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Most buyers look at just sum insured (coverage amount) and premium (cost) but the true value of a health insurance policy is found in the fine print.
Modern insurance policies offer a ‘Restoration’ or ‘Refill’ benefit.
Buying health insurance is often treated like a tax-saving checklist item or a grudging necessity. Most buyers look at two things: the Sum Insured (coverage amount) and the Premium (cost). However, the true value of a health insurance policy is found in the fine print. When a medical emergency strikes, these clauses determine whether your insurer pays the bill or if you are left reaching for your savings:
Here is what you need to look for to ensure your policy actually protects you.
The Room Rent Limit
The most important clause in your policy is the Room Rent Limit. Many policies cap your room entitlement to 1% of the Sum Insured or a fixed amount (e.g., Rs 5,000/day).
It carries a hidden penalty called ‘Proportionate Deduction’. If you pick a room that costs more than your limit, the insurer does not just deduct the difference in rent. They deduct the same percentage from every associated medical cost, including doctor fees, nursing, and operation theatre charges. A Rs 50,000 claim could be settled for just Rs 30,000 because you upgraded your room by Rs 2,000.
Always choose a policy with ‘No Room Rent Capping’ or eligibility for a ‘Single Private A/C Room’.
Co-pay: The Shared Cost
Co-payment is an agreement where you pay a percentage of the claim (usually 10-20%) and the insurer pays the rest. Insurers often offer lower premiums for policies with high co-pays. While this looks attractive now, it is expensive later. If you have a Rs 5 lakh claim with a 20% co-pay, you must pay Rs 1 lakh out of pocket immediately.
“Unless you are buying for senior citizens (where co-pay is standard), always opt for a Zero Co-pay policy,” according to a personal finance expert, who did not want to be named.
The Feature of Restoration
Modern policies offer a ‘Restoration’ or ‘Refill’ benefit. If you exhaust your entire cover during a hospitalisation, the insurer automatically refills the amount for the next claim within the same year.
However, check the conditions. Basic policies only refill for unrelated illnesses. The best policies offer ‘100% Restoration for the Same Illness’, meaning if you are hospitalised for a heart condition, exhaust your limit, and need hospitalisation again for the same heart condition months later, the policy will cover it.
Waiting Periods and Pre-Existing Diseases
No insurance covers everything from Day 1. There is usually a 30-day wait for all illnesses (except accidents). More importantly, if you have existing conditions like diabetes or thyroid issues, there is a “Pre-Existing Disease (PED) Waiting Period” ranging from 2 to 4 years.
“Look for policies with a low PED waiting period (1 or 2 years) or those that allow you to pay extra to reduce this wait time,” he added.
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