Health insurance: Points you need to consider before buying Rs 1 crore cover

Insurance companies have been offering cheaper Rs 1 crore health insurance plans compared to Rs 25-50 lakh cover. This looks like a clincher deal as one gets a much higher sum insured at lesser rates. According to data shared by Policybazaar towards the end of 2019, the penetration of high sum insured policies (Rs 1 crore cover) was at 2% which has grown to 35%, suggesting how awareness around high sum insured covers has picked up.

“In insurance, affordability is a crucial factor so that people can come forward to opt for such plans thus insurance companies have effectively devised Rs 1 crore that the burden is lesser on policyholders and they can get access financial support to medical facilities even with medical inflation,” said Naval Goel, founder and CEO of PolicyX.

Many insurance companies are offering Rs 1 crore health cover policies Rs 500-600 more than the Rs 10 lakh sum insured plans. But what makes these Rs 1 crore plans so affordable?

Here are some of the things you should look into before buying Rs 1 crore health plans:

Combination of basic and top-up plans

Some of these Rs 1 crore policies are designed as a combination of a base plan coupled with a super top-up, which substantially brings down the premium for such policies. Under top-up plans, a health insurance policy gets triggered after the hospital bills cross a certain limit. The limit set is called deduction or threshold limit. The hospital bill up to the deduction limit is taken care of by the basic policy and the excess bill is borne by the super top policy. In the case of super top-up plans, the aggregate hospital bills are taken into the account and not just the single hospitalisation.

“Interestingly, Rs 1 crore plans are quite affordable despite higher returns than other lesser sum insured plans because Rs 1 crore plans are a combination of a small base cover plan along with a high top-up plan. Since top-up plans are pretty inexpensive thus they being a large plan of the plan eventually makes INR 1 crore plans quite cheaper,” said Naval Goel, founder and CEO of PolicyX.

Increase in premium

Insurance Regulatory and Development Authority of India (Irdai) allows insurance companies to revise their premium rates after every three years. So, if the insurance companies are giving you lower rates today but they may increase the premium after the completion of three years since the last revision.

Discontinuing the plan

In the past also there have been many cases where insurance companies withdrew the old plan health plans and instead offered an alternative which was expensive by 50-150%. Considering an insurer can withdraw or discontinue any product after seeking permission from the regulator one cannot rule out the possibility of discontinuation of health plans. But when the insurer withdraws any plans it also offers an alternative, which, however, can be expensive than the existing plan.

What should you do?

You can either buy these plans or can go for a combination of the basic and a top-up plan. Under a top-up plan, the coverage starts after the exhaustion of the deductible. “Certainly, people with the capacity to afford them must go for Rs 1 crore plan because it is helpful in various means. Primarily, the Covid 19 pandemic has made us realize that having enough financial support is very crucial as one doesn’t know or can’t predict health emergencies. Secondly, people having a history of critical illness in their family or likely to get any critical illness are advised to combat the disease with a proper and timely check-up without any challenge,” said Goel.