Buying Health Insurance

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Seventy-five-year-old Sushil Jain has a major grouse against his health insurer of almost two decades. I have made only one claim so far, for my surgery of the lower spine in February 1999. I have been in perfect health since then. In fact, I have not been to a doctor in the last 15 years. Yet, at the time of renewal, the company insists on treating this as a pre-existing illness. They have turned down my request to increase the value of the insurance cover citing the same reason. Another policyholder, DP Jambusaria, is peeved with his insurer for introducing new exclusions into his policy at the time of renewal. They have also limited the amount payable for any cataract surgery to Rs 24,000.

The series of consumer court verdicts against health insurers underscores that there is widespread dissatisfaction among policyholders. The most common disputes are in respect of preexisting diseases, suppression of material facts and insistence of the insurance company to lodge claim with 7 days or 30 days of discharge. So common are such complaints that the Insurance Regulatory and Development Authority (Irda) has had to issue an advisory note asking insurers to refrain from repudiating claims on flimsy grounds, primarily delay in filing the claim. Recently, Irda chief J Hari Narayan pointed out that one-third of the complaints pertain to the health insurance space, identifying poor communication of product details as the root cause of disputes. The regulator has also directed industry lobbies — CII and FICCI — to work on guidelines aimed at simplifying policy terms and conditions.

On your part, you can work towards understanding these clauses at the time of buying or renewing your policy to avoid conflicts, and also to stand up for your rights if claims or renewal requests are turned down.

Pre-Existing Illness

Pre-existing diseases, followed by time-bound exclusions (one-year or two-year exclusions), are the major areas of confusion. This can be attributed to the over-promise made by the advisor during the pre-sale process. Also, in some cases the policyholders misunderstand the terms of the policy. In simple terms, pre-existing diseases are the conditions for which you may have undergone treatment for an ailment within 48 months before the policy was issued. Insurers are not under any obligation to honour such claims until a pre-specified period is over. Some insurers, however, do use this clause as a tool to deny claims. If diabetes or hypertension is pre-existing, claims for other illnesses are rejected on the pretext that those diseases have arisen as a complication of diabetes and hypertension.

Suppression Of Material Facts

Often, claims are not approved on the grounds that the expenses were related to a pre-existing condition that was not disclosed at the time of issuing the policy. Minor and common ailments which are completely curable need not be disclosed. Yet, claims are rejected on the ground that such ailments were not disclosed at the time of applying for the policy.

Renewability

Health insurers have never been enthusiastic about renewing policies of senior citizens or those with a history of making huge claims. This is patently wrong, because they are bound by regulations to renew policies irrespective of the claims made. In fact, all new products to be launched will have to offer life-long renewability. A policyholder must not permit the insurance company to unilaterally change the terms and conditions of the policy without his specific consent. A renewal of a policy cannot be considered a fresh contract, but is an extension of the original contract for a further period of one year. Hence, renewal has to be done on identical terms and conditions.

CLAIM LOADING

While insurers have the right to revise their premium rates every year, it cannot be arbitrary. They have to follow the claim loading structure mentioned in the policy document for the purpose. Ensure that your policy wordings clearly spell out this framework before going ahead with the purchase.

Sub-Limits

Sub-limits refer to caps placed on room rent, surgeon's fees, operation theatre charges, among others, within the overall cover amount. You need to be wary of policies that have sub-limits on parameters such as doctor's fees and day-care procedures. Also, keep an eye on treatment-wise limits, where the amount you can claim for a particular surgery is capped. Some private insurers have eliminated these internal ceilings completely. If a policy's sum insured is . 5 lakh and the claim amounts to . 3 lakh, policyholders tend to assume that the entire claim will be disbursed. However, due to restrictions on say room rent, the admissible claim could work out to only . 1.5 lakh. This can lead to disputes and hence, we have done away with the sub-limits.

Exclusions

Along with sub-limits and scope of coverage, you also need to study the exclusions – treatment procedures and ancillary expenses that the insurer will not pay for – while signing up for the policy. For instance, claims related to pregnancy, dental treatment, outpatient department (OPD) expenses, and cost of external aids like pacemakers and wheel-chairs are not entertained in many policies. However, some new age insurers are now undertaking to foot the bill for these expenses, too.

Many policyholders care to study their policy wordings only after their claims are rejected. Instead, understanding the terms and conditions at the outset will help you save a world of trouble later.

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