How to choose Health Insurance?

Anish Mahapatra
12 min readMay 25, 2024

So, you have decided to choose a Health Insurance Plan after hearing from multiple people that it’s important and given the job market, you aren’t sure how long you have a stable job for? Great! In this article, I am going to give you a simple, solid guide on how to choose Health insurance. Focus on the process, rather than just the points, because the results may change over time. Also, this article is India-specific. Note, I have used and modified some of these points using AI to write the article faster. Additional note, I have also taken the time to proofread and validate it, so that you don’t have to. And, no, this first paragraph has no semblance of AI.

Photo by Owen Beard on Unsplash

Should I get Health Insurance if I have a stable job in a metro city?

Yes, you should. Whether you are a bachelor or a couple, the definition of “stable jobs” took a BIG hit when companies started to lay off millions of people under the name of “right-sizing”. It is dumb to trust a company for an unlikely event that will be the biggest drain on your net worth. Let me elaborate.

  1. Coverage Gaps: Employer plans may have limitations and exclusions. Personal insurance can fill these gaps for more comprehensive protection.
  2. Job Security: Employment situations can change. Personal insurance ensures continuous coverage regardless of job status.
  3. Rising Medical Costs: Healthcare expenses in metro cities can be high. Additional insurance provides a financial safety net for severe illnesses or prolonged treatments.
  4. Additional Benefits: Personal policies offer features like critical illness riders, maternity benefits, and higher room rent limits that may not be included in employer plans.
  5. Tax Benefits: Premiums for personal health insurance are tax-deductible under Section 80D, offering financial savings.
  6. Room rent waiver: Allows policyholders to choose a hospital room without worrying about daily room rent limits, ensuring better comfort and care without additional out-of-pocket costs.

So, yes, you should get Health insurance outside of the cover from your company. The company is going to prioritize their bottom line over the most suitable Health Insurance for you.

Ok fine, I will get Health Insurance outside of my company cover, because I care about “unlikely events” that can be the biggest drain on my net worth.

Good, now let’s get on with selecting our Health Insurance.

Photo by Kristine Wook on Unsplash

01. What are the types of Health Insurance?

(1/2) Individual Cover

  • What it means: Provides coverage for a single individual against medical expenses.
  • Why you should consider it: Tailored coverage based on individual healthcare needs and preferences.
  • Importance: Ensures personalized protection without being affected by the medical needs of other family members.
  • Disadvantage: May be more expensive compared to family floater plans, especially if multiple family members require coverage.

(2/2) Family Floater

  • What it means: Offers a single policy covering the entire family, including spouse, children, and sometimes parents.
  • Why you should consider it: Cost-effective solution providing comprehensive coverage for the entire family under one policy.
  • Importance: Simplifies insurance management with one policy for all family members, potentially reducing administrative hassles and paperwork.
  • Disadvantage: Coverage amount shared among family members, leading to depletion of the sum insured faster if multiple members require treatment simultaneously.

Bonus: Top-up policies — Add-on on top of Health Insurance Policy

Top-up policies:

  • Offer extra coverage: On top of your existing insurance but are limited to a single hospitalization event.
  • Example: If you have a 10 lakh primary insurance with a 5 lakh deductible and add a 20 lakh top-up, it kicks in after you cross the deductible. For instance, if you incur 15 lakhs in medical expenses, the primary policy covers the first 5 lakhs, and the top-up covers the remaining 10 lakhs.
  • NCB Benefits: Do not affect No Claim Bonus (NCB) benefits, which continue to accumulate only on the primary policy.
  • Disadvantage: May have waiting periods.

Super Top-up policies:

  • Aggregate expenses: Cover multiple hospitalizations in a policy year, offering continuous protection beyond the deductible.
  • Example: If you have a 20 lakh super top-up with a 5 lakh deductible and incur expenses of 25 lakhs in a year across different hospitalizations, the policy covers the amount exceeding the deductible.
  • Advantage: Provide broader and continuous protection against fluctuating medical costs compared to top-up policies.
Photo by Markus Winkler on Unsplash

02. What are the conditions in my Health Insurance that I should care about and how do they matter?

There are multiple points to consider. I will give you the most critical ones here. This should cover 98% of working individuals and families.

(1/6) Room rent waiver

  • What it means: Allows policyholders to choose any hospital room without being limited by daily rent caps.
  • Why you should get it: Ensures better comfort and care during hospitalization without worrying about additional out-of-pocket expenses for a preferred room. Also, if there is an emergency, you cannot wait at the hospital to only get that room.
  • The disadvantage of not getting it: Without this benefit, you may be restricted to lower-cost rooms, potentially compromising on comfort and quality of care during your hospital stay. Additionally, if your chosen room exceeds the prescribed rent limit, only a proportionate amount of your medical expenses, such as surgery costs, will be covered, leading to higher out-of-pocket expenses.

(2/6) No Copay

  • What it means: The insurer covers the entire medical expense without requiring you to pay a percentage.
  • Why you should get it: Makes healthcare more affordable and reduces financial stress.
  • An additional consideration for senior citizens: While copay can help reduce insurance premiums, it might be more acceptable for senior citizens as their insurance tends to be expensive. Adding a copay clause could significantly reduce the overall cost of the insurance policy, making it more accessible for seniors.

(3/6) Restoration benefits

  • What it means: Restoration benefits automatically reinstate the sum insured if it gets exhausted during the policy year, providing continuous coverage for multiple hospitalizations.
  • Why you should get it: Ensures peace of mind by providing uninterrupted coverage even after exhausting the sum insured, safeguarding against unexpected medical expenses.
  • The disadvantage of not getting it: Without restoration benefits, once the sum insured is exhausted, you may have to bear the full cost of any subsequent medical expenses, leaving you financially vulnerable and potentially unable to afford necessary treatments.
Photo by Towfiqu barbhuiya on Unsplash

(4/6) No disease-wise sub-limit:

  • What it means: Full coverage for any illness without specific disease caps.
  • Why you should get it: Offers comprehensive protection for high-cost treatments.
  • The disadvantage of not getting it: You might face inadequate coverage for certain expensive treatments.
  • Additional consideration: Some health insurance policies impose waiting periods ranging from 6 months to 4 years for specific diseases, especially common ones with high chances of occurrence. Without the no disease-wise sub-limit benefit, you may encounter waiting periods before being eligible for coverage, leaving you vulnerable to out-of-pocket expenses for treatments during that time.

(5/6) Pre-existing Conditions

  • What it means: Understand the waiting period and coverage for pre-existing conditions, as these can significantly impact your ability to claim insurance benefits.
  • Why you should care about it: Ensures you are aware of any waiting periods or limitations for coverage related to pre-existing medical conditions, preventing unexpected expenses.
Photo by National Cancer Institute on Unsplash

(6/6) Network Hospitals

  • What it means: Check if the insurance company has tie-ups with hospitals in your area or preferred locations for cashless treatment facilities, ensuring easy access to quality healthcare.
  • Why you should care about it: Provides convenient access to medical care without worrying about upfront payment, reducing financial burden during emergencies.
  • Importance: Having access to a network of hospitals ensures you can receive timely treatment from reputable healthcare providers, enhancing the overall quality of healthcare services available under your insurance policy.
  • The disadvantage of not getting it: Without access to network hospitals, you may have to bear the upfront costs of medical treatment, leading to financial strain, especially during emergencies.

Great, now I have understood more about the conditions to take under consideration while getting Health Insurance. Now, onto the next question.

02. How much Health Insurance coverage do I need?

I will tell you the bare minimum to get concerning different parts of India.

  • Zone 1: Mumbai (all of it), Delhi NCR region - most expensive
    Individual Cover: 12–15 L
    Family Floater: 15–20 L
    Senior Citizens: 20–30 L
  • Zone 2: Bangalore, Chennai, Kolkata, Hyderabad, Ahmedabad, Surat, Vadodara - more expensive
    Individual Cover: 5–10 L
    Family Floater: 8–15 L
    Senior Citizens: 15–20 L
  • Zone 3: Rest of India
    Individual Cover: 3–5 L
    Family Floater: 7–10 L
    Senior Citizens: 10–15 L

Depending on your financial capability, it is better to get the highest amount that you can afford. It is easy to decrease your cover, but difficult to increase your cover. Remember, medical inflation is different from regular inflation — medical costs in India at the current rate are doubling every five years. (Source — ToI)

Photo by Jp Valery on Unsplash
(Source — Times of India)

03. How to select Health Insurance (Step-by-Step Walk-Through)

In this part, I will tell you how exactly to select the best Health insurance for you. I will recommend that you go through the steps yourself and not just blindly select the one that comes up. Process over result.

There are multiple ways to do this. I will show you one of these based on one of the insurance aggregators.

  1. Select an insurance platform to search on and search!
  2. Add conditions for Health Insurance
  3. Shortlist via the IRDAI website
  4. Buy the Health Insurance

(1/4) Select an insurance platform to search on and search!

Here, you can select from the likes of Policybazaar, insurancedekho, coverfox and ditto. For this walkthrough, I have selected one — InsuranceDekho.

Head on to the platform. Here, we are selecting a family floater plan.

Pro-tip: Never club health insurance for your parents and you because health insurance is based on the member with the highest age and your insurance premium (the amount that you have to pay every year to keep the insurance) will be high.

Enter the details for you or your family. Enter your age and PIN Code.

Now, you will need to add in your Medical History. DO NOT LIE here. It will affect you later on. Be honest to get the best insurance possible — this is critical.

(2/4) Add the following conditions for Health Insurance

  • Select your range of coverage: depending on where you stay (Refer to Section 02. How much Health Insurance coverage do I need)
  • Plan Type: Select a Base cover or if you can afford it a 1 cr cover (about twice the price of normal insurance)
Plan Type: Select a Base cover or if you can afford it a 1 cr cover (about twice the price of normal insurance)
  • Coverage: Select the amount that works for you in the coverage section
Coverage: Select the amount that works for you in the coverage section
  • Features: Select the right features (mentioned below)
Features: Select the right features (mentioned below)

Now, we will select the features of our Health insurance:

  • Restoration Benefit
  • No Co-Payments
  • No Room rent capping
Photo by Dose Juice on Unsplash
  • Tenure: Enter a higher tenure to get a 15% discount (if you can afford it) as it locks in the insurance at the current prices
Tenure: Enter a higher tenure to get a 15% discount (if you can afford it) as it locks in the insurance at the current prices

With these filters, the insurance goes down from 20+ to about 4 or 5 providers.

Now, select 3 and hit the compare button.

You will get the options below. Now hit the red “Compare” option.

You will now get all the details to compare.

Photo by Myriam Jessier on Unsplash

(3/4) Shortlist via the IRDAI website

IRDAI, or the Insurance Regulatory and Development Authority of India, oversees the insurance industry in India to ensure fair practices and consumer protection — essentially the insurance regulatory body of India, similar to SEBI, TRAI and RBI.

Now, go to Google and search for

Annual Report IRDAI <latest year or last year>. Since I am searching for it in the month of May 2024, I will search for the following:

Annual Report IRDAI 2024

Now, select the search result that has the “pdf” option next to it.

PDF Option in Google Search

Click on it and you will find the latest report.

Now, in this sheet, search for the term (Ctrl+F in Windows and Cmd+F in Mac)

incurred claims ratio

You will find this page in a weird orientation.

In most PDF readers, you can turn the page.

Find me on LinkedIn: https://www.linkedin.com/in/anishmahapatra/

Let’s understand 2 new terms now.

  • Claims Settlement Ratio: Timely Payment of Claims: The claims settlement ratio shows how many claims an insurance company settles out of the total received. A higher ratio, ideally above 90-95%, means the company pays out most claims it receives, ensuring customers get their money when they need it.
  • Incurred Claim Ratio: Balancing Costs and Payouts: The incurred claim ratio reveals how much an insurer spends on settling claims compared to the premiums it collects. If the ratio is between 60–90%, it means the company is managing its expenses well while still providing coverage for its customers.

I was not able to find the Claims Settlement Ratio in the 2022–23 pdf from IRDAI. So I Googled it and found it here.

STATUS OF CLAIMS OF GENERAL AND HEALTH INSURERS in the 2022-23 report (< 3 months)
Photo by Mitchell Luo on Unsplash

So, here for the claims settlement ratio, look at the number of 3 months.

The screenshots refer to the document from the year before because the report may have it in the future.

Now we will make three sets of tables to get the following:

  • 3 years average of Claims settlement ratio
  • 3 years average of Incurred Claims Settlement ratio
  • Cost for 10L, 15L, 20L (or any amount of your choice)

I’ll give you the Excel sheet via Google Sheets towards the end of the blog.

3 years average of Claims settlement ratio
3 years average of Incurred Claims Settlement ratio
Cost for 10L, 15L, 20L (or any amount of your choice)

Do this analysis for yourself! Overall, Care Health seems the best choice for Family Floater for

(4/4) Buy the Health Insurance

Book calls with Beshak and Ditto to validate your amateur research. Beshak will charge you 5% of your insurance cost if you buy through them.

To SAVE money, but directly via the Insurance provider (more effort). Ditto does not take a cut, they directly charge the insurance provider and take a commission from them. Link to Ditto — https://joinditto.in/. No, I do not get a commission or have an Affiliate Link. I do not get a kickback from anything. I am simply documenting my research. I will buy my insurance through Ditto.

Link to Excel — Health Insurance by Anish Mahapatra

Photo by Madison Oren on Unsplash

Conclusion

Insurance is such a complicated product, I hate it. I did the research to buy mine, I hope this helped. Clap for me and follow me if this is remotely useful :) Feel free to comment in case you have any questions or any articles you want. I am always happy to help! :)

https://www.linkedin.com/in/anishmahapatra/

Also, fun fact, I have a YouTube Channel: AI For Dummies for smart Dummies who can just be smarter with AI!

--

--

Anish Mahapatra

Senior AI & ML Engineer | Fortune 500 | Senior Technical Writer - Google me. Anish Mahapatra | https://www.linkedin.com/in/anishmahapatra/