Musing 36- The Essential Five: Health Insurance- The Latest Rules
MUSING
36
INSURANCE:
THE ESSENTIAL FIVE
HEALTH
INSURANCE- LATEST RULES
Morningstar
is a global financial services firm based in
Chicago, USA. It is considered to be the gold-standard in investment research
and management services. Naturally, any reference of any product or services
quoted or referred to by the Morningstar assumes utmost importance.
It is
a matter of great pride and privilege for me that my book, “Musings of a
Financially Illiterate Father”- an Amazon Bestseller and ranked # 5 globally,
has been referred to by Morningstar in their article “Saving for Your Child’s
Education”. As a debut author, it is indeed a great honour for me, and I thank
Morningstar for the same. The link is provided below for your perusal.
IRDAI
has recently brought out its new draft policy on guidelines pertaining to
health insurance. Most, if not all the proposed changes are consumer-friendly
and will benefit all of us. So far, when one had gone out to buy a health
insurance policy, many issues were left ambiguous to the customer which
resulted in the rejection of claims when the need arose. This post is an effort to
highlight important aspects of the new draft policy to you.
The
most important point is pertaining to exclusions in the policy. This
means certain diseases which thus far were not covered by the insurer. In fact,
if one had these diseases say a heart ailment or diabetes, the insurer would
not cover the customer by health policy. Now, IRDAI has listed out certain
health conditions which even if the customer is suffering from, can’t result in
non-granting the policy by the insurer. What will instead be done is that the
insurer will cover you for all diseases and illness except for those which the
customer is already suffering from. So, if the customer is suffering from
diabetes, he will be given a health insurance cover which will cover him/her
from all diseases/illness/ailments except related to diabetes.
Be
careful of the correct declaration of pre-existing diseases and be truthful.
Any treatment/diagnosis of a disease done within a period 24 months prior to
the date of the policy has to be declared and construed as a pre-existing disease.
Similarly, if after signing the policy, you are detected with a disease, say
hypertension, within a specified period, it is also construed as a pre-existing
disease.
A
related issue is that if a disease comes to light about which the customer was not
aware of at the time of going for the policy, his claim can’t be rejected on
the ground of it being pre-existing.
Another
important issue is that patients suffering from mental illness and other
psychological disorders can’t be denied being covered under a health insurance
policy. The caveat is that the customer should not have had this illness when
he/she took the policy. This disease was a taboo for health insurance thus far.
However,
there is a standard 30 days period after you take a policy, in which you are
not covered even if you contact a disease/illness. This clause is not
applicable in case of an accident.
There
are few standard exclusions though which will not be covered by insurance company
like surgery related to obesity, sex-change surgery, HIV/AIDS, epilepsy etc. Also, treatments related to alcoholism and drug
abuse are also excluded. Do discuss these standard exclusions- 16 in total, in
detail with your insurer before signing on the dotted line.
Earlier,
an ambiguous clause existed which talked of exclusion if one indulged in hazardous
activities, which were as such not defined. Hence, the insurer could reject
the claim on flimsy ground. Now, if the so-called hazardous activities are part
and parcel of your job/occupation your claim can’t be rejected. So, the persons
working in say mining industry will get covered by health insurance. However,
if you decide to go for bungee jumping and get hurt in the process, you are not
covered by the policy as this activity is not intrinsic to your job.
The
premiums of these health policies, with the additional exclusions, may
marginally rise- may be in the range of 10-15%. However, the exact impact will
have to be seen.
These
changes come fully into effect with effect from 01 October 2020. However, any
health policy which has been issued from 01 October 2019 onwards, has to also
conform to these guidelines. In addition, any health policies purchased before
01 October 2019, will have to gradually change to be compliant with these new guidelines
by 01 October 2020.
I will
stop here for you to mull over your status of health insurance and take
corrective actions if required. We will discuss the remaining three essential
insurances next week. See you next week with
more information on my new book. Till that time enjoy my book, the link is
below.
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