Avoid 10 common health insurance distresses

Health insurance, though has become popular among many, is often bought without careful consideration. Whether it is lack of time, lack of understanding or simple ignorance, people invest in a health insurance plan hurriedly. They don’t do much research before buying. Are you one among them?

A health insurance plan should be bought only after you have understood the plan completely and are sure that the plan matches your requirements. Buying a plan ignorantly would result in common problems and cause a distress. So, when you are buying a plan for yourself and your family, avoid these common health insurance distresses –

  1. Coverage limits

While many of you consider the coverage features, the underlying limits are often ignored. Don’t do this. Check whether the plan has any sub-limits or restrictions on the coverage features. If it does, you should ensure that your claims are within the sub-limits so that you don’t have to pay any excess from your own pockets. For instance, the sub-limits on room rents under many plans can be 1% of the sum insured. If the sum insured is Rs.5 lakhs, you are allowed a room rent limit of Rs.5000 per day of hospitalisation. If the actual room rent is higher than the allowed limit, the overall hospitalisation claim is reduced. So, if the actual room rent is Rs.10, 000 and the medical bills amount to Rs.50, 000, claim would be paid for only Rs.25, 000.

  1. Ignorance of the claim process

Health insurance claims require you to follow a protocol. You should, therefore, check the terms and conditions of making a claim. Check the claim intimation timelines, the documents required and the claim process beforehand to avoid a distress at the time of actual claim.

(Here are the reasons why your claim might get rejected)

  1. Waiting periods

Health insurance plans have different types of waiting period. Pre-existing illnesses are covered only after a waiting period. This period differs across different plans. It starts from 12 months and goes up to 48 months. So, if you or any family member is suffering from a pre-existing illness, check the waiting period to know when the plan would allow coverage for the illness. Just like there is a waiting period for pre-existing illnesses, there is also a waiting period for specific illnesses and treatments. Treatments like piles, fistula, hernia, cataract, etc. are covered after 2 to 4 years. So, you should know this waiting period too when buying a health plan.

  1. Age-based premium increase

Health insurance plans can be taken for one, two or three years. However, the premium might not remain the same. Companies have age-based premium rates. So, when buying a health plan, know that your premium would increase when you move to another age bracket.

  1. Facing out-of-pocket expenses

Every health insurance plan has a list of excluded coverage features. This list constitutes the plan’s exclusions. Many often than not, most of you ignore this exclusion list. When you make a claim you find out that the coverage is excluded and end up paying the expenses yourself. Avoid this dilemma. Know the plan’s exclusions when you are buying it so that you can avoid the excluded claims

Did you know India spends 90% of its healthcare costs from its own pocket?

  1. Co-pay ratio and deductibles, if applicable

Co-pay is applicable if individuals aged 61 years and above are covered under the plan. So, if you cover your senior citizen dependent parents or buy senior citizen health plan co-pay would be applicable. Co-pay ratio indicates the portion of claim which you have to pay. So, if your plan states a co-pay of 20%, 20% of the claim amount would be payable by you. So, check for the applicable co-pay ratio before buying the plan. There is also a concept of deductibles in some health plans. Deductibles also represent the portion of claim payable by you. Claims up to the deductible limits are not paid by the health plan. Only if the claim exceeds the deductible limit, the excess is paid. For instance, if there is a deductible of Rs.10, 000 and the claim amounts to Rs.12, 000, the health plan would pay only Rs.2000 as claim. The first Rs.10, 000 would have to be borne by you.

Read more about Dejargonizing health insurance terms

  1. Pre-entrance medical check-ups

Pre-entrance medical check-ups are medical tests which are conducted before the company issues the policy. Requirement of these tests depends on your age and the sum insured you have chosen. Usually, if your age is up to 45 years and the sum insured is up to Rs.5 lakhs, pre-entrance check-ups are not required.

  1. The coverage features

This is the most important factor which you should consider when buying your health insurance plan. The coverage features of the plan influence the coverage you get. Higher the features, the more comprehensive would be your health insurance coverage. So, look at the coverage features of a health insurance plan and opt for a plan with the highest features.

  1. Age restrictions in a floater plan

A family floater plan covers your family members too. Dependent children and parents are covered under the plan besides yourself and your spouse. However, coverage for dependent members is limited up to a specified age. Dependent children are, usually, covered till they attain 21-25 years. Similarly, there might be a restricting age for dependent parents too. So, understand these age restrictions of your floater plan to know for how long can your family members be covered.

If you exercise caution with these pointers and choose a health plan with care, you wouldn’t have to face any distresses. So, be wise when you are buying a health plan.

Read more on How to pick the right health insurance plans

  1. Renewals and Grace Period

Health insurance plans come with a fixed tenure. This tenure can be one, two or three years. After the selected term of the plan comes to an end, the plan should be renewed if you want to enjoy uninterrupted coverage. If the plan is not renewed within the due date, the policy lapses and the coverage under the plan stops. You lose all renewal benefits when the plan lapses. However, there is a concept of grace period under health plans. Grace period is an additional period which is allowed after the policy due date for renewal. If the policy is renewed within the grace period, the renewal benefits continue. However, no coverage is available during the grace period.

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Different types of ULIPs

Unit Linked Insurance Plans (ULIPs) became a rage in the insurance market when they were launched some 15 or more years ago. Even today, ULIPs find favour among many individuals because of the inherent benefits they provide. You can enjoy insurance coverage as well as market-linked returns from a unit linked plan. Moreover, there are flexible benefits like partial withdrawals, switching, top-ups, etc. which make the plan customisable. The best part about ULIPs is their tax-saving nature. The investments made and benefits received are both tax-free. In fact, even partial withdrawals and fund switching do not attract tax. Do you need any more reason for buying a ULIP?

Just like they are beneficial, ULIPs are also varied in nature. You can find different types of unit linked plans. Each plan fulfils a different need. Let’s see what these different variants of a ULIP are –

    • ULIPs for child planning

      Child ULIPs are child-oriented saving plans. They have an inbuilt premium waiver rider. The parent is covered under the plan. In case of death of the parent during the policy tenure, the sum assured is paid. The plan, however, doesn’t stop. It continues and future premiums are paid by the insurance company. When the plan matures, the fund value is paid. Child ULIPs, therefore, create assured funds for your child’s future even in your absence.

    • Pension ULIPs

      Just like child ULIPs fulfil child planning need, unit linked pension plans help you build a retirement corpus. These ULIPs, therefore, help in retirement planning. You choose the plan tenure and pay premiums during the tenure. In case of death, higher of the sum assured or the fund value is paid. When the policy matures, you get different options of availing the fund value.

      • You can buy an immediate annuity plan with the maturity value and start receiving annuity pay-outs.
      • You can withdraw (commute) 1/3rd of the fund value in cash and receive annuity from the remaining 2/3rd of the maturity value.
      • You can buy a single premium deferred annuity plan using the fund value
      • You can postpone the vesting age and receive the maturity proceeds after some years

      Thus, under pension ULIPs, maturity benefit ensures that you receive annuity pay-outs to fund your retirement.

    • Tailor-made ULIPs

      Under tailor-made ULIPs, there are automatic investment strategies. You can choose any strategy and your premium gets invested by the company as per the strategy chosen. Some common investment strategies which you can find include the following –

      • Age-based strategy – under this strategy, your fund’s equity exposure is reduced as your age progresses. Thus, as your plan approaches maturity, your fund value is invested majorly in debt oriented funds to protect your returns
      • Trigger based strategy – under this strategy, your fund is invested in equity. There is a trigger level which you can choose. Once the fund increases or falls by the trigger level, the excess fund is invested in debt. This maintains your returns
      • Risk profile based strategy – under this strategy, you choose your risk appetite and the company then chooses the funds based on your risk profile

      Tailor-made ULIPs are beneficial for amateur investors who feel confused when choosing the investment fund and cannot monitor their investments regularly.

    • ULIPs with enhanced death benefit

      These are unit linked plans with an option of enhancing the death benefit. Rather than paying higher of the sum assured or fund value on death, these ULIPs pay both the sum assured and the fund value in case of death during the plan tenure. Thus, these ULIPs are suitable for those who are looking for a higher insurance cover.

  • Limited or single pay ULIPs

    This category of ULIPs is based on the frequency of premium payment. If the plan requires only limited premium payments, the plan is a limited premium ULIP. Similarly, if the plan requires only one-time investment, it is called a single premium ULIP. These ULIPs are suitable for investors who want to pay premiums either for a limited period or in one lump sum.

ULIPs come in the above-mentioned variants. Which variant is suitable for you?

Choose your ULIP from Turtlemint based on your requirements and enjoy the benefits which the plan provides.

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Can you afford not to have term insurance plan?

‘Term insurance plans are not very beneficial because they don’t have a maturity benefit’. ‘I don’t need a term insurance plan because I already have planned for my family’s finances in my absence’. ‘Term plans are a waste of money because they don’t yield any returns’. These are some common sentiments which most of you have for term insurance plans. These beliefs make you abstain from buying a term plan. Are these beliefs correct?

Contrary to your pre-conceived notions, a term insurance plan is an absolute requirement. The financial security which the plan can provide cannot be found elsewhere. If you believe that the plan is not very important ask yourself the following questions. Find out if you can afford not to have a term plan –

    • Would my spouse be able to meet the financial loss associated with my death?

      Couples create financial goals for their family and save towards achievement of those goals. If you are a single income family your spouse depends on your income for meeting the everyday expenses and planning for the future goals. In case of your premature death, the financial loss suffered is tremendous. Even if you are in a double income family, your spouse might not be able to supplement the loss of income caused by your death. You should, therefore, understand whether your spouse has sufficient financial resources to substitute your lost income if you die early.

    • Are my existing investments enough to meet my family’s lifestyle expenses?

      Many of you who feel that you have invested enough for your family’s financial requirements should assess your investments once again. As inflation is rising at a steady pace, would your investments be sufficient to meet your family’s expenses for years to come?

    • In my absence, how will my family manage its lifestyle expenses?

      Many of you have invested your savings and created emergency funds to take care of your family’s future financial needs. However, in case of your sudden death will these investments and emergency funds be enough to cover for your family’s expenses given that inflation is rising at a steady pace? would your investments be sufficient to meet your family’s expenses for years to come?

    • Would my loans be taken care of if I am not around?

      Most of you must have loans to your credit. Have you wondered who would pay off your loans in your absence? Wouldn’t the burden of loan fall on your family? If it does, your investments would be utilised for paying off your liabilities. How would your family meet its lifestyle needs in that case?

  • Will my child’s future be secured in case of my sudden death?

    Everyone wants a secured future for their children complete with a good education and a stable career. Ensuring a secured future requires funds. That is why most of you invest towards building a sufficient corpus for your child’s future education. What if your investments are cut short due to sudden death? Would the invested funds be sufficient in paying for your child’s higher education?

A term insurance plan provides you a common solution to all the afore-mentioned questions. By having low premium rates the plan allows you to buy a considerable sum assured. You, therefore, insure your life for a sufficient amount. In case of your premature death the sum assured is paid which, being of a considerable size, solves your family’s financial dilemma. Your family can use the plan’s benefits to pay for your child’s higher education, for meeting their lifestyle expenses, for giving your spouse the necessary financial support and also for paying off your liabilities. The plan, therefore, presents an all-in-one solution for all your financial needs. Doesn’t it, therefore, become important?

Read more about Common mistakes to avoid when buying term insurance plan

A term plan is important and should form a part of your financial portfolio. If you are thinking of skipping out on the plan, revisit the above questions once again. I am sure you would be forced to accept the importance of the plan.

Here are some more questions which would force you to think twice if you want to avoid term plans

Read more about Common terms in life insurance policy

Also, check out our video to understand Why you should buy term insurance plans