Twelve common health insurance purchase mistakes (and how to avoid them)

Choosing an appropriate health insurance policy is crucial since that can influence your financial future as well as determine what kind of access you get to healthcare services. However, many customers make mistakes during this process, resulting in inadequate insurance or unexpected costs. This article highlights common mistakes to avoid while choosing a health plan in India.

1. Insufficient Coverage Amount: One common mistake many people make is to buy a policy with low sum assured. Avoiding inadequate coverage requires understanding the methodology for determining right coverage amount based on your family’s healthcare needs and income. Lower sum assured translates to lower premiums, a key financial factor. But buying a low sum assured policy also means that the policy benefits are limited and in case of long hospitalization, your policy might get exhausted quickly. Customers should evaluate their healthcare needs based on their age, family medical history, etc. to figure out the right amount of coverage.

2. Not Considering Add-Ons: A lot of people often underestimate the value of add-ons or riders that improve the amount and type of coverage provided by the base policy. Riders such as critical illness riders or personal accident riders boost the financial protection of the plan further during any such unfortunate medical emergency. Evaluating and choosing relevant add-ons will add another layer of customized coverage as per your requirements. 

3. Overlooking the fine print: Failing to read and understand policy terms and conditions is also a common error. Achieving insurance terminology clarity is crucial before purchasing any policy, as misunderstanding key terms can lead to claim disappointments later. It is very important to be cognizant of exclusions, waiting periods, sub-limits, co-payment clauses and other key details mentioned in the policy document. A detailed examination of the fine print will allow you to make an informed decision and set realistic expectations. Ideally this should be done before the purchase, but policy free look period means that even after the purchase of the policy you can opt out of it and get your premium back provided you do so within the stipulated time period (usually 15 days from policy pack receipt). 

4. Concealing medical history in application: Some policy buyers might be tempted to conceal or misrepresent their medical history to get lower premium rates or avoid policy rejection. But insurance providers are cautious and any discrepancies might get your claim rejected or policy cancelled. You should disclose all pertinent health information truthfully, so that claim processes work smoothly in the future. 

5. Not Comparing Policies: And since you were probably buying a policy without comparing options from different insurers, you could have been stuck with suboptimal coverage. The benefits, premiums, and network hospitals offered by each insurance provider vary. The comparison of policies enables you to choose the one that is more suitable according to your needs and pocket. 

6. Concentrating Exclusively on Tax Advantages: Health insurance premiums are eligible for tax exemptions under the Section 80D of the Income Tax Act, however buying a plan merely for tax benefits is a mistake a lot of people make. The first goal is to achieve sufficient health care coverage. Avoiding the tax implications of a higher premium can result in inadequate coverage in the face of a medical emergency. 

7. Not Evaluating Network Hospitals: The hospitals you can access for cashless treatment will depend on the network of hospitals tied up with your insurer. Not to evaluate the network hospitals of the insurer could make you face inconvenience in emergencies. Make sure your favourite hospitals are in the network of the insurer so that you won’t face claim settlement hassle. 

8. Looking only at the Claim Settlement Ratio: A claim settlement ratio shows the percentage of claims settled by an insurer during a financial year. It’s an important factor, but not the only factor in selection. There are many things about the company like their financial strengths, complaints ratio etc. which should also be understood before deciding on which company would you like to buy your health insurance from. 

9. Not Considering Inflation: Healthcare costs are also subject to inflation, and a policy that is adequate today may not be high enough down the road. Ignoring medical inflation leads to underinsurance. It is wise to choose a policy with an insured sum that considers future healthcare cost increases. 

10. Ignorance Towards Sub-Limits and Co-Payment Clauses: Specific treatments have a payout cap, in the form of sub-limits, set by the insurance company, which reduces the amount payable for those treatments, while co-payment clauses specify that the policyholder bears part of the claim amount. Overlooking these clauses could pave the way for unexpected out-of-pocket costs. 

11. Not renewing the policy timely. It’s important to renew your health insurance policy well in time. Timely renewals are also crucial for no-claim bonus optimization, which can significantly reduce your premium costs while increasing coverage benefits. Health emergencies are unpredictable, and a lapsed policy during a crisis adds significant stress. Also, few people understand that even in case the policy gets revived in case of late payment, you might have to undergo underwriting tests, often at your own costs, and the waiting periods reapply. Therefore, our advice to customers is to put their premiums on autopay and make sure that you pay your premium around 15 days before the due date. 

12. Not Seeking Professional Help: Understanding the ins and outs of health insurance can be complicated. When making the agent vs online purchase decision, consider how professional guidance can help you navigate complex policy features and avoid costly errors. Lack of consultation with insurance advisors or experts can result in poor choices being made. Expert advice is used to navigate the complexities of policies and find a plan that meets your health and wellness wants and fiscal targets. Understanding the complete range of professional agent benefits can help you decide whether to work with an advisor during your policy selection process.