The Economic Times
22 March 2009
By Lisa Mary Thomson

It’s not enough to check the lowest premium or skim through the information on the health insurance policy you choose. Read the fine print before signing the dotted line
There are some dates in life that you can afford to forget only at your own risk. Forget your spouse’s (particularly your wife’s) birthday and chances are that this will be held against you all your life, irrespective of whether you make amends or not. But literally, you stand to find yourself in a far more life–threatening position, if you forget the renewal dates for your life insurance or health insurance policy.

Ask 40–year–old engineer Prashant Rajan who had to rush his mother to the hospital after she complained of chest pain. Rajan, who had left home in a hurry, was counting on the cash–less facility on his insurance policy to take care of the immediate costs. But to his dismay, when he took the papers out, he realised that the policy had not been renewed. No doubt, it would take only a few hours to get back home, get his card and visit the ATM, but anything could happen in the interim.

Forgetting to renew your health insurance policy is a common error but it is only one in the series of errors that people make while choosing their policies. To prevent you from falling prey to these, Sunday ET outlines a list of the common follies that people make when choosing health insurance policies.

The best Bargain
It’s very hard to say ‘no’ when you are offered something at a rate lower than the market price. But when it comes to shopping for a health insurance policy, it is not a good idea to go for a product that simply allows you to pay a lower premium. S Narayanamurty, senior vice–president – underwriting and product development, Bharti Axa General Insurance, says: “Very often people do not compare the price with the coverage but simply go by the price. In the process, comprehensive coverage may not be available and they may come back with a simple cover.” Similarly, there are some who choose a policy for a lower sum insured. But this could prove to be fatal if they are beset with critical illnesses later in life.

Skimming the Surface
There are others who skim through the information and the terms and conditions, without paying much attention to detail. They are content as long as the list of diseases and hospitals appears detailed. “Many individuals simply go for hospitalisation cover forgetting the need for critical illness and income replacement covers,” says Narayanamurty. However, when they find major ailments, they find themselves only with indemnity cover.

“There are many cases where the customer has been denied a claim for a disease or an illness which has been clearly listed under the exclusions which the customer never bothered to read but learnt about only when the claim was denied,” says Ajay Bimbhet, managing director, Royal Sundaram Alliance Insurance Company. Similarly, those who do not go into details about the continuity of the cover and renewals often find themselves in trouble during renewal or when they are suddenly asked to pay higher premium.

Keeping Back Secrets
If you’re one of those who’s always running around, pressurised by work, deadlines and so on, you’re not likely to have the time to sit down with a lot of paperwork. You may just relegate the task of filling up forms to others (very often an agent), answer a few of his/her questions and sign on the dotted lines, without paying too much heed to what exactly is being put down. In many cases, people do not disclose pre–existing diseases or policies with rival insurance companies. So when the insurance agency asks about this in the form, people may tend to hide this fact, without realising that this could contribute towards helping them save the cumulative bonus that gets accrued under each policy. “The insurer reserves the right to forfeit the cover if customer has willfully concealed any such important information or pass an endorsement to effect any changes in that,” warns Bimbhet.

Looking for Tax Breaks
There is another group of people which rushes for health insurance at the end of the year when they are looking for a way to save a greater proportion of their hard–earned money from the taxman’s claws. While the tax–saving element associated with insurance is definitely a benefit, a lot of people see it as the primary motive, as a result of which they often end up picking up policies, which do not really cover their needs.

Giving you the Edge
Industry experts say one has to avoid falling prey to some mistakes. “While buying health insurance, one should take into account the age, health, number of dependants, lifestyle, pre–existing illness and other factors and buy a policy which best suits his/her needs,” says Sanjay Datta, head, customer service – health & accident of ICICI Lombard. Before adding on any fresh policy, it’s advisable to assess your existing protection. Datta warns that you should guard against single disease covers as your other plans may already provide you with the necessary protection.

Get Smart

• Shop for yourself or buy through an insurance broker rather than an agent.
• Look for comprehensive cover rather than low premium.
• Fill the forms yourself, don’t rely on external help.
• Disclose pre–existing diseases and ongoing policies.