 2 lakh, the insured will not be paid more than Rs. 4,000 even if the doctor’s fees amount to Rs. 8000. This will not only limit the claims outgo for the insurance company, but also bring down the premium and incentivize the insured for using the lower-end of the policy.

Now how does this affect your choice of policy?
If you want to get treated for a specific ailment and the cost of that treatment is negligible, then your decision should not be based on the sub-limit. But if you are looking for a product that imposes no sub-limits, then your annual premium may be relatively higher. According to experts, you should choose your policy based on your budget, your existing medical condition, your susceptibility to the specific medical ailments on which the sub-limits are applicable and your ability to pay if your policy provides limited coverage. Ideally, if you want value for money, then look out for policies that don’t have restrictive limits on room rents, co-pays and specific treatments. This will help you avoid unpleasant surprises during medical emergencies.

Even the best health insurance policy will have a waiting period of 3 or 4 years. But certain policies have a provision where you can reduce the waiting period by one year, provided you pay a higher premium for life. Now why would you want to pay a high premium for your entire life over a medical condition when you don’t even know the probability!

And in the case of certain disease, it makes no sense to wait through the waiting period for a negligible amount. Also, you don’t want the condition to be left untreated and invite a bigger health issue over time.

Your health insurance policy covers infinite health scenarios and the probability that you will suffer from a very specific disease out of 3 or 4 diseases listed in the policy is very low. So you have a very tight bucket of scenarios for a few diseases that are least likely to occur for which you wouldn’t want to increase the life-long premium. And what is the absolute risk to you? The waiting period is anyways not zero! And if you are saving 365 days over a probability, you need to remember that is comes with a hefty price tag that you will continue to pay lifelong which makes absolutely no sense.

If a couple has a family floater policy and unfortunately a partner dies, then the partner who actually survived is already out of the plan. Similarly, those with an individual health insurance plan must check if they can convert the policy into a family floater plan at a later stage in life and go back to an individual policy when their dependent child is no longer eligible for cover and a partner passes away.

A restrictive health insurance plan is very risky. So, if you are looking for the best health insurance policy, then make sure your chosen policy offers you the flexibility to add and remove family members if you want to make the most of it.

Ideally, you should prefer a health insurance policy that offers restoration benefit. This will ensure that if unfortunately, you end up using your full sum insured in a given year when your policy is active then the insurance company will restore the sum insured in the same year. And this benefit comes to you at no additional cost, so it is a big bonus!

Certain health insurance policies include a preventive health check-up every year while few others offer this benefit after 3 consecutive claim-free years. In either case, a preventive health check-up is a beneficial feature that you wouldn’t want to miss out on.

Some Myths Surrounding Health Insurance Policies

Now that you know what essentially makes for a good health insurance policy, let us bust some common myths surrounding health insurance policies.

Incurred Claim Ratio

The incurrent claim ratio is the total amount of claims approved in one year against the premium received from policyholders in the same year. So, for instance, if an insurance company has received a total of 100 crores in premium in 2018 and approved a total of 60 crores in claims then its ICR was 60% in 2018.

But, while the ICR reflects the insurance company’s ability to pay off claims, it does not reveal how many claims were settled and what was the payout against the actual amount claimed. So ICR should not be a parameter for judging which health insurance company is the best. This is because, ICR is a business metric and it should not be confused with a consumer metric.

Private Vs. Public Health Insurance

When you are narrowing down your options for the best health insurance policy, don’t base your decision on private and public sector policies. While it is true that public sector policies have a huge reserve for reimbursement, a lethargic claim process is their flip side. If you do not have a claim expert like SureClaim to guide you through their claim process, then you can face several issues before your claim is settled.

Similarly a private retail policy may have a seamless claim process but it may not cater to your unique preferences, lifestyle, or it may not fit your budget. So whichever policy you choose, it is important that you get health coverage in case of an unexpected medical emergency and when the need arises, you can make the claim. And when you file a claim, make sure you consult a SureClaim expert to avoid the possibility of claim denial and get the maximum sum insured.

Cheaper is Better

Never go by the price tag, especially if you are looking for the best family health insurance. A health insurance plan with the lowest annual premium may actually prove to be a costly mistake when it is time to claim. Make sure your policy has all of the above-mentioned features included if you don’t want any surprises to pop up at the time of discharge.

A Bigger Cashless Network is the Best

The cashless hospital network should not be your parameter for deciding on the best health insurance. Will you be able to reach a network hospital in case of an emergency? How will you find out if your preferred hospital is on the list at the time of a medical emergency? Your decision should not be based on the size of the cashless network but rather on your fundamental requirements.

A newlywed couple planning to start a family may have completely different financial demands from a couple with ageing parents and growing children. The question that every individual should be asking himself/herself is – will the health insurance cover my family’s health expenses?

How to Decide on the Sum Insured

Your choice of health insurance policy will also be affected by the following factors:

  • Age

    Ideally, your liability grows as you age and while your health depends largely on your lifestyle, you cannot deny the fact that the frequency of hospitalisation increases with age. So, it does not matter how small or big your health insurance coverage is; as long as you start young.

  • Family Size

    How many people do you have in your family? Do you have a spouse? Children? Do you have ageing parents? In that case, a family floater plan that covers your entire family may work well for you.

  • Income & Liabilities

    Consider your existing loans and financial liabilities, cash flow and affordability and accordingly choose a policy that fits your basic healthcare needs. You don’t need to buy a health insurance policy with a big cover immediately. You can purchase a policy that fits your annual budget and expand the cover as your affordability grows and income increases.

  • Needs

    Every individual faces financial risk when an unplanned medical emergency strikes. Given the rising cost of healthcare with each passing year, it is important to create some provisions for a decent medical treatment throughout life. You need to ensure financial security for you and your family in your 30s but when you have a spouse, growing children, and dependent parents, having a health insurance cover is no longer an option during the 40s. 50s is when you when you wake up to the thought of creating a financial cover for your family in case an unfortunate life-threatening disease strikes. You need to be careful not to be under-insured or over-insured. Striking the right balance is important here.

  • Lifestyle & City

    Your behaviour and preferences along with your family’s health condition and medical history, take every factor into account when finalizing a health insurance policy. Also consider the healthcare inflation coupled with the impact of lifestyle diseases. The city you stay in will also have an impact on your choice as cities are broadly classified into 3 zones. While Mumbai and Delhi fall in zone 1, maximum tier-1 cities fall in the zone 2 and the remaining Indian cities come under zone 3. So your policy and its premium will depend on which zone your city falls in. And if you move from a tier-1 city to a tier-2 city, most insurance companies will offer you a discounted rate. The cost of hospitalisation is also higher in metro cities as opposed to smaller cities and the chances of acquiring infectious lifestyle diseases is also higher in bigger cities.

Some Questions As You Go Along

Earlier, policyholders had to retain and renew their previous policy in order to claim their waiting period benefit. But now, IRDA allows the policyholders to port their policies to any other insurer of their choice.

A health insurance portability allows the policyholder to carry forward the continuity benefits received and the cumulative bonus earned on their previous policy to another insurer.

As a policyholder, these are your rights:
  • You can port any individual health insurance policies or family floater plans.
  • You can port your policy from and to any health insurance or specialized health insurance company.
  • Your new insurer should give you at least, if not more than the sum insured under your old policy.
  • Your new insurer needs to give you the credit you gained with your old insurer relating to the waiting period for pre-existing conditions
  • Your health insurance porting needs to be completed from the two insurers as per the timelines prescribed in the IRDA Regulations and guidelines.

However, there are some conditions:
You can port the policy only when it is time for you to renew the policy. After porting, the renewed insurance period will be with the new insurer.

Apart from the benefits that are passed on from an old policy to the new policy, all other terms including the premium are at the discretion of the new insurer.

Health insurance portability has to be initiated at least 45 days before the renewal date of the policy. Follow this process:
  • Intimate your insurance company to request a portability
  • Specify the company to which you want to port your policy
  • Renew your insurance policy without any break. If the porting is under process, there is a 30 day grace period given to

Yes. Your insurance through your employer could have a few issues such as an inadequate cover, parents not covered, or room rent limit is low. But the major problem comes when you are about to retire, in-between jobs, starting your own business, or you get fired and you start having health problems. In such circumstances, you will have no health cover through your employer. So, it’s better to buy your own health insurance plan.

Yes. You have the freedom of making a medical claim from one or both of your policies. If you need to pay for the hospitalisation expenses and you’ve exhausted the claim limit on one policy, then you can file a claim with the second policy and get the payout for the remaining expenses.

It is critical that you disclose pre-existing diseases because the cost of non-disclosure is very severe and the insurer can easily find out. So, if you don’t want your claim gets rejected then make sure you disclose all the following details accurately:

  • Pre-existing diseases
  • Any clinical diagnosis whether it was treated or not
  • Any birth defect that was ever informed to you, even if it may or may not require treatment
  • Any surgical procedures that was performed on you
  • Any injuries whether they were serious or not
  • Any kind of long-standing pain anywhere, whether it was treated or not
  • Any ongoing medication even if it’s for migraine or a non-serious medical condition
  • Any therapies, even if there were Ayurvedic in nature
  • Any diagnosis by a doctor even if it was orally informed and not written

List of Health Insurance Companies in India

  • Apollo Munich Health Insurance Company Limited

  • United India Insurance Company Limited

  • Oriental Insurance Company Limited

  • Star Health and Allied Insurance Company Limited

  • National Health Insurance Company Limited

  • SBI General Insurance Company Ltd

  • Universal Sompo General Insurance Co Ltd

  • Bajaj Allianz General Insurance Company Limited

  • Kotak Mahindra General Insurances

  • Iffco Tokio General Insurance Company Limited

  • Royal Sundaram Alliance Insurance Company Limited

  • Reliance General Insurance Company Limited

  • Cholamandalam MS General Insurance Company Limited

  • Tata AIG General Insurance Company Limited

  • Bharti AXA General Insurance Company Limited

  • HDFC ERGO General Insurance Company Limited

  • MAX Bupa Health Insurance Company Limited

  • Future Generali India Insurance Company Ltd

  • Religare Health Insurance Company Limited

  • ICICI Lombard Health Insurance Company Limited

  • Aditya Birla Health Insurance Company Limited

  • Liberty General Insurance

  • The New India Assurance Co Ltd

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