A crucial part of managing your finances includes planning for insurance. Health insurance provides the best medical care in times of need. It has become a necessity, especially after COVID-19.
Let us understand why planning for your parent’s health insurance – apart from your family floater and employer’s cover- is essential and how to go about it.
Why should parents’ health insurance be different from family’s?
The risk of more incidences of ill-health and age-related conditions makes proper health insurance vital for your parents.
Health insurance premiums are derived from the age of the oldest family member. The probability of your parents getting hospitalised is higher than you getting hospitalised. If they are on the same plan as the rest of the family, you would be paying a higher premium for that coverage.
For example, your father is 60 years old, and you are 30. Your father’s age will decide the premium. Since he is more likely to get hospitalised, you will pay a lot more. To avoid this, you must have an individual health insurance plan for your parents.
Things to look out for in parent’s health insurance
1. Sum assured-
Check the amount of the sum assured in your parent’s health insurance policy. It should be adequate, especially considering the increasing cost of healthcare.
2. Hospitalisation expenses-
The insurance company can cover expenses in an unfortunate event like an illness or surgery. This includes doctor visits, tests, and other ancillary services.
Many insurance companies have a cap on room charges, which is undesirable. If you live in a large city, the room charges, especially in private hospitals, are high. Thus, you need to ensure adequate coverage based on room charges.
3. Pre and post-hospitalisation expenses-
When hospitalisation or surgery is pre-declared, the insurance cover provides all your expenses from preparation until recovery.
Some insurance providers may exclude the expenses incurred once you are discharged from the hospital. This is not a good sign. An insurance policy that covers post-hospitalisation costs for one or two months is desirable.
4. Pre-existing diseases-
Your parents may have medical conditions like blood pressure, diabetes etc. These conditions may be present at the time of buying health insurance. How the insurance policy takes care of it is an important point.
Typically, there is a waiting period for pre-existing diseases (PED), which ranges from 1 year to 4 years. Your parents’ insurance plan will not cover any of their PED.
Some insurance providers might offer coverage but charge a sizeable premium. So, you need to choose the one with the shortest waiting period whenever you select a plan.
5. No-claim bonus-
If you do not claim anything in one year, meaning there was no hospitalisation or you did not utilise the insurance cover, then you are eligible for a no-claim bonus in the increased form of your cover. Usually, this is 5%.
In other words, if you have taken an insurance cover of 5 lakh rupees and you have not claimed anything for one year, at the end of the first year or the beginning of the second year, the company will give you a no-claim bonus of say, 5% which is Rs. 25,000. So next year, for the same premium, you will get a cover of Rs. 5,25,000 instead of Rs. 500000.
6. Claim settlement ratio-
Compare the claim settlement ratio of various insurers before choosing a plan. The claim settlement ratio is the number of claims settled by the insurer divided by the total number of claims in a year.
A claim settlement ratio above 90 is ideal. It usually indicates that you would not face problems while claiming your expenses.
Health insurance for parents above 60 (Senior citizen’s health insurance)
A senior citizen health insurance plan is specially crafted to provide medical aid to individuals aged over 60 years.
The chances of medical emergencies arising at age 60 or above are high. Buying senior citizens’ health insurance ensures benefits like preventive health checkups and appropriate medical guidance.
Difference between corporate and individual insurance plans
Salaried employees are likely to have a corporate health insurance plan. These plans tend to cover the employee, their partner, kids, parents, dependents and in-laws. It provides excellent insurance coverage and should be taken advantage of.
When you switch jobs, your insurance gets terminated. Moreover, if that health insurance included a PED waiting period, that too gets reset, and many people are unaware of this.
The employer and the insurance provider decide the terms and benefits of the corporate insurance plan. This can be altered as and when the employer decides. Individual health insurance allows you to choose the best plan according to your requirements and needs.
There is no denying the fact that health insurance acts as a safety net in terms of medical emergencies.
Another benefit is the tax deduction under 80D. Parents below the age of 60 can avail of the deduction up to Rs. 25000; for parents aged 60 or older, the cap is Rs. 30000.
Along with these points, it is vital to consider the policy’s various terms and conditions while buying it to take maximum advantage.
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Also Read: All about co-payment in health insurance