Beginner’s guide to the 7 pillars of health insurance

Securing both your health and finances starts with the right health insurance policy. But with countless options available, finding the best fit can feel overwhelming. To make the process easier, here are seven key pillars to consider before making your decision.

The 7 pillars of health insurance
The following are the essential considerations when choosing a health insurance policy:
1. Coverage scope: What’s included and what’s not?
One of the first things to check in a health insurance policy is the coverage it offers. Does it cover hospitalisation, pre- and post-hospitalisation expenses, and ambulance charges? More importantly, check for inclusions like daycare procedures, maternity benefits, and organ donor expenses. Always read the fine print to understand exclusions and avoid unexpected surprises later.

A comprehensive plan should ideally cover:
1. In-patient hospitalisation: Expenses for hospital stays, surgeries, and treatments.
2. Day-care procedures: Treatments that do not require a 24-hour hospital stay, such as cataract surgery or chemotherapy.
3. Pre- and post-hospitalisation: Medical costs incurred before and after admission.
4. Domiciliary hospitalisation: Treatment taken at home due to the unavailability of a hospital bed.
5. Maternity benefits: Coverage for pregnancy and childbirth expenses.

6. Organ donor expenses: Costs associated with organ transplantation.
7. OPD (Outpatient Department) expenses: Consultations, diagnostics, and minor treatments that don’t require hospitalisation.
Many policies also exclude cosmetic procedures, alternative treatments, and self-inflicted injuries, so be sure to check these details before finalising your plan.

2. Sum insured: The backbone of your policy
Your sum insured is the maximum amount your insurer will pay for medical expenses. A higher sum insured means better financial security, especially with rising medical costs. If you live in a metro city or have a family to cover, consider opting for a higher sum insured to avoid out-of-pocket expenses.

How to choose the right sum insured?
Here are some essential considerations when choosing your sum insured:
1. If you’re single and healthy, a sum insured of Rs 5 to 10 lakh might be sufficient.
2. Consider a higher sum insured of Rs 15 to 25 lakh if you have dependent children or elderly parents, as medical costs can be unpredictable.
3. If you live in metro cities like Mumbai, Delhi, or Bangalore, where medical costs are higher, aim for a minimum of Rs 10 to 20 lakh.
Remember, the optimal sum insured can vary significantly based on personal circumstances and local healthcare pricing. Additionally, look for policies with a restoration benefit, which refills the sum insured if it gets exhausted in a policy year.

3. Network hospitals: Cashless convenience matters
Most insurance providers have tie-ups with hospitals for cashless treatments. Always check the insurer’s list of network hospitals to ensure you have convenient access to healthcare facilities near you. Cashless hospitalisation saves you from the hassle of upfront payments and lengthy reimbursement processes.

Why network hospitals matter
Here’s why network hospitals are beneficial:
1. Cashless facility: No need to arrange funds during emergencies.
2. Faster approvals: Insurers directly settle bills with the hospital.
3. Access to quality hospitals: Policies often include reputed hospitals with high standards of care.
Before buying a policy, ensure that the hospitals in your area are covered under the insurer’s network.

4. Waiting periods: Know when you can claim
Most health insurance policies come with waiting periods for pre-existing diseases, maternity benefits, and specific treatments like knee replacements. Typically, this ranges from 2 to 4 years. If you have pre-existing conditions, choose a plan with a shorter waiting period.
If you have ongoing medical conditions, consider policies with lower waiting periods or those offering waivers for pre-existing diseases.

5. Critical illness coverage: A must for added protection
Standard health insurance may not provide sufficient coverage for expensive treatments of critical illnesses like cancer, kidney failure, or heart attacks. That’s where critical illness insurance comes in. This add-on provides a lump sum payout upon diagnosis, helping you manage medical expenses, lost income, or lifestyle adjustments.

Benefits of critical illness insurance
The following are the benefits of this type of coverage:
1. Lump sum payout: The amount can be used for treatment, lifestyle changes, or lost income.
2. Covers major illnesses: Cancer, heart attack, stroke, kidney failure, and more.
3. Fixed benefit plan: Unlike regular health insurance, this pays a fixed amount irrespective of actual expenses.
If you have a family history of critical illnesses, adding this cover to your health insurance policy is a wise move.

6. Claim settlement ratio: Trust matters
A high claim settlement ratio indicates that the insurer pays claims promptly and reliably. Research the insurer’s record to avoid difficulties during claim processing. The faster and smoother the claim process, the better your experience will be.

What to check?
1. Claim settlement ratio (CSR): Look for insurers with a CSR above 95%.
2. Incurred claim ratio (ICR): This is the percentage of the total claim amount paid out relative to the total premiums collected in a period. Look for an ICR between 80% and 100%.
3. Claim process time: Check how quickly claims are settled.
4. Customer reviews: Read feedback from existing policyholders.
A hassle-free claim process ensures you get the support you need during medical emergencies.

7. Premium vs benefits: Finding the right balance
Lower premiums seem attractive, but they often come with limited coverage. It’s crucial to balance affordability with comprehensive benefits. Compare different policies and check for sub-limits, co-payment clauses, and exclusions to ensure you’re getting the best value for your money.

How to weigh the benefits
Here’s how to choose a plan that suits you best:
1. Compare coverage vs cost: A slightly higher premium for better benefits is worth it.
2. Check for co-payment clauses: Some policies require you to pay a percentage of the claim amount.
3. Look for lifetime renewability: This ensures coverage even as you grow older.
A health insurance policy isn’t just a requirement—it’s a long-term investment in your well-being. Understanding these seven pillars will help you choose a plan that truly meets your needs, ensuring financial and medical security when you need it most. Additionally, consider adding critical illness insurance to your policy for further protection against major illnesses.