We are a 75 year old couple with a Mediclaim policy $4.5 Lakhs from PSU Insurance Company. Coverage has remained unchanged for the past 10 years and has continued for the past 30 years without any claims. No illness or disease occurred. My wife suffers from asthma from the dust fumes. Should we port our policies or add new ones?
– Name withheld upon request
Most health insurance plans have a cap on the no-claims bonus (NCB). In your case, the basic insurance amount may be $Three hundred thousand. The maximum NCB allowed to accumulate may be 50%. This is why the total sum insured is capped at $450,000. However, given your age, this level of coverage is far from sufficient. You should consider increasing your sum assured to at least $1 million. The rule of thumb is to maintain health insurance equal to a person’s annual income.
There are three ways you can increase your insurance coverage. The simplest option may be to ask your existing insurance company to increase the amount insured on the same policy. Insurance companies usually take these requirements into consideration when renewing your policy. Since you don’t have any claims history or pre-existing medical conditions, your current insurance company should be willing. However, if the policy has any limitations, such as rent or illness limitations, then it will also apply to the increased sum assured. Therefore, although the sum assured will increase, the rest of the conditions will remain the same. The flip side is that these legacy plans are often expensive. In some of these plans, incremental sum assured comes at a steep cost. You must compare the incremental cost of increased coverage in this plan with the other two options below.
Another option is to purchase a supplemental health insurance plan. Depending on your health history, you should be able to get a new plan. Here you should select your deductible $30,000-400,000. Under current plans, claims can be made up to the deductible. Any claim above the deductible will be paid under the top-up plan, up to the sum insured. Stored value plans are usually very cheap.
The third option requires some paperwork. You can transfer your existing plan to a new insurance company. This will allow you to transfer any past waiting periods to the new plan. There will be no waiting period for any pre-existing or specific medical conditions. Against this backdrop, the number of insurance companies willing to issue policies will be limited.
Your new insurance company may require a statement of your health and, in some cases, may even require you to undergo a medical examination before issuing a policy. Despite this process, this approach may still be most appropriate if the current plan has significant limitations.
For example, many legacy plans have caps $50,000 to $$100,000 for modern treatment. Given the increased incidence of claims under modern treatments, this cap may become highly restrictive in the future. Again, if the new plan is significantly cheaper, it might be worth it.
(Abhishek Bondia is the Chief Officer and Managing Director of SecureNow.in.)