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videos | IST

Money Money Money: The fineprint on healthcare insurance policies

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CNBC-TV18's special show, Money Money Money, caught up with Rahul Agarwal, founder and chief executive officer, Ideal Insurance Brokers, and puts the spotlight on specific situations like diabetes, cancer and what products the health insurance industry offers to cover these ailments and what options senior citizens have when it comes to getting a health policy.

Health cover is probably the first financial product you need to buy even before life insurance or a mutual fund investment.
CNBC-TV18's special show, Money Money Money, caught up with Rahul Agarwal, founder and chief executive officer, Ideal Insurance Brokers, and puts the spotlight on specific situations like diabetes, cancer and what products the health insurance industry offers to cover these ailments and what options senior citizens have when it comes to getting a health policy.
Listen to the podcast of this episode here.
Edited excerpts:
Q: We do hear of a plethora of these fancy products in the market, cancer care or some sort of diabetes related product. Should you look at this, at what stage do you start looking at it, who needs these specific illness covers beyond the basic mediclaim?
A: These are not fancy covers, these are covers which were much needed in India. Unfortunately, the pace of growth in these covers have been slow, but now a lot of great products are coming in India. The health insurance industry is of course growing in leaps and bounds. Indians are understanding the importance of health insurance.
These were long awaited. Let us say, talking about cancer or diabetes, they have become like epidemics now. If you talk about diabetes, more than 100 million people are affected by diabetes in India today and it leads to a lot of complications and a lot of money is spent on healthcare. Cancer again, everyone knows, every house has a cancer patient today and the expenditure in cancer is very high.
Coming to who should take a cancer policy, ideally, cancer policy, any person who has a family history of cancer must take it. My father is a cancer patient, my uncle is a cancer patient, and so for me it's very imperative to take, because I could have high chances of getting it. So, anyone having any kind of family history must take.
Why should one take a cancer policy compared to only a base policy. In cancer, the expenditure could be very high. It could go up to Rs 20-30 lakh or even more. If you take a base policy, normal health insurance policy of Rs 20-30 lakh, it might cost you a bomb.
Q: If you are saying base policy, you mean to say a basic mediclaim followed by a topup or a super topup?
A: A specific cancer policy, I would say or a specific diabetes policy. For a young person like me, I do not have any other thing that can happen to me. I will rather take a small base policy of Rs 5 lakh and take a cancer care separately, which will reduce my cost, because ultimately the probability of having cancer is still low. So, I do not need to pay a bomb to cover cancer at my age. I might develop cancer 10-20 years down the line, I do not need to keep on paying for that long. So, now they have specialised cancer covers at lower cost, which you can take separately apart from the health insurance policy that you have.
Q: When you apply for a cancer policy, if there is family history, obviously that is why you will think of applying, is that an impediment . When you declare that in the form, does the premium shoot up?
A: Fortunately, that does not affect your premium right now. Till the time you do not have any problem, it will not affect your policy and you will get the policy very easily. In fact, there is a company, which is offering cancer policy to even people who are already suffering from cancer, but there are of course lots of terms and conditions.
Q: Let us take it a step at a time. For those who fortunately have no current occurrence or any kind of current diagnosis of cancer and are applying for one of these cancer polices, what are the typical premiums, what is the kind of sum assured that they are offering?
A: Sum insured is always in multiples of Rs 5 lakh, Rs 10 lakh, Rs 20 lakh, Rs 50 lakh, etc. So ideally, if you are opting for a cancer policy, the minimum you should look at is Rs 20 lakh and the cost would be around Rs 10,000-15,000, which is not very high.
Q: Any specific health checks, any specific things which might kind of debar you from getting that policy or something that people should keep in mind?
A: Nothing really, because cancer is not associated with the normal problems like hypertension or sugar or anything. Till the time, you yourself do not have any cancer symptoms or anything, there is nothing that debars you from taking a policy.
Another factor, which has to be taken into cancer is that when somebody gets this disease, normally it can happen multiple times over the period. So every time, there is a lot of expenditure, it's not one time. Let us say, if I am a heart patient and I go for a heart surgery, it might be once in five years or 10 years, but a cancer patient, he has to go through a treatment continuously for many years. So the expenditure is very high, if you look at it that way. So the separate policy takes care of the cancer part and your base policy can take care of the other things as well.
Q: This is for people who have not yet been diagnosed with cancer. But if unfortunately there is a diagnosis and then you apply for a cancer policy, then what are the kind of conditions and the fine print that kicks in. How do premiums then shoot up, what should one be prepared for?
A: For someone who already has cancer, there is very limited availability. I think there is only one product offered by Star Health, but that only has an Rs 5 lakh cover and there are lots of terms and conditions. It covers only up to the second stage, not beyond that. Once you have cancer, I do not think you have too much of option. It's better you plan in advance as well.
Q: Some product names that you can leave us with, good cancer covers that you sort of like?
A: Star Health already has a cancer cover for people who are already suffering. That is one option you have apart from that you have Apollo, Bajaj - every company is coming out with a cancer cover now. They are all good. So, I would not say there is much to choose from. You are covering before you have the disease. After disease, there is no choice. So you can just compare the cover and choose whichever is the cheapest.
Q: Do these policies kick in immediately or is there initial cool off period?
A: There is always a waiting period of one-two years, because if someone has a cancer, they can hide it for three months-six months. So they do have minimum waiting period of one-two years depending on the policy and it kicks in after that.
Q: Let us move to the mega epidemic as you called it and that is diabetes. I don't think we realise the kind of complications that simple diabetes can create if it goes out of hand. If there is a family history, so premiums, costs and if you simultaneously have any other health condition can you be rejected from giving the policy?
A: Diabetes a little more complicated, because that depends on your lifestyle and most of us have a bad lifestyle and everyone is at risk of diabetes today. Diabetes can happen from bad food habits, stress and so even if you don't have a family history. In diabetes, you don't need to take a separate policy, it's the same policy which covers, because diabetes itself is not a disease. It's condition, but it can lead to a lot of other diseases, which needs to be covered in a health plan. Normal health plan covers diabetes. The problem is many people who do not have a health cover, but are suffering from diabetes what about them is the question.
Previously, most insurance companies would reject such cases. Now there are some companies, which are covering diabetes as well. So, even if you have diabetes, they will cover you right from day one.
Q: This is important because till now if you had diabetes you would probably get rejected for the basic mediclaim policy now such people can apply for a diabetic cover - which may cover along with the diabetes, the other complications that may arise out of diabetes?
A: Once you cover diabetes means, anything resulting out of diabetes.
Q: How will the premiums vary and how will the compare with the regular mediclaim?
A: They are not very expensive. They would be 20-30 percent higher than the regular mediclaim, which is totally justified if they are covering diabetes from day one.
Q: Is it day one or is there a waiting period?
A: There it depends from company to company. Apollo covers form day one, but Religare has two years waiting period. Even in that, your Type 1 can be covered from day one. Type 2 diabetes may have a waiting period of 2-3 years. Religare was one of the pioneers to start, but now Apollo has come out with a very good product.
Continuously, new products are coming into the market and so I would request the audience to whenever they want to go for diabetes cover, find out form your consultant or online about the best plan available.
Q: Most of these policies you can get the settlement done in cashless format?
A: Yes.
Q: A quick summary of the things that one needs to keep in mind. What all I need to ask the insurance broker or the insurance company before buying either a caner policy or diabetes policy - checklist?
A: First, what type of cancer, diabetes is covered and what stages are covered and if there are any terms and conditions. Primarily, the terms and conditions are important. Apart from that premium, we can always compare. It's only the type of cancer, which is covered and at what stage. Normally, some companies would not cover cancer below third stage, but even in first and second stage, there is lot of expenditure involved.
So look at the terms and conditions. There should not be any restriction on the cover. It should be a blanket cover that the moment I am diagnosed with cancer, I should get my policy.
Q: And these policies largely cover in-hospital expenses or do some of these products also cover the day care needs?
A: In cancer cover, chemotherapy and radiation are also covered, which are day care along with surgery.
Q: Now, we need to talk about senior citizens, because it's never easy if you haven't bought a policy by the time you are 35 or max 40 years, as then the conditionality's only increase. If you have developed hypertension by then or if you are a little overweight chances are that you get completely rejected. So, even before I talk about the 60 plus, what do you do in that age bracket, those who are 45 onwards and who are trying to get health policy with some of these conditions like may be cholesterol, hypertension because it is very common in this age bracket?
A: Fortunately, lot of products are available. The only problem is, you might have to shell out more premium than normal. So, if a normal base cover is like Rs 100, you might be asked to pay 30-40 percent more. Lot of people don't want to do that in India, because of lack of awareness. But at whatever cost, if you are getting a cover, you should just grab it, because the more you wait, you might not even get that cover after couple of years or if you condition worsens you might totally be rejected.
Q: So, for this age bracket, I am talking about 40 to 50 years. Those who are trying to get a cover with some of these conditions, hypertension for sure, that is very common. What are the kind of premium ranges that you will get for a basic cover - a Rs 5 lakh basic mediclaim?
A: For Rs 5 lakh cover for a 45-year-old guy, assuming a wife and two kids, it should cost anywhere around Rs 20,000, which is again not very high. The costs have come down drastically with so many companies coming in and  competition coming in. It's all going great for the consumer right now.
Q: Those who have been smart enough to take policies early on in their life and premiums are so different, you can pay Rs 5,000 to Rs 7,000 and you get a nice Rs 5 lakh cover in your 30s. As and when you keep renewing with your policy provider, at some point in time, do tests kick in or at some point in time will the premiums start really going higher? I am just trying to understand, that when you renew your policy, do some of these conditions start kicking in as the years go on?
A: No. You don't have to ever give a medical test again. If you are renewing your policies on time, then anything happens to you, it's covered. Insurer cannot ask you for any further information on anything.
Q: So, if I am with a certain policy provider and I have been paying my premium regularly, then even at age 40, my claim has to be honoured?
A: At any age, it has to be honoured. The premium might increase, but that will not increase for you only, if the company increases the premium for everyone, then only your premium will increase. Previously, some insurers what they were doing was, the moment you had a claim, they would increase your premium drastically. But now IRDA has hit out very heavily on that, so they cannot increase your premium, because you have made a claim. However, if they have increased the premium for everyone in your category, then the premium will increase and not specifically for you. Just because you have made a claim, they cannot increase the premium.
Q: Since we are talking about premiums over the last several years, what is the kind of average increase that you have seen across the board, I am talking about basic mediclaim premiums?
A: Few years back, the PSUs had increased their premiums around 40-50 percent, but that was long pending, because these premiums had been there for last 40-50 years and were never revised. The way the cost of healthcare has gone up, it was totally justified. I see another correction coming in, the premiums in India have to rise, because the loss ratios are very high right now and the cost of treatment is only increasing day by day. Also, if you compare to western countries, the cost of mediclaim in India is very cheap right now.
Q: Coming back to senior citizens. It's not easy if your plus 60 years to convince anybody to give you a policy and from what I understand even if you get a product, there will be a long waiting period, lot of conditions kick in, what options does a 60 years plus person have?
A: We get lot of requests for 60 years plus people, because 10-20 years back there was not so much of awareness. So, lot of people now want to cover their parents. There are not too much of options available for them. If they have some serious health issues like hypertension or sugar, which is very common then, it's very difficult to get a cover. But if you are healthy or if your conditions are in control, then there are quite a few products, which are available. For example, Star Health has a Senior Citizens Red Carpet policy, Bajaj Insurance has a policy, PSUs are much better in this regards, they provide very cheap covers for senior citizens. But the only problem is the cover is only Rs 1 or 2 lakh and not beyond that, but at least you can get that cover at a very cheap cost.
Q: But you said this is only for healthy senior citizens?
A: Healthy seniors or someone with condition, which is in control and not very serious right now.
Q: That means a senior citizen with hypertension, weight issues etc. they also have chance if they look at the PSU policies?
A: Yes.
Q: You said the covers might only be Rs 2 lakh?
A: You can always take it from two-three companies. I can take Rs 2 lakh from National Insurance, maybe Rs 2 lakh from New India Assurance. So, you will get Rs 4-5 lakh. It will be a little hassle in making a claim, but at least, you get a policy at a very cheap rate.
Q: What kind of hassles?
A: You have to claim from two companies. It's not a huge problem, but compared to the kind of cost savings that you are doing, it makes sense to do that.
Q: What kind of premiums would these PSUs charge?
A: Let us say, if I go for a combined National Insurance and New India Assurance, one can get a cover of around Rs 3-4 lakh at less than Rs 20,000, for the same cover in any other standard policy might cost you Rs 40,000-50,000.
Q: Speaking of covering parents. The family floaters that we take, I don't know how that works, because of course spouse and children are covered. But are there policies and are they worthwhile, where a child can take a policy for himself/herself and cover the senior citizens?
A: There are policies where entire family can be covered in one policy, but I do not suggest that. I think the senior citizen should be covered in some other policy, because the way group policy is structured, they always count the person with the highest age and so the premium will be calculated as per the most senior member. So, overall the group cover will be high and the probability of making a claim for your parents is higher. So, the moment there is a claim, you lose out on the no claim bonus and other benefits and premiums will increase. So, better to have different policy for senior citizens.
Q: Maternity insurance is also quite an interesting subject. I am guessing these are policies that cover all aspects, whether there is a surgery involved or hospitalisation. Tell us more about these products.
A: Maternity cost is also pretty high. In a city, it can range anywhere between Rs 50,000 and Rs 5 lakh also. It's not uncertainty, if you are married, then eventually you are going to have a child. So, it's better to cover that cost. Previously, there were not too many companies, which were covering, they were covering hardly Rs 25,000-40,000. However, the cost of treatment is of course much higher today, and you need a plan which can cover your entire maternity cost.
Q: How do these plans work? Can they be added on to your mediclaim or these are separate standalone polices?
A: They are normal health plans with a maternity cover. You cannot take a separate maternity policy, they are normal health insurance plans, but which also has a maternity cover.
Q: Therefore, the premium would be higher than a plain vanilla base mediclaim?
A: No. They are at same premium.
Q: Tell us about some of these products then.
A: If you ask me, it's a no brainer for anyone who is married and who is planning to have a kid. There are quite a few products available. Apollo has a cover, Max Bupa has a cover. However, the best cover is offered by SBI, where it's unlimited after 12 months or 9 months waiting period. Most of the other companies have a two to four years waiting period or they have a limit to the amount of cover, which you can claim. Cigna has unlimited cover, but then they have a waiting period of around 3-4 years. If you start early, Cigna is good. It's cheap and it has a waiting period, but it has unlimited cover.
Q: How will the premiums vary? I am just trying to understand what the range would be for some of these policies which also have an add-on maternity benefit.
A: An SBI cover for husband and wife, Rs 10 lakh cover will cost around Rs 18,000-20,000.
Q: Rs 18,000-20,000, that is Rs 10 lakh cover. It's a normal mediclaim which also covers maternity benefit?
A: It's a normal mediclaim, which covers your other diseases also.
Q: For Cigna?
A: It's same. As I said, it's a normal cover, just that now they have added maternity as a cover in that.
Q: Final thoughts then. Coming down to health insurance, what are the things that perhaps one needs to keep in mind and where do you actually kind of begin, because the thing with health insurance is you can keep loading on. There are critical illness covers as well, there are disability cover, there are so many different covers, how do you create your list of the number of policies that you need on the health side?
A: I will suggest to keep it very simple. Have a base plan of Rs 5 lakh or Rs 10 lakh depending on your affordability and take a topup. That is the bare minimum, whether you go for a diabetes, cancer, maternity, this is the bare minimum you need to have. Then, depending on your family history or your condition, you can look for a policy with a maternity cover or a cancer cover or something for your parents. However, having a base policy with topup is a must. If your parents are not covered, you need not be disheartened, there are options available for your parents, so you can get your parents also covered as soon as possible before it keeps on getting more late.
Q: Are there any hidden fineprint points that we need to keep in mind, any restrictions that usually you find out a little later or any cases where the claims might not be fully honoured? Also I wanted to ask you, in most of these policies that we have discussed, what are the co-pay clauses like where you also have to fork up a certain amount of money?
A: Co-pay is basically, when you have to shell out a certain portion from your own pocket. So let us say, Star Insurance has a co-pay of 20 percent, whereas National Insurance does not have any co-pay. That is one thing you can check and that differentiates from policy-to-policy. Another important thing is the number of waiting period. Some companies offer a one year waiting period, some companies offer a four year waiting period. So, the lower the waiting period, the better it is for you.