Tips to care about your medical insurance policies

Even a decent coverage amount today might look meager in the near future. Medical inflation proves to be high and individuals have to plan for the next 15 years accordingly.

February 12, 2013 12:52 IST | India Infoline News Service
A very important doubt that pops up in your mind when you think about the health insurance policy is the coverage amount. How much is the right amount for my health insurance coverage? Every individual will have this question and needs to find the right answer so as to avoid financial complications in the future. Even a decent coverage amount today might look meager in the near future. Medical inflation proves to be high and individuals have to plan for the next 15 years accordingly.

Here is a simple math: The current medical inflation rate in India is 15%. Assuming a 38-year old person has taken a policy of Rs. 3 lakh for his medical coverage, and then it would have translated into Rs. 9.31 lakh at the age of 65 years. (3 lakh * (1 + 0.15) * 27).

Points to ponder before you take medical insurance: There are two important points to be considered when you are about to decide your health insurance policy in India.
You need the most out of your health policy when you are in late 50s and 60s.
Hospital expenses are constantly rising and it is out of the common man’s reach.

So how much coverage would you think is sufficient to have a peaceful retirement life?

Inflation rates and calculation: Suppose if you have a coverage amount of Rs. 4 lakh in 2013, then the amount required to cover you after 10 years would be around Rs. 13 lakh to Rs. 14 lakh assuming the medical inflation to stay at an average of 12% per year. You should have coverage of Rs. 22 lakh to Rs. 24 lakh per year after 20 years with the present rate of inflation. So, do you get your numbers properly now?

Things to ensure before you take medical insurance: If you have calculated the required amount of coverage for your family, it is time to take care of certain things before you can finally sign the documents.

Make sure to choose a vendor whose claim success ratio is higher. There are several players in the market who offer insurance at cheaper rates. However, their claim ratio will be very low and they cannot be trusted.

Read the form thoroughly before you sign the document. Go through all terms and conditions about premium loadings, claim free year privileges.

Do not allow the insurance agent to fill the form. Fill it yourself to avoid any discrepancy in providing information.

Declare all pre-existing illness or diseases when you fill the form. It is important to be transparent when you declare such things.

Go through the medical tests before you buy the insurance. This test will help you to know about the health status depending upon which the premium will be upgraded or downgraded.

After you buy the insurance product from the vendor, go through the policy documents once again and understand the terms and conditions. If you are not satisfied with the rules provided, you always have the option of surrendering the policy within 15 to 25 days of time.

The writer is a technical analyst, author and owner of the technical analysis blog shabbir.in

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