You 'must have' this insurance policy: Policybazaar Founder | EXCLUSIVE

All about health insurance: Health insurance is no longer an option; it’s a must have, especially for young professionals just beginning their careers. In an exclusive conversation with Republic Money, Sarbvir Singh, Co-founder and CEO of Policybazaar, shed light on why health insurance should be a top priority for individuals in their early 20s.

“Health insurance is non-negotiable. If there's only one insurance a person in their 20s should prioritize, it should be health insurance,” Singh said.  

“Buying when you’re young allows you to pay lower premiums and ensures coverage for a longer period,” he added.

If you haven't secured health insurance yet, here's everything you need to know before getting one.

Health insurance explained in simple way

Health insurance is a financial agreement between an individual and an insurance provider that covers medical expenses arising from illnesses, injuries, or other health conditions. The primary purpose of health insurance is to protect individuals and families from the financial burden of healthcare costs.

Having a health insurance means that you pay a certain amount, called a premium, regularly to an insurance company, and in return, the company promises to cover specific medical expenses if you ever need treatment.

For example, if you get hospitalised for an illness or surgery, your insurance policy can cover the cost of your hospital stay, doctor fees, medications, and even diagnostic tests. Some policies also offer additional benefits like covering maternity care, day-care procedures, or expenses incurred before and after hospitalisation.

One of the biggest advantages of health insurance is the cashless facility, which means you don’t need to pay out of pocket at certain hospitals. Instead, the insurance company directly settles the bill with the hospital. On the other hand, if you go to a hospital not tied up with your insurer, you can still claim reimbursement later by submitting all the necessary documents.

Every policy has a sum insured, which is the maximum amount the company will pay for your treatment during a year. For instance, if your policy has a sum insured of Rs 5 lakh and your treatment costs Rs 4 lakh, the insurance will cover it. However, if the expenses go beyond Rs 5 lakh, the extra cost will need to be paid by you.

What health insurance should you prioritise in your 20s?

Though there are various types of health insurance in market but for someone in their early career, such as a 25-year-old, not all types of health insurance are essential. Here are few essential coverage options:

Individual Health Insurance

An Individual Health Insurance policy is like a starting point, as it covers medical expenses exclusively for you, including hospitalisation, surgeries, and medications. It’s ideal for those without family dependents and comes with the added benefit of lower premiums at a young age. Starting early also helps lock in these lower rates for the future.

Family Floater Plan

If you’re married or have dependents, a Family Floater Plan might be more suitable. This policy covers your entire family under a single plan with a shared sum insured, making it affordable compared to separate individual policies. However, it’s best to consider this only if you have dependents.

Critical Illness Insurance

For added protection, especially if there’s a family history of severe illnesses, a Critical Illness Insurance plan can be a valuable addition. It provides a lump sum payout upon diagnosis of illnesses like cancer or heart disease, offering financial security for expensive and long-term treatments. For those already holding basic health insurance, a Top-Up or Super Top-Up Plan is also a considerable option.

Personal Accident Insurance

Additionally, a Personal Accident Insurance policy is another affordable and essential option, providing coverage for accidents leading to injuries, disability, or death. It offers financial protection by covering hospitalisation costs or providing a lump sum in case of permanent disability or accidental death.

Preventive Health Insurance

Lastly, Preventive Health Insurance can be beneficial for maintaining an active lifestyle. It covers diagnostic tests, screenings, and vaccinations, encouraging regular health check-ups and early detection of potential issues. However, some policies like Maternity Insurance and Senior Citizen Health Insurance are unnecessary at this stage, as they cater to specific life phases. Similarly, disease-specific insurance isn’t essential unless you have pre-existing conditions.

But before purchasing…

Before purchasing health insurance, it’s important to ask critical questions to ensure you choose the right policy. Start by asking how much coverage does the policy provide? to determine if it meets your needs. It's also important to know if there are room rent restrictions that could limit your options during hospitalisation. Be sure to inquire about what are the waiting periods for pre-existing conditions or certain treatments, as this can affect your coverage. Finally, don’t forget to ask about any key exclusions, as knowing what's not covered can help you avoid surprises when you need to make a claim.

Avoid these mistakes

Few mistakes could jeopardize your coverage or financial security. One of the biggest pitfalls is ignoring the fine print of the policy. Many people overlook important details like co-payment clauses, room rent limits, or exclusions. For example, some policies may only cover a certain room category, or they may require you to share a percentage of the medical costs, which can add up if you're not prepared.

Another mistake to watch out for is underinsuring yourself. It’s tempting to choose a lower sum insured to keep premiums affordable, but with rising healthcare costs, this could leave you financially vulnerable. It’s important to pick a sum insured that aligns with the current cost of treatments and hospitalisation, ensuring you're covered for unexpected medical emergencies or major health issues.

Additionally, many people make the mistake of skipping renewals. If you fail to renew your policy on time, it lapses, and you lose the accumulated benefits such as the completion of waiting periods for pre-existing conditions. A policy that’s continuously renewed without any gaps can provide long-term benefits, including covering any treatments for conditions you may have developed since the initial policy.

Lastly, not disclosing your medical history is a critical error that could lead to claim rejection. If you have any pre-existing health conditions, you are legally required to disclose them when purchasing a health insurance policy. Failure to do so may result in the insurer rejecting your claim, especially if the condition you failed to disclose becomes the cause of your hospitalisation.