Be wise, Health Insurance wise

Insurances are our safety nets in life and it is one of the first step to creating a financial plan. Health protects our wealth and we have to Be Wise, Health Insurance wise. There are numerous factors which are crucial in selecting in a Health Insurance. Before we go into the factors, its important to understand a few things.

1. Healthcare cost inflation is significant
2. Healthcare needs go up significantly post our retirement
3. Cover which look great now, would not be so great 20-30 years from now

The typical mentality of anybody is to go for lowest premium in health insurance. It is important to understand how Insurance providers reduce the premium costs. A few important factors are:

We will look at Room rent cap in this particular blog and how it affects you. Mrs. X bought a health insurance over of 5L for herself which has a room rent cap of 5000 per day. Now after a few years, Mrs. X was admitted for Dengue fever in a hospital for 5 days. Mrs. X took a deluxe room, which costed her 7500 per day. In her mind, she knew she was comfortable paying off the 5*2500 INR extra cost on the room rent. The total bill came to 1L and Mrs. X thought she would have to pay that 12500 INR extra. To her utter shock, the insurance company approved only 5000/7500 * 1L ~ 66K INR. Mrs. X has to now pay the remaining as her “Proportionate Deductions” to settle the bill.

Thankfully IRDAI has standardised certain aspects to be not allowed under proportionate deductions. So Mrs. X would probably end up paying say around 20K from her pocket.

Finally, the bigger point to understand is that, there is absolutely no point choosing a limit on room rent. Imagine the room rent increase during our life time. Hence, its better to go for no cap on room rent policy and protect yourself. In the next one, we will look at Copay, stay tuned 🙂