Health insurance policy: Focus on essentials


There could be over 20 features included in health insurance that one must consider before making one’s buying decision. While specific features have their place in individual cases, we list the five useful features which are a must have.

NCB, Restoration of cover

Accumulating the No Claim Bonus can ensure that your coverage increases to 1.5-2x, through claim free years. The feature is widespread across policies and the only differentiation is with regard to the maximum bonus accumulated and the number of step increments. Across policies, NCB can range from doubling base coverage in two years at the fastest pace to ten years at the slowest pace.

But on the flip side, reduction on making a claim will also move at the same pace. The highest NCB bonus can be accumulated in Niva Bupa Reassure 2.0. This policy, through a redesigned NCB, allows unused base sum insured to be carried forward to a maximum of five times the original. But at the other end, even government insurers allow for up to 50 per cent increase in sum insured.

Similarly, restoration is also a common feature, and the differentiation is with regard to number of times one is allowed to restore — restoring sum insured after a claim in a policy year, and if related illness is covered with the restored amount (illness related to first claim). The bare minimum across policies allows one restoration of sum insured for an unrelated illness. One can rejoice when unlimited restorations are allowed to cover related or unrelated illness. But one should be mindful of two distinct illnesses occurring in a policy term.

Room rent and Co-pay

Room rent limits have been a minor irritant that could potentially dilute policy benefits. On choosing a single room or an A/C room for inpatient hospitalisation, one could increase the ‘out of pocket’ cost for the entire procedure (not just room rent) proportionally. But now, all policies scanned (close to 12) offered either ‘single private A/C room’ or ‘any room’, except for New India insurance, which still retains the old-gen ₹5,000 room rent limit. This removal of room rent limit across policies essentially reduces the risk of outsized impact on personal finances at the time of settling the bill.

Policies bought even five years back commonly mentioned 20-30 per cent co-pay. That is, excluding consumables, which are excluded even now, a portion of the procedure cost was borne by the policyholder and 100 per cent Co-pay is ubiquitous across policies now. This should enable a near cashless transaction, save for consumables.

Points to remember

Ensure the basics, but these cannot be the unique selling points

Network hospital and OPD covers

OPD covers

A wide network of hospitals that accept cashless transaction for a given insurance policy was earlier a selling point for both the insurer and the hospitals. But with insurers having an average of 8,000 hospitals on network list, it is safe to assume most reasonable healthcare providers cover cashless facilities.

On top of it, insurance regulator IRDAI further simplified the process to empanel a hospital, in July 2022, whereby a video KYC and insurer benchmarks are to be met to empanel a hospital. This essentially ensures that a decent sized healthcare provider should find no reason not to be empanelled by insurer network. Hence, paying cash even when insured should surely be a thing of past and not a unique selling point anymore.

OPD Cover — which covers outpatient consultations or its digital cousin, e-consultation — is slowly becoming a standard feature. A handful of policies still bracket the two under optional services that can be bought, but seven of the 12 scanned policies do provide either of the two in basic policy. Considering the various strands of viruses prevalent and the harms of self-prescribed antibiotic that is challenging doctors, the future of health covers should include a basic consultation package.

Covid years have dramatically increased the awareness and benefits of such features and most (if not all) have included a version of the same in base policy. Unlimited e-consultation and an OPD limit of ₹2,000 to ₹5,000 is at the higher end of base policies, but in the median range, limited e-consultation or an OPD cover of ₹1,200 are available. Only five of the policies scanned have neither.

Prospective policyholders should ensure the exclusion of the above features and distinguish policies based on critical illness covers, sublimits for procedures and PED waiting periods while zooming in on an insurance policy.