Maternity cover: A must-have benefit?

The maternity benefit in a health policy covers the insured during childbirth. A lot of newlyweds tend to take a health policy with maternity cover keeping in mind this certain expense in the near future. But you need to know a few things before you get this cover.

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Maternity benefit- what does it cover?

Depending on the given policy, the maternity benefit covers the following:

-Hospitalization expenses for both Cesarean and normal delivery

New born cover that insures the baby up to a maximum of 90 days

-Pre and post natal expenses, which also include post pregnancy complications

Not many options

Maternity benefit is not a default feature of a Health Insurance policy. In fact, many insurance companies don’t offer this benefit at all, and when they do, it’s offered with some restrictions. Apollo Munich, Religare, L&T, Cigna are among the few insurers that club it with their regular health policies.

Waiting period is justified!

There are some caveats involved with maternity covers. One is that they come with waiting periods, varying usually between 36-48 months. There is no escaping this fact and it sounds logical from the insurer’s point of view as well.

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Cash limit

As it happens, there is a cap on the expenses. Even in policies with sum insured 15 lakh+, you’ll not get more than 50k for normal delivery and 1 lakh for Cesarean delivery. Typically, the benefits range between 20k to 40k. The policies didn’t cover the pre and post natal expenses before, which increasingly the new plans have started to offer. However, no plan in the market covers in vitro fertilisation, abortion and expenses related to termination of pregnancy.

Compare the cost

Since maternity cover comes with a waiting period, the incremental cost to take this cover may reduce the value of the benefit accrued. To put it simply, with premium going up every year and health cost inflation, what you are promised as part of this benefit will not have the same value as calculated at the start of the policy period.

Final word

The question that you would have to ask is whether or not maternity benefit alone should dictate your decision. Maternity is not a ‘probable’ event, it is a planned event. In that sense, it’s a benefit that will be claimed. So, in a nutshell, two things.

1. A premium policy sweetens the deal by offering a lot of benefits, of which maternity is just one. If you think you want all those benefits as well, totally go for it. But it makes little sense to opt for a premium policy JUST for the maternity benefit.
2. Maternity is a policy specific benefit and there are no two ways about it. You pick out policies with maternity benefit and see if overall they address your needs. There are health policies in the market that insure up to 15-25k, which won’t cover the cost entirely, but will ensure that your pocket doesn’t go too light!

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Know your health policy exclusions

Choosing a health insurance policy calls for factoring in a number of things. One such important thing is exclusions of the policy.

Exclusions are events and conditions that the insurance policy doesn’t cover. They can be of two types: (a) Permanent exclusions and (b) Time-sensitive exclusions (Benefits with a waiting period).

1. Permanent exclusions are the events, treatments and diseases that are never covered by the policy. Cosmetic treatments, Facial surgeries, treatment of HIV/AIDS and war related injuries are some of the permanent exclusions. Every policy lists out an exhaustive list of these exclusions.

2. Some benefits of the policy require you to wait for a specified period of time before they can be availed. These are time-sensitive exclusions or benefits with a waiting period. For instance, the first waiting period, also called “cooling off period”, is 30 days long, after which most of the policy benefits come through.

Every policy clearly names treatments that you can’t make a claim for in the first 2 (or 3) years of the policy. Common among them are treatments pertaining to cataract, hernia, varicose veins, osteoporosis, non-infective arthritis and many more. In addition, specific benefits like maternity coverage come through after a waiting period of 9 to 48 months depending on the policy. Pre-existing diseases too are covered only after the lapse of specified waiting period.

The law demands these exclusions to be specific and precise as they are not part of the coverage (or imply conditional coverage). In case there happens to be considerable difference in the interpreted meaning, the law sides with the policyholder by applying a possible restrictive definition. Visit our website to compare and buy health insurance.

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The winning case of critical illness covers

A critical illness is a severe illness like Cancer, Cardiac arrest etc. that puts your life at high risk and even after treatment, changes your ordinary day to day life. One aspect of these changes is financial.

Insurance customers often ask this question: Why do I need a critical illness cover when I have a health policy? The answer is fairly simple. They don’t conflict each other. Critical illness cover is like a health coverage booster, which serves a different function than that of a health policy.

Health policy or Critical illness cover? Actually, both!

The treatment of a critical illness is three times more expensive on an average than other ordinary treatments. The regular health insurance policy covers only for hospitalization related costs, however incidental costs like loss of income, family travel & stay, canteen bills, alternate accommodation etc. are not covered. These costs can be significant especially during prolonged treatment. Result: You end up dipping into your own savings, and to no end!

-Critical illness cover is specifically designed to protect the insured from this situation. It functions as a benefits policy that provides a lump-sum amount on detection of specified critical illnesses.

Critical illness covers are not expensive and are offered by all major insurance companies. Also, do note that the premium increases with the age of the insured. The earlier you apply, the less you pay.

Read more about benefits of critical illness policy

Rider vs. Standalone policy

Critical illness covers are offered as either riders (top-ups) or stand-alone policies. Here you will need to evaluate the extent to which you want to get covered. The critical illness rider can be taken at low premiums but typically, this cover doesn’t assure you of a sum greater than the insured sum of the base policy. Also, you don’t get much flexibility in terms of choosing a high sum insured and it can be continued only until the term of your base plan. In contrast, a standalone policy gives you all the freedom to choose a high sum insured, but the premiums too are slightly high. As a rule of thumb, with a basic health plan of 5 lakh, a critical illness cover of 15 lakh strikes a good balance.

Clauses you must know

Some policies specify a survival period of 30 days, which means that insurance company will make the payment only if after diagnosis, the insured survives the specified period. Here, it is important to make the distinction between policy waiting period and survival period. Like any other policy, critical illness policy entails a waiting period of 90 days after which the benefits come through. If you’re diagnosed with a critical illness in the first 90 days, insurance company will reject your claim.

As mentioned earlier, critical illness benefit doesn’t depend on whether or not you’re hospitalized. On diagnosis of the illness, you’re paid a lump-sum. A few insurance companies spread the payouts in several installments that you receive over a given period of time.

Some of the critical illnesses commonly covered in the policies are:

  • Cancer
  • Paralysis
  • Heart attack
  • Kidney failure
  • Coronary artery bypass surgery
  • Stroke
  • Major organ transplant (e.g. heart, lung, pancreas)

Most policies cover the aforementioned illnesses but the count can go as high as 36+ depending on the policy. Also, always keep an eye on medical definitions of the covered illnesses(failure of a single kidney is not critical enough, partial paralysis too will be skipped over, things like that), exclusions and claim settlement ratio of the insurer (higher the better), and only after making sure of all these policy credentials should you buy the policy.You can compare health insurance policy on our website.

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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.

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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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