Health insurance premiums are going up and the reports are claiming 25-50% increase and we have seen this happening since the pandemic when there has been a lot of awareness about health insurance and this kind of a protection cover. But talking about rising premium, is it just the premium that is going up or are there more add-ons in the health insurance policies also which customers are getting a benefit out of?
Sanjiv Bajaj: It is a combination of both, but it will be very difficult for me to say that it is only due to increase in benefits or improvement in benefits. We have to understand in India the health inflation is about 14%, so that means every year the cost of health treatments are going up by 14%. There is an 18% GST on health insurance. So, the point is that that it is causing the claims to go up and whenever for an insurance company the claims go up or when they do their planning, they look at it okay if a person gets this ailment, what is going to be the corresponding price of the treatment, that is increasing and that is the main cause for the premiums to increase.
Yes, there are some very interesting new plans out there, but that does not mean that they are more expensive. That makes them interesting plans. It is time to review health insurance because there are some plans which are value for money, have beautiful benefits, like till you do not make a claim, your premium does not increase and there are a lot of other interesting benefits on the new products but then you have to see is your product now outdated? Is it old? Is it giving you the best coverage? Is it the best value for money and it is about time that you need to start reviewing your health insurance every at least three to five years.
So, talking about people who want to renew their health insurance policy, how should they look at doing this? Time to put your policies? Is it the time to buy a top-up and a super top-up just in case you want a cost effective option? What would be the right strategy?
Sanjiv Bajaj: Both are not replacements for each other. Let us first start by saying that today porting is much better and easier.Over a period of time, IRDA has been coming out with regulations and changes which make porting much fairer, easier, and interest much better protected.
Let me take an example. Earlier it was said that if you had insured with a company for seven years, then from eighth year, your claim will not get rejected. Now IRDA has come up with a clarification that they have brought this eight years down to five years, that after five years there is no reason unless you have lied on your application form, your claim should not get rejected and this will be applicable even if you port your policy.
The continuity benefits have been improved. So, my point is that do not be scared of porting your policy and if you have bought a policy, you must remember at that time there was very limited choices available and over a period of time new policies have come out which offer a much better coverage. Another fallacy, let me tell you; a lot of people are carrying Rs 3-lakh, Rs 5-lakh policies. But if you upgrade it to a 20-30 lakh policy which is what is required minimum today, the cost does not double or triple, the cost may go up by maximum 30% to 50%. As you had very rightly mentioned, there is a concept of super top-ups, so you can also buy a super top-up to increase your 25-30 lakh cover to Rs 1 crore. But you must understand that whenever you buy an add-on cover, it has its own set of limitations. So, what we like to recommend is that if your base plan is big enough, that is the best. But you must review the product and you must try to buy a comprehensive because health is the most important thing. Now, when you have a claim, you are not feeling well or somebody in the family is not feeling well, you do not want to spend your time trying to figure out benefit X, Y, let me go here, let me do this, you just want convenience. Even if you are paying Rs 1000-2000 extra, it is better to have that convenience.
This is the reason why you have health insurance and it is one of the best forms of investment that you should be doing for yourself and for your family members. Porting being very easy and flexible these days, what are the things that one should be keeping in mind and when you are porting your health insurance policy or that product, would you have to go through the drill of getting a health insurance test again?
Sanjiv Bajaj: The most important thing in porting and which most of the people make a mistake is when you port a policy, make sure when you get the new policy you have to check and it should say that this policy is ported from your old policy. Now, a lot of times porting has lesser commission. So, a lot of agents and others will buy you a new product rather than porting, so that is the first thing that you need to be careful of, that when you port your policy, your new policy should mention it is ported and second is when you port a policy, you have to give a new health declaration. So, if you have any pre-existing diseases or you have added on any existing diseases, then you have to mention that and the insurance company will take a call whether they want to accept that port or they do not want to or they may charge a very small additional premium.
So, at least you have an assurance that, when you bought the original product, you did not have diabetes, now you have diabetes and you feel that you should improve yiur product policy from Rs 5 lakh to maybe Rs 30 lakh. So, they will say, okay, when they port it and if they accept that they port, they will say up to Rs 5 lakh, no conditions, above Rs 5 to 30 lakh, there is a two-year waiting period for diabetes related ailments or they may say there is an amount of extra premium. But it is better to do that and be very clear.
I also like to tell all the clients that whenever you are talking about health insurance, please give your requirements in writing to your broker or agent so you know what you have told him and you have proof of that. Look, this is the product I want. This is the health condition and make sure this is communicated. So, if you have that and if somebody mis-sells, then you are protected.
