Should You Go for High Health Insurance?

    Most individuals fear that their health cover of . 5 lakh or . 10 lakh won't be enough to take care of a medical emergency. They believe advances in medical science, along with the rising cost of treatment, medications and procedures, may wipe out their savings and investment if they contract some serious or critical illness. The fears are not exaggerated. For example, an organ transplant, say, of liver or lung, can cost . 20 lakh to . 40 lakh. Even the new medicines for cancer and other serious illnesses cost . 500 upwards per tablet. However, most insurance companies offer a maximum health cover of only . 10 lakh. But the signs of changes are already there. Religare Health recently launched Care, a health insurance policy that offers sum insured of up to . 60 lakh, the highest offered on any health insurance product in the country. ICICI Lombard and Max Bupa Health Insurance already have products that offer health cover of up to . 50 lakh. 

"Due to advancement in technology and medical science, many new procedures have been adopted in critical surgeries and treatment of severe illnesses, which come at extra cost. Also, a change in lifestyle is encouraging individuals to take treatment in super-luxury hospitals. These factors, along with the inflation in healthcare cost, are forcing individuals to look for enhanced sum assured," says Pankaj Mathpal, certified financial planner and managing director, Optima Money Managers. "Individuals with adverse family history should go for a higher sum assured if they can afford the premium. Wealthy people looking for advance treatment and services in super-luxury hospitals can also go for such large sum assured," says Mathpal. 
Also, many people are increasingly opting for medical treatments outside India for critical illnesses. Some of these health insurance products cater to that need, too. For instance, Care covers costs related to medical treatments outside India for individuals opting for a sum assured of above . 50 lakh. "This policy provides coverage for hospitalisation abroad for cancer, benign brain tumour, major organ/bone marrow transplant, heart valve replacement, and heart bypass surgery, for a sum insured of . 50 lakh and . 60 lakh," says Mahavir Chopra, head, e-business, medimanage.com, a healthinsurance advisory firm. 
DO YOU NEED HIGH COVERS? 
Experts are unanimous that a cover of . 10 lakh may not suffice for treatment of any critical illness, especially in the metros. Gaurav Mashruwala, a certified financial planner, says, "People won't have any choice but to visit premier hospitals if they contract any serious illness. In Mumbai, a room in these premier hospitals costs . 5,000 to . 7,000. A room in the ICU would cost at least three to four times the normal room." According to him, if an individual can afford the premium, he or she should go for the maximum health cover. 
Still, affordability could be an issue for many people. For example, the premium for a health cover of . 50 lakh can be in the wide range of . 27,000 to . 50,000 for a 35-year-old individual, depending upon the product and the number of family members covered by the policy. The renewal premiums - ing in inflation and healthcare costs. "These policies do not have a claim-based loading at renewal. However, the premium of every policy increases after 1-2 years because of inflation and rising healthcare costs. So you have to factor in the potential hike in premium when you budget for such high-value policies," says Suresh Sadagopan, a certified financial planner with Ladder 7 Financial Advisories. 
"I would advise a client to go for the maximum health cover. If affordability is an issue, I would ask them to strike a balance," says Mashruwala. Striking a balance is very important because one shouldn't channel all the savings towards health insurance premium. "From a financial planning perspective, risk is only one of the components that includes term insurance, healthinsurance and home insurance. So a retail investor cannot afford spending . 30,000 only on a health insurance policy when he/she has to think about building a retirement corpus, saving for child's education, etc. And the premium will only go up as he ages," says Harshvardhan Roongta, certified financial planner, Roongta Securities. 
If you can't afford the premium, you should try to add a top-up health cover to your existing . 5 lakh or . 10 lakh cover. The maximum top-up cover available in the market today is . 15 lakh. "If you are comfortable getting treated in tier-2 hospitals, a cover of Rs 10-15 lakh in an urban area should suffice," says Roongta. Mashruwala suggests another way out for people who can't afford the premium for high covers. "You should start building a corpus of . 5 lakh for medical emergency. You can use this corpus for treatment of your minor illnesses." 
DON'T MISS THE FINE PRINT 
A large cover doesn't mean it will reimburse every expense. Pay attention to factors such as the network of hospitals, sub-limits in the policy, exclusions, waiting period for pre-existing disease, additional benefits such as maternity cover, neonatal cover, dental treatment and so on. In case of high-value policies, there may not be any caps or sub-limits on the room rent. However, there may be a definition of the category of the room covered by the policy. "In case of Religare Health, for sum insured of . 5 lakh and above there is a room category cap. Such a cap allows only the lowest category private room in the hospital," says Chopra. So even if you opt for a 5-star hospital, you have to opt for the lowest category of the private room. 
Just like health policies with small sum insured, these policies also have a co-pay clause at 20% for senior citizens. "The Religare Health policy applies a 20% co-pay for members who enter the policy at 61 years and above. Max Bupa applies 20% co-pay, even if one enters at the age of 20 and continues the policy for 45 years," says Chopra. So if you opt for tier-1 hospital for medical treatment, the 20% ratio to be borne by the patient will be a heavy sum.