We all know that health-related situations usually come unannounced and that no matter how well prepared we are, we can never guarantee an illness-/disease-free future. This, along with ever increasing healthcare costs, explains why we shouldn't be taking health insurance lightly. However, more often than not, we end up buying the wrong plan either because it was highly recommended by our relatives and friends or because we chose to blindly follow our advisors. So, what are the common mistakes that people often make while choosing a health plan? Let's take a look:
Buying health insurance for tax-saving benefits
This is the most common mistake that we fall prey to. For most of us, saving tax is the only reason we invest and buy insurance products. And although tax benefits from a health cover are attractive, the main purpose of buying a health policy is, and should always be, to cover your health. Don't buy health insurance for the sake of saving taxes in a financial year as that can lead you to buying a wrong policy or opting for insufficient coverage.
Getting insufficient coverage
The premium is often one of the main factors that plays on our minds when buying a health policy. And in order to keep the premium low, we end up buying a policy providing insufficient coverage. Before settling for a health policy, assess your healthcare needs, compare the coverage provided by insurers and then finalize a policy that matches your needs.
Concealing medical history
Do not hide your medical history for the fear of getting your insurance policy rejected. Non-disclosure of your existing medical conditions can lead to the rejection of your insurance claim at the time of need. Let's not forget that concealing facts from insurers will tarnish your profile, as it's classified as a fraud.
Not evaluating zone-based pricing carefully
Many health insurers price their policies according to city zones. Health insurance premium will be comparatively lower for those residing in Tier-II & III cities (vis-à-vis a Tier-I city). City-specific health insurance makes sense if you have restricted income and if your city of residence has reputed hospitals, well-equipped for treating the majority of ailments and diseases. What you must keep in mind is that some insurers restrict coverage if a policyholder from a lower zone moves to zone 1 city for advanced treatments.
Ignoring co-pay clause
Most insurers have incorporated co-payment in the contract with an intention to keep a check on claims outgo. Typically, the co-payment clause is levied on those who have specific medical conditions, for treatments that are highly expensive, for treatment in metro cities or non-network hospitals and also on senior citizens. As per this clause, you have to share the treatment cost with your insurer. This could range anywhere between 10% and 20%, depending on the terms of agreement. Your premium outgo will be relatively lower if you opt for a higher co-pay percentage.
Buying a second health plan to enhance coverage
Needless to say, buying additional health coverage is not very cost effective, if you compare it with alternatives. Instead, you can opt for a super top-up plan for enhancing your health coverage. It is primarily an improved version of the top-up plan that comes into force as soon as you exhaust your base cover. The difference between top-up and super top-up is that while the former extends benefits only when you cross the threshold limit, the latter covers all medical expenses incurred during a policy year.