What is Co-Pay in Health Insurance?

hISo you’ve taken a health insurance policy and unfortunately the time has come to claim it. You go the hospital, get checked up, treated and are presented with a bill. Typically, the health insurance company will take care of the entire expense as per the terms of your policy, and you will walk out healthier, and just as rich as you were when you were admitted in the hospital. But this isn’t the case with co-pay.

What is Health Insurance Co-Pay?

If your insurance policy has a co-pay clause, you agree to pay a part of the medical expense out of your own pocket, and the insurer will cover the rest. There are many insurance companies today that have co-pay clauses in their policies. For example: If your insurance policy has a co-pay (or co-insurance) clause of 10% and your medical expenditure has totally amounted to Rs.50,000, you will have to pay Rs.5,000 out of your own pocket and the insurer will cover the remaining Rs.45,000.

Why do insurance companies have co-pay clauses?

Apart from the obvious reason that the insurance company will be able to save a portion of its expense during claims, insurance companies also have co-pay clauses for the following reasons:

  • Discourages people from making unnecessary claims, as they will have to pay a portion of the expense. Claims for medication and treatment sought to get over the common cold, or for some kind of regular gastric distress, could technically be charged back to the insurer. This results in a lot of unnecessary paperwork for both parties and a minimal claim amount. Co-pay discourages the misuse of health insurance policies.
  • Discourages people from undergoing treatment in expensive hospitals and healthcare centers. Assume you have an insurance policy with a co-pay (or co-insurance) clause of 10%. Treatment for a health condition at a regular hospital may come up to Rs.10,000, the insurer will pay Rs.9,000 and you will only have to pay the remaining Rs.1,000. But if the medical treatment has been sought at an expensive hospital/institution, the total expense for the same treatment could be as high as Rs.40,000 (recent polls suggest that boutique hospitals, high-class medical centers and specialty centers charge up to 40% more for the same services and treatments). This means that you will end up paying Rs.4,000 out of your own pocket. This will discourage the average insurance holder from wasteful expenditure at more expensive hospitals.
  • Encourages honest and judicious use of health insurance policies. The fact that co-payment means you will have to pay an amount out of your own pocket, means that you will see your hospitalization or medical treatment as an expense that you must incur as well. This will ensure that you use it right, as it brings with it a sense of ownership.
  • Mitigates the risk and liability for the insurer. Insurance companies are huge businesses with huge profit and loss statements. What increases the balance in the loss column are payments made due to claims. A co-pay (or co-insurance) clause of 10% in all its policies means a direct 10% saving for the insurance company.

What are the disadvantages of co-pay?

Not every insurer in India chooses to add a co-pay clause to the insurance policy they sell you. This is because of a multitude of reasons, both in favour of the insurer and the insured:

  • If the co-pay amount is too high it may deter the insured person from seeking life-saving medical attention and care – thus rendering the insurance policy completely useless.
  • Medical insurance products and policies offered with co-pay are generally less popular, and less likely to be bought. A person who understands co-pay would choose a policy that does not have such clauses.
  • Higher co-pay means less premium. While this is true, it is only beneficial for the insured person (you), as long as you don’t need to cash in your insurance policy. But if something happens, all that money you saved on premiums will have to paid towards the treatment expenses anyway.

Is a health insurance policy with co-pay the right choice for you?

Ideally policies with co pay should not be taken. But if you are unable to afford an insurance policy and adding a co pay clause makes a sizable difference to the premium outgo same can be evaluated. You should evaluate keeping in mind your existing physical condition, history of past diseases, pre-existing illnesses, or susceptibility to falling critically ill in the future. Remember it is only beneficial for you, as long as you don’t need to cash in your insurance policy. But if something happens, all the money saved on premiums can be wiped out.

#Health Insurance


How pre-existing medical conditions affect your health insurance

How pre-existing medical conditions affect your health insurance

hILaunching Health Insurance program for an upcoming private bank in India, I had an interesting time studying the various aspects of Health Insurance.  Unlike term life insurance which does not have too many conditions, Health Insurance is a tad complicated. It has many sub conditions which greatly impact the policy coverage and the premium charged. It is important to educate oneself about these and use these parameters to compare health plans of various companies. I will over next few days cover these aspects in my blog.

Today we will talk about Pre Existing Diseases.


Meaning of pre-existing condition

While many of us know what health insurance is, we may be unclear what a pre-existing condition is. Thanks to the 2013 IRDAI guidelines on standardisation of terms in health insurance, all health insurers in India have to follow a common definition of “pre-existing condition” as follows:

Any condition, ailment or injury or related condition(s) for which you had signs or symptoms, and / or were diagnosed, and / or received medical advice / treatment within 48 months to prior to the first policy issued by the insurer.

So, if you are applying for a policy on January 1, 2017, if at any time between Jan 1, 2012 to December 31, 2016, you’ve had signs/were diagnosed/had received medical advice/undergone treatment for any medical condition, it will qualify as a pre-existing condition.

How pre-existing condition can affect your health insurance policy

Regardless of which of the health insurance plans in India you choose from, a pre-existing condition can affect it in one or more of the following ways:

You will be required to make a disclosure at the time of purchase:

In any application form for health insurance, you’ll find a question on this point. One of the basic principles of insurance is “utmost good faith” & here, the onus is on you to disclose honestly details of any such condition. In an event that you misrepresent/do not disclose, the insurer has every right to reject your claim when you make one.

Affects the policy issuance decision:

Every health insurer has a set of internal underwriting guidelines that they follow when deciding whether and on which terms they can issue the policy to you. In case of a pre-existing medical condition, there can be the following implications:

  • For an issue on standard terms, insurers can add a waiting period
  • You may be asked to pay a higher insurance premium(also known as “loading”) to cover the additional risk
  • Issue subject to life time exclusion to the pre-existing condition i.e. your insurer may agree to insure you for events other than those caused by your pre-existing medical condition
  • The policy can be denied in exceptional cases or in case of chronic illnesses

Waiting period applies for pre-existing condition:

As mentioned above, even if a standard policy is issued, if you closely read the terms and conditions of the policy, it will invariably have a “waiting period” which ranges from 12 months to 48 months. This implies that for a policy issued on Jan 1, 2016, if you are hospitalised due to “diabetes” anytime till December 31, 2019 (assuming a waiting period of 48 months), your insurer is not liable to pay the claim.

Sum assured enhancement:

Insurers give an option to policyholders to increase the sum assured of the policy upon renewal. So, continuing from the above example, suppose on the renewal date Jan 1, 2018, if you decide to raise the sum assured from Rs. 2 lac to Rs. 3 lac, the waiting period for diabetes for the incremental Rs. 1 lac will end on December 31, 2021 (and not December 31, 2020 for the existing sum assured of Rs. 2 lac)

Following are some pointers to note w.r.t. pre-existing condition

While buying a health insurance policy:

  1. Buy health insurance as early as possible as the chances of contracting illnesses increases with age, along with insurance premium
  2. Compare policies from different insurers on the parameter of duration of waiting period for pre-existing condition
  3. Fully disclose the pre-existing condition in the proposal form without fail and do not try to conceal any material facts

Once you buy a health insurance policy:

  1. In case the waiting period for the policy leaves you uninsured for the following years, ensure you have an emergency medical fund set aside.
  2. Renew the policy without letting it lapse due to delay in paying insurance premium, else the waiting periods may start afresh
  3. In case you are planning to change your health insurance provider, opt for portability rather than buying a new insurance policy to preserve built up credit of waiting periods


A pre-existing medical condition should not be a deterrent for buying health insurance and securing your family’s financial future. However, proper disclosure and some precautions ensure that in case you need to make a claim, you have a smooth and hassle free experience.

Health Insurance cover you must get at different stages of life

#Health Insurance

#Good Health #pre-existing diseases


Health Insurance cover you must get at different stages of life

hIThere is no denying that your health is probably your most precious asset. However, the definition of good health can vary depending on your age. A young person does not have the same health needs as an older person. This is why you should modify your health insurance cover as you approach different stages of life. Read on to find out how you can enjoy real protection throughout your life.

During the 20s

Most people start thinking about buying an independent health insurance policy once they settle into their first jobs. More than 75% of youngsters in India buy health insurance for its tax benefits. Not surprisingly, Indians pay more than 70% of all medical expenses out of their own pockets.

While tax benefits are important, it should not be the primary factor for buying health cover in your 20s. Your plan must cover these risks-

  • Hospitalization for treatment of common diseases and ailments. You can fall prey to Dengue or Chikungunya even if you are young, fit, and healthy. With the Day Care Facility feature, you can even get covered for treatment that lasts less than 24 hours.
  • Accident treatment. Youngsters with active lifestyles must always guard against mishaps
  • Dental cover. Such problems can affect you irrespective of your age and are best tackled properly at the earliest.

During the 30s

You will probably be married by your late 20s or early 30s. Now, you need to look beyond your personal health requirements and include those of your family’s as well. Your health insurance must now offer benefits such as-

  • Family floater protection for yourself and your spouse
  • Maternity cover for the birth of your child. While the average waiting period is 1-6 years, some new age insurers offer a waiting period of as less as 9 months.
  • Post-natal protection for your new-born child along with the option of including his/her name in the family protection plan
  • Comprehensive cover that fills the gaps in protection that your company or group health insurance policy offers, because very often, group insurance policies are not enough.

Keep in mind that the more you wait to buy health insurance, the higher your premium is likely to be, especially if you suffer from any pre-existing medical conditions at the time you are buying a policy. In case you are concerned that if you buy it too early, you may not need to make a claim, and that could be a waste of money, there’s always the No Claim Bonus benefit. you can get in case you go a year without making a claim. You can avail this benefit either in the form of a reduction of renewal premium or an increase in the sum assured amount.

During the 40s

As one grows older, good health cannot be guaranteed by merely exercising regularly and eating healthy. Focus must shift to regular diagnostic checks and other preventive measures. A growing family must be protected with a family floater plan. Children fall ill frequently and may require hospital treatment. Even something as minor as a bone fracture can set your finances back by Rs. 4-5 lakhs.

Furthermore, middle age is the right time to opt for critical illness policies. Unlike conventional medi-care that reimburses you for health expenses, critical care policies offer lump-sum benefits upon diagnosis of covered ailments. There are also diseases specific plans for Diabetes, Cancer and other major illnesses which may cover diseases at all stages of severity. However, since there is no guarantee you will be diagnosed with one, a broader critical illness policy may be more helpful.

50s, 60s and beyond

As your children grow older and opt for their own plans, it is time to shift from expensive family plans back to individual plans that are tailored to provide the best benefits for your unique health requirements. Keep in mind that if one member has diabetes, then a combined plan for the entire family may result in unnecessary expenses.

Senior citizens have special health requirements and your cover should provide for the same. For starters, choose a plan that offers assured cover for the longest period of time with minimal excisions, though most plans now offer the option for renewal. Instead of going for a plan that requires a yearly renewal, consider paying more for a plan that offers comprehensive coverage for 3 to 5 years at a stretch.

As you grow older, you may explore alternate treatments like AYUSH (Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy) to keep you in good shape. There are some new age health plans offered by insurers like Apollo Munich, Star Health and HDFC Ergo which are open to covering alternate forms of treatment.

At the same time, get rid of cover options you no longer require. Instead, focus on convenience as you are likely to visit hospitals for tests and treatments more often.

In the end

To live in good health all your life is not an easy task. Thankfully, having the right health insurance cover will make things far easier. Instead of adopting a buy-it-and-forget-it approach, assess your present and future needs and opt for the right health insurance plans at different stages of your life.

#Health Insurance

#Good Health

What not do with your investments!

financial invsetments2Read an interesting article in ET by my college alumni #Dhirender Kumar, CEO of #value research on what they don’t teach in financial literacy.  He was referring to a research study in the US which found that people who were financially literate were more susceptible to financial fraud than those who weren’t. This 2006 study was conducted by a non-profit organisation called the FINRA Investor Education Foundation. The study revealed that people who became victims of fraudulent investment schemes had a higher score on financial literacy tests than those who hadn’t fallen victim, by a statistically significant 27 percentage points.

He goes on to make a point that  if a person is making bad personal financial decisions, whatever kind of knowledge he possesses does not qualify as financial literacy. It may be called financially literacy by those who provide it, or those who possess it. It may superficially resemble what financial literacy should be like, but it cannot actually be financial literacy. Problem lies as most financial literacy lessons are delivered by vested parties who teach what they want you to learn. As per him we should also have a list of what not do. This kind of resonated with me as I am on a mission to spread Financial Awareness among the natives.

Here is my list of what not to do

  1. Buy life Insurance as investment: India is plagued with the misnomer that insurance is investment because of which people end up buying confused plans which don’t offer either full risk coverage nor optimize return on investment
  2. Buy any mutual fund without asking a few questions: Investments in mutual funds are a prudent decision however choosing the right scheme is also very critical. Mutual fund investments should be done as per an individual’s risk profile. In addition investor should understand the fund house reputation, no of years the scheme has been in existence, 3/5 yr CAGR (compounded average growth rate) before finalizing the investment.
  3. Buy life insurance when you are 60 years of age: a few years back a well meaning personal banker from a reputed back sold a high interest yielding life insurance policy to my father. I was disappointed that my own father fell for the scam. But that’s how persuasive agents can be. My simple question to my father was, Why do you need life cover at the age of 60 when you have no dependants? What risk are you insuring? We were able to return the policy in the free look period.
  4. Buy health insurance from card companies without checking the following: I must admit health insurance plans offered on most credit cards are quite attractive but you must know the following before buying:
  • Is the insurance offered under group or individual plan?
  • What will happen to the insurance if you close the card in policy year?
  • Next year on renewal will the premium change? In retail plans premium is locked for a age band and only changes when one crosses the age band. This is not true in case of group covers offered by most credit card companies
  1. Buy insurance to save tax: I know of people who buy an insurance plan every year to save tax. Again buying insurance only for tax planning is not prudent.
  2. Buy ELSS more than Rs 1.5L: ELSS or equity linked saving schemes are mutual funds which are recognized for exemption under section 80C of income tax act for exemption till Rs 150000 only. These are closed ended schemes and generally offer returns less than equity mutual funds. Investments in these should be restricted to Rs 1.5L only
  3. Buy inadequate health insurance: Most people are only aware the yearly premium that they pay on their health insurance and not the coverage. Be aware of the health cover and take an adequate cover commensurate to your age and income.

#financial literacy

#investments # Financial Awareness

Top 5 things to know about maternity benefit cover in India

young motherThough it’s common knowledge that raising a child leads to an increase in expenses, have you considered the cost of pregnancy and hospital expenses? Have you set aside money for the birth of your baby? And did you know that you usually cannot claim for maternity benefit until after 1-6 years of buying the policy?

To ensure you are well prepared for a child and always have an affirmative answer to these questions, here are the top 5 things you must know about maternity benefit cover in India.

#1: What is covered under maternity benefit in India

The definition of maternity expense is a part of the IRDAI’s Circular on Standardised Definitions issued in 2013, so all insurers need to follow this uniform definition. It essentially includes any hospitalisation traceable to child birth, and also includes medical termination of pregnancy and pre/post-natal expenses. Maternity expense includes the following expenses:

  • Maternity related hospitalisation – pre-hospitalisation expenses are covered up to 30 days prior to delivery and will also cover post-hospitalisation expenses up to 60 days
  • Delivery including Pre and post-natal expenses – Maternity insurance covers expenditure related to both caesarian and normal delivery, as well as post-delivery complications for the mother
  • Hospitalisation costs- This usually includes room charges, nurse and surgeon charges, anaesthetist consultation charges, medical practitioner fees, and emergency ambulance charges.
  • New Born Baby cover (Day 1-90) – Coverage is also extended to infants in case they are diagnosed with a congenital disorder or some critical illness.

#2: What is the waiting period and what are the sub-limits?

There is a waiting period of anywhere between 1 to 4 years before one is eligible to claim a maternity related claim, with some policies extending this up to 6 years, though this of course varies across insurers. Thus, it is essential to buy maternity cover as early as possible, even if you have no plans of having a baby anytime soon. The only notable exception to plans with such long waiting periods is Religare Health Insurance’s specialised maternity product JOY in which the waiting period is just 9 months. To know more about such plans, check out Features of New Age Health Insurance Plans.

#3: Exclusions:

There are specific exclusions applicable to the maternity benefit and some are reproduced below:

  • Benefit limit for maternity and new born baby related claim is capped between Rs. 15,000-30,000 for normal deliveries and between Rs. 25,000 – Rs. 50,000 for c-sec births. It may seem insufficient considering maternity costs in A-rated hospitals in metros but can help in reducing the burden of these expenses.
  • Age of insured for claiming maternity benefit cover is capped at 45 years.
  • Termination of pre

The major downside to these policies is the high premium. However, the reason these premiums are higher than that of a regular health insurance policy where there’s a high possibility you may not need the cover, maternity insurance covers an almost certain event, and can greatly help lessen its financial impact. For example, Religare’s Joy Rs. 5 lakh cover for an 18-35-year-old woman would be Rs. 27,039 per annum. However, Joy has a waiting period of just 9 months, which so far is the shortest in the industry! Hence, it is important to do a cost-benefit analysis of these plans before picking the one you want.

#5: Tips on buying a policy and planning this expense:

  • Do not make maternity cover the sole criteria you consider when purchasing a health insurance policy.
  • In case your employer provided plan covers maternity expenses, claim from that policy without touching your own policy. This will also allow you to preserve the no-claim bonus.
  • Additionally, if the cost you have incurred exceeds the cover offered by your employer’s policy, you can claim the balance through your individual health policy
  • Work at creating your own maternity fund which can be parked in a fixed deposit or liquid mutual fund.
  • The insurer will not cover you in such policies if you’re already pregnant and also waiting periods shall apply. Hence, it is important to time the purchase properly


A steep rise in maternity expenses over the years is forcing couples to look for options to fund this expense and hence insurers highlight the maternity benefit feature in their health insurance policies. The couple purchasing these policies should fully understand the scope, exclusions and pricing of these policies and also create a separate medical fund to meet this requirement.

#maternity    #childcare   #mother&child


How to go about financial planning

  • Begin Early:Money Needs Time to Grow
  • Be Organised:Maintain separate accounts for Income, Expenditure &Investments
  • Be Disciplined:Use balance in each account for the purpose it is allocated
  • Understand Your Rights:All money matters should be discussed by couples
  • Speak to an Expert:Know about Banking, Insurance, Investments, Growing Money Well and related topics
  • Know the basics:Understand basic everyday financial terms

Personal Finance Challenges Unique to Women

  • Income disruption: Relocation after Marriage
  • Care for Parents: Now more involved in taking care of their elderly parents
  • Separation: Reality of Separation -ncreasing Divorce Rates, Untimely Death of Partner- Sudden Responsibility
  • Salary disparity: Though a woman and a man may have started their careers at the same time, she ends up earning far less when they both retire
  • Higher life expectancy: Women, on an average, live longer than Men