Out Of Bounds

[Apollo Munich CEO]

You don't have to look too far to find someone who has some woes or
other to narrate about health insurance. Why, even you, or a close
relative, might have been a 'victim' of claim rejection.

One of the most common reasons for rejection of claims is that not
many people are aware of ailments that are covered by their health
insurance policy and those that aren’t. For instance, not all critical
illnesses are covered under a critical illness policy. A policy taken
from one company may cover an end-stage lung disease or liver failure,
but that from another company may not. To weed out these last-minute
surprises, you must carefully examine the policy details before buying
it. The best way would be to buy a policy with the fewest exclusions.
Says Antony Jacob, chief executive officer, Apollo Munich Health
Insurance: “It is imperative for all policyholders and prospective
customers of health insurance to remember that every health insurance
policy is unique and is guided by underwriting principles, making the
coverage and exclusions vary from plan to plan and insurer to
insurer.”
It is important to note that the coverage of pre-existing diseases and
waiting periods differ from plan to plan and company to company. Says
Subrahmanyam B, vice-president and head, health vertical, Bharti AXA
General Insurance: “There are certain standard exclusions, such as pre-
existing illnesses, maternity expenses and congenital diseases, which
are excluded under all conditions. Then, there are certain exclusions
which are time-based, that is, they are excluded only for a certain
number of years.” (See No-Go Area).

There are different kinds of health insurance policies available in
the market—indemnity, critical illness, daily cash hospital, unit-
linked health policies, and so on. Before buying, be clear about what
the policy is about and what ailments it covers. Says Sanjay Datta,
head, health insurance, ICICI Lombard General Insurance: “It's prudent
to get things clarified before buying a policy. For instance, a
policyholder should know that pre-existing diseases are excluded as a
general rule from health insurance policies. Then, there is a 30-90-
day waiting period followed by various time and permanent exclusions.”

Indemnity Policy
These are traditional policies which mainly cover hospitalisation
expenses, subject to a minimum 24-hour stay. Some of the expense
covered are room fees, consultant fees and surgeon fees, among other
things. The traditional policies are of two types: individual health
policies and family floaters (FF). While in an individual policy, only
the policyholder can avail the sum assured, an FF is a combination of
several individual health policies. So, under FF, the sum insured can
be availed by any or all members of the family and not just a single
person. For example, in an individual policy, you need to buy a cover
of Rs 2 lakh separately for each member of the family of four for a
total cover of Rs 8 lakh. On the other hand, in an FF, for Rs 8 lakh,
each person covered under it can avail benefits up to Rs 8 lakh as
opposed to Rs 2 lakh in the earlier instance.

Exclusions. Be aware of the sub-limits under different heads, such as
room fees and consultancy fees, to avoid last-minute surprises. This
is important because most of these plans now come with sub-limits,
which is usually 1 or 2 per cent of the sum assured. Also, these plans
do not cover pre-existing diseases or complications arising from them
for the first four years of the policy. Claims for specific ailments,
such as cataract and age-related eye ailments, arthritis and stone in
gall bladder, may not be allowed in the first or second year. Before
buying, always check the list of standard and time exclusions.

Critical Illness policy
Under this policy, a lump sum is paid if the insured acquires a
serious ailment, such as cancer, or has a stroke, and the policy
terminates after that. You need to check the list of diseases covered
under a policy. Each policy has a list of ailments, usually 10-20 of
them. Keep in mind your and your family's medical history before
buying a policy. The critical illness policy can either be purchased
in the form of a rider attached to a life insurance cover, or as a
standalone policy from a life insurer or a non-life insurance company.
If this cover is bought from a life insurer as a rider, the policy
term is usually for 10-20 years. When bought from a general insurer,
it's for 1-5 years.
Exclusions. To receive the payout, the insured has to survive for at
least 30 days after the diagnosis. Like in other cases, a critical
illness policy doesn't cover pre-existing diseases and no claim can be
made during the first 60-90 days of the policy coming into force.
Hospitalisation expenses due to accident may or may not be covered.
So, you need to check all these details before buying a policy.
Various permanent and time exclusions apply to critical illness
policies as well.

Daily Hospital Cash Policy
Instead of reimbursing your hospital bills, a daily hospital cash
(DHC) policy pays you on the basis of the number of days spent at the
hospital. The policy has a predefined limit in most cases, say, Rs 500
per day for up to 50 days in a year, and up to 250 days during the
entire term. This should be the last layer of your insurance cover.
Exclusions. DHC offers the benefit after discharge from hospital and
only after the policyholder produces proof of the hospital stay. These
policies, too, have pre-existing illnesses and waiting period
exclusions, along with a list of permanent and time exclusions.

Unit-Linked Health Plans
Here, the payout is not dependent on the costs incurred on
hospitalisation as these are defined benefit plans. Unit-linked plans
consist of two parts—a health plan and a unit-linked investment plan.
Out of the premium one pays, a portion goes towards medical coverage
and the rest is invested in a fund that operates like a mutual fund.
Exclusions. Unit-linked policies do not cover pregnancy, infertility,
congenital external diseases and genetic conditions. Similarly non-
allopathic, cosmetic surgery and plastic surgery, hearing impairment
correction, self-inflicted injuries, STDs and AIDS are not covered
under the policy. There is a waiting period of 30 days. For the
investment plan, the lock-in could be as long as three yeas with
subsequent cap on withdrawals.

While it may be difficult to find out exactly all what your policy
covers, the best option is to be aware of all the exclusions. It might
be a time-taking exercise, but it's worth the trouble.