The must-know of fine print: Deductibles and Co-pays

The thing that most affects a person with insurance is the sum they actually receive at the end of the day and the money they pay out of their own pockets. So it is important that you know how much of your bills the insurer will consider.

Insurance companies cover the risk but they also like to share the risk with the insured, especially when the risk is high. For instance, a senior citizen is at a much higher health risk than a young person. He is more likely to visit a hospital and avail healthcare. And for insurance companies risk sharing means cost sharing. In this context, two terms become crucial to understand: Co-payment and Deductibles.

Co-payment (Co-pay) implies that every time you make a claim you partially bear the expenses. It is a fixed percentage decided before the beginning of the policy period and remains the same throughout.To give an example, if you claim Rs. 10000 with 10% co-pay, you’ll pay Rs. 1000 and the insurance company will pay the rest Rs. 9000. You will find the co-payment clause in most of the policies that makes it mandatory for people above a certain age to share the claim amount as the insurers want to keep the premiums low and reasonable, and at the same time discourage them from making frequent minor claims.

Read more A quick guide to common insurance terms.

Deductible is another way of sharing the cost with the insured. It is a fixed amount that the insured party has to pay before the benefits of the insurance policy kick in. Simply speaking, If your deductible is Rs 50k, until you spend that much amount the insurance company won’t pay a dime. If you claim Rs 3 Lakh, you’ll pay Rs. 50k and the insurance company will take care of the rest. In case of motor insurance, if you’re willing to share more risk and opt for a higher deductible, the insurer will give you a discount on the premium.

Deductible can be calculated in two ways. Insurance companies may apply a fixed deductible to each and every claim made. The other way is calculate the aggregate deductible during the policy year. Let’s take an example. You make 3 claims during the year of Rs. 7k, 15k and 20k respectively, and your insurer applies a deductible of Rs. 10k for every claim. The following will happen:

First claim: The insurer will pay nothing. Zilch.

Second claim: You pay the deductible,the insurer will pay Rs. 5k.

Third claim: you pay the deductible, the insurer will pay Rs. 10k.

In summary, You pay Rs. 27k out of Rs. 42k claimed.

Let’s suppose the insurer calculates deductible as an aggregate amount of Rs. 20k and yet again, you claim thrice during the year.

First claim: You’ll pay everything.

Second claim: you’ll pay 13k and the insurer will share the rest. You see, you pay your aggregate deductible of 20k, 7k from first claim and 13k from second.

Third claim: You’ll pay nothing. The entire 20k is covered by the insurer.

You end up paying 20k out of 42k claimed.

The deductible can vary from plan to plan but on an average, aggregate deductible is found to be more cost-friendly for the consumer.

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Read more about Dejargonizing health insurance terms

Read more about Anatomy of a car insurance plan

I am healthy, why should I buy health insurance?

I am healthy, why should I buy health insurance?- said Malik Raja Mora, a healthy 26 years old Mumbai immigrant, who lived in a decent apartment, had moderate savings for someone in their mid 20s, and worked, exercised and ate healthy for the most of it. He did not smoke or consume excessive amount of alcohol. On an average, more fit than most youths in that age group in metros lately.

It was in March, on a regular working day, he had a massive headache after work. He popped a Disprin, and decided to call it a day. At  5 am, he woke up and felt heat emitting from his body. He had a splitting headache and blurred vision. He woke up his flatmate who rushed him to the near by reputed private hospital chain (Name removed). Let us hear from Raja himself, the narrative of the events that followed.

In the morning when I was rushed to the hospital in my vicinity, the night shift doctor, took my vitals and asked a few general questions. My fever was taking a toll on me, and my roommate Varun spoke on my behalf.  The doctor prescribed me regular antibiotics and paracetamol and suggested that I went home and rested. That time, the swine flu scare had gripped the city. Varun, a borderline hypochondriac, inquired if I could be a suspect and requested to do a test. The doctor seemed a little apprehensive.  He said that the test was expensive and we should consult a general physician as he was just a casualty doctor.  We agreed and decided to head home. Varun gave me some milk and bread, the frugal items available in our humble bachelor pad,  and I took the medicines with it.

Raja 7

As decided, at 9:30 am we went to the physician. My fever had spiked again but he refused to run any tests as they were expensive. I agreed to pay for it, but he did not give his consent and sweet talked us out of it.  He repeated the same prescription with a stronger paracetamol and added “isolation” at the end. He advised me to go home and observe for 2 days and told Varun to be wary. I went home and crashed. In the afternoon around 2 pm I woke up with a fever of 103 despite taking a paracetamol 4 hours ago.  Varun who decided to work from home that day rushed me to the hospital 3rd time the same day. The on-duty physician was alarmed by the sudden spike in temperature and  administered an IV paracetamol drip. Varun insisted on running some tests, but she refused as she apparently required the permission of the attending physician. When did this rule came into place, I did not know. Hence, it was pushed to the next day.  My exhaustion level had crossed my tolerance threshold and I could barely walk. A kind auto driver got ready to take us 300 mts  from the hospital to our apartment at 2X the meter price. I crashed on my bed and  fell asleep.  After what felt like 5 minutes, I was woken up by Varun. However the creases on my face from the pillow and the clock said otherwise. I had slept for 7 hours straight in the same position.  Varun, tried to feed me some Khichdi he had attempted for the first time inspired by a Youtube video. But, the bitter taste in my mouth and absence of appetite prevented me from appreciating his effort. When I refused to oblige despite constant concerned badgering, he checked my temperature which was now a dangerous 104. He ran to the other room frantically calling people. After an eventful day, my savior was tired and scared of being the solo show runner of my unprecedented illness. He finally called a co-worker for help. They immediately drove me to a nationally reputed hospital about 6 kms away. I was immediately admitted and allotted a single isolated room as an H1N1 aka Swine Flu suspect. They took samples and dispatched them for testing without further adieu. They prescribed Tamiflu to Varun and told him to take extra precaution. He was given instructions to get admitted to the hospital if he developed symptoms. He swore that he had an itch in this throat and it could turn bad, but fortunately the doctor dismissed it as a psychological symptom.

The flawless medical attention I received at the Reputed Hospital, assured me that my health would improve, but little did I expect the monetary punch, soon to throw me off balance.

It started with a deposit amount of Rs. 20,000 to get admitted. I was asked about health insurance which I did not have. Luckily, I was a little more careful with my money than my friends, and I had some savings. I gave my card and the pin number to Varun and he took care of all the formalities.

I was happy with the nice room I was put in, and the care and attention comforted me. They gave me a plethora of medicines to gulp down and I obliged.

I stayed there for another night, oblivious to the costs I was incurring.  The next day when I was back to my senses, the reality dawned on me. I was staying in a plush room with the best medical facilities in one of the most expensive cities in India. That kind of celebrity treatment, could not be cheap. I asked the on-duty staff to discharge me, but  I could not leave unless the attending physician consented.

I pestered Varun to call the accounts department to inquire about the costs incurred so far. I was shocked when I found out the amount. I believe you would be too. The total was Rs 37500 for one night! Out of which only Rs 8000 was for the H1N1 test and the rest were ridiculous expenses like an isolation room, in which I was put not by choice but for the safety of all patients and medical staff. A single visit by the attending, which involved him walking in, looking at me and walking out,  was Rs 2000. Right from the masks, thermometer, medicines, IV drip, I was charged for everything! Oh yes, the terrible bland food was complimentary. I would like to mention that till then my reports had not arrived, so I was paying as an H1N1 suspect and not patient.

When my reports came out, I was declared positive for H1N1, which at that time made me a little happy- at least the Rs 37000 hospital bill was somewhat  justified.

My temperature normalized and I wanted to go home.  But the hospital refused to discharge me as I was contagious and could be a danger to the people around.  My friends promised that they would quarantine me and take care of me without putting themselves and others at risk. Still not allowed. The moment I said I did not have money to pay anymore, I was immediately given the Discharged against medical advice slip and told to pack-up and leave. So much for their concern for safety of the society.

I did not want to put my friends at risk, despite them promising to take care of me and quarantine me. So we inquired at a friend’s private hospital which was slightly cheaper, and they refused to admit an H1N1 patient. As the last resort we headed to a government hospital in a small station in Thane- Kalwa.

They showed us an isolation ward. I was horrified looking at the room and especially bathrooms. I was sure that public bathrooms in crowded areas were better maintained. If I had to stay there for a day, I would contract more illnesses, with my already compromised immune system. We headed home and I was quarantined for  4 days, till I completely recovered.

So after a blow of almost Rs 40,000 I wish I could just give my cashless insurance card at the hospital.

For a basic accident and sickness cover, I am now paying only Rs 4000 per year at my age. It took me all my hard earned savings to realize that I was losing the small amount in taxes anyways. Why not use it to secure my health?

I am healthy and a young individual, which is why I Should Have Bought Health Insurance.

We would like to thank Raja,  for sharing his experience with our readers. We wish him luck for a bright and healthy future.

Read more about what is insurance and how does it work?

Read also An anatomy of an health insurance plan

Read more about Dejargonizing health insurance terms

What are the Pradhan Mantri insurance schemes?

The advent of whatsapp has made messaging obsolete. who wants to pay for messaging when whatsapp is faster is easier.

Home screen notificationAll you get in messages is anyways advertisements and promotions.  But isn’t it super difficult to ignore the little notification on your phone,  despite most of them being the same annoying promotional offer?

Lately many of us have been receiving a lot of messages from our banks about the Pradhan Mantri Suraksh Bime Yojna (PMSBY) and Pradhan Mantri Jeevam Jyoti Beema Yojna (PMJJBY). Not only messages but a lot of emails and letters too have somehow been talking and pushing us to avail it. So what are these Yojnas?

Pradhan Mantri Suraksha Bima Yojana

The PMSBY is an accident insurance policy introduced by the Government of India for its citizens.  It provides cover up to ₹ 2 lakh for accidental death or full disablement of the policyholder for just ₹ 1 per month. Any Indian Citizen between ages 18 to 70 years regardless of their socio-economic status can buy this policy.

What is in Store for You

  1. It is linked directly to your bank account. The annual premium amount of ₹ 12 will be debited in a single installment from your  bank account on or before 1 June every year.
  2. Death and Full Disability: ₹ 2 lakh : Full Disability is described as
  • Total and irrecoverable loss of both eyes or loss of use of both hands or feet, or
  • Loss of sight of one eye and loss of use of hand or foot
  1. Partial Disability: ₹ 1 lakh Partial Disability is described as
  • “Total and irrecoverable loss of sight of one eye or loss of use of one hand or foot”

Pradhan Mantri Jeevan Jyoti Yojna

Rs.2 lakhs is payable on member’s death due to any reason. If the Scheme Member dies during Insurable Membership, subject to Policy being in force and all due Premiums, Service Tax and any Other Levies (if any) having been paid and subject to any restrictions or qualifications referred to in these Clauses, the amount specified as the Sum Assured for such Scheme Member shall become due to the Nominee of the Scheme Member. No Maturity benefit is payable under the policy. No Surrender benefit is payable under the policy.

No policy comes without the fine print terms and conditions. So here are some for the PMSBY and PMJJBY

  • You can have only one subscription to the insurance policy regardless of the number of bank accounts you may hold.
  • The policy will be processed through the policyholder’s AADHAR-linked bank account only- So if you don’t have an AADHAR number ( card is a distant dream at this point) time to stand in those long lines at the municipal corporation.
  • To get the policy, you must authorize your bank during application to auto-debit the premium amount at the time of renewal and ensure the continuation of the policy.
  • A shout out to all broke people- you must have sufficient balance (i.e. Rs 12 for PMSBY and Rs. 330 for PMJJBY)  in your linked bank account at the time of renewal each year. Failure to do so would result in the risk cover being suspended with reinstatement at the sole discretion of the insurance company.
  • Your linked bank will be the Master PolicyHolder on behalf of you.

If you are one of those few people, whose bank has not already contacted you, please get in touch with them to process your policy application.

What a regular internet search will not tell you clearly about this policy

You will be able to get the claim of Rs 1 lakh only if you lose one eye or one limb. No other accidental ailment will be covered.- So if you are admitted to a hospital for a fracture or injury, this scheme will not bear your hospital charges.

Read more about What is health Insurance?

Read also An anatomy of an health insurance plan

Read more about Dejargonizing health insurance terms

Be safe and secure 🙂

Why should you get your two wheeler insured

Lets take a look at the funny CCTV coverage caught live!

Maybe situations like this do not occur everyday with you. However, it’s pretty evident that accidents are pretty common.  Maybe you had nothing to do with reckless driving, but still became a part of it! Can you think of the kinds of costs you could incur if your vehicle was damaged. Worse would be if be if you collide with someone and they file a legal claim against you!

How do you avoid such situations? Well,

  1. Drive Safe
  2. Get Insured.

“75% of two wheelers in India are not insured, despite it being illegal”

May 2015, the Insurance Regulatory and Development Authority (IRDA) stated that 75% of two wheelers in India are not insured, despite it being illegal! Yes riding a vehicle without a 3rd party liability is illegal and can lead to heavy fines, and or prison punishments. So, having an insured vehicle is not only the right, but also the wise thing to do.

Read more Why do you need third party insurance for two-wheelers.

How will insurance benefit you?

  1. It will cover the expense of your vehicle damage and medical expenses- provided you are not underinsured – ( Link to why not be what coverage to get article)
  2. In the event another person is hurt or his vehicle is damaged, insurance will cover his vehicle, property and life damages too.
  3. A peaceful night’s sleep that you are doing the right thing legally and monetarily.

Now since you are convinced as to why to get 2-wheeler insurance, do check out our HOW & WHAT to select for your two wheeler insurance by visiting our site here.

Drive Safe 🙂

Read more about What to do when you two wheeler meets with an accident?