Health insurance policies are long-term commitments that have an equal role to play in your finances and your health. So, it’s only natural that you will be careful when filling in the details of your health insurance policy.
However, “it’s only human to err,” right?
So, what happens if you have misspelled a word in your name/address, have chosen the wrong riders for your plan, or need to change your residential address? Can you make the necessary changes?
The answer is yes! It’s called Endorsement in Health Insurance. Needless to say, the procedure requires multiple document submissions and you will have to follow a strict step-by-step process; but such changes are a common occurrence in health insurance policies.
Here is a look at everything you need to know about Endorsement in health insurance!
What Is Endorsement In Health Insurance?
An endorsement in health insurance indicates any changes or additions made to your existing health insurance policy.
For example, say,
Bindi was a 25-year-old girl, unmarried and staying in West Bengal when she purchased her health insurance policy.
5 years later, she got married (and she chose to take her husband’s surname) and shifted off to Bangalore for a better job opportunity.
Now, her insurance plan needs to be adjusted for her name and address. She approaches her insurer and they tell her about the endorsement process to get the details changed which requires the submission of certain documents.
Here are the most highlighted features and implications of endorsement -
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- Why are endorsements in health insurance important?
The pivotal purpose of an endorsement is to
- Offer accurate support to existing policyholders by correcting any details, and/or
- Customise by introducing perks (read: health insurance add-ons) and thus help you tap into the maximum benefits of your current plan availed from the best health insurance providers.
- When can endorsements in health insurance be done?
Such additions and alterations can be introduced to a plan at any point in time - during health insurance renewal or across the entire policy year.
- What are the implications of endorsements in health insurance?
When you initiate an endorsement, you may or may not have to face financial implications. It all depends on the kind of changes that you want to introduce to the plan.
Based on the type of changes you introduce, endorsements have been broadly classified into 2 types - financial and non-financial
What are the different types of endorsement in health insurance?
1. Financial Endorsement in Health Insurance
- Change in address (tier change)
Health services and opportunities broaden and improve qualitatively when you come into a metro city or a Tier 1 city from a Tier 2 or 3 city.
Let’s say you stay in Assam (a Tier 2 city). Due to some complications in your kidney, you require dialysis every month. This procedure incurs a bill of ₹35k in Assam.
Now, for whatever reason, you shift to Bangalore (a Tier 1 city) and the same dialysis requires a payment of ₹60k.
This spike in bills is a result of improved quality of healthcare services and higher invoices generated by the medical specialists.
Thus, health insurers and their underwriting team, factor in the location of a policyholder (nominee) when calculating their policy premium. Now, if the address of the nominee changes, so does the premium for the same policy.
P.S. When you are shifting from an economically underdeveloped city to a developed one, the premium inevitably increases. However, when it’s the other way around, make sure to reach out to your insurer about whether you can expect a reduction in your premium since location isn’t the only factor that influences an insurance policy’s premium.
- Addition of Health Insurance Riders
Health insurance add-ons are a crucial influence in customising a health insurance plan. Such health insurance add-ons can include - a protection rider, unlimited restoration, copayment waiver, hospital cash, maternity coverage, home care, international coverage, etc.
Such riders, for the benefit of policyholders, are kept pocket-friendly. But in case you are planning to add or drop a health insurance rider, a change in premium follows.
- Changes in Body Mass Index
Your Body Mass Index is an indicator of your health prospects that influences acceptance/rejection of one’s health insurance policy application.
| BMI | Policy Approved / Rejected | Implications |
|---|---|---|
| 18 - 29 | ✔️ | It suggests a healthy individual with minimum chances of contracting ailments and thus, hospitalisation. This presents a lower payout risk for the insurer, who is happy to offer a health insurance plan. |
| 29 - 35 | ✔️ (with loading charges) | This indicates a semi-healthy applicant with chances of acquiring diseases that might lead to hospitalisations and thus higher payout risks for the insurance providers. However, since these individuals represent a majority of the population, insurers offer them a policy with some loading charges (= higher premium). |
| 35+ | ❌ | When BMIs are way too high, this suggests that the individual is prone to multiple ailments that will lead them towards multiple hospitalisations or extensive treatments. This takes a toll on the financial standpoint and stability and hence insurers reject such health insurance policy applications. |
Now, say you availed of a health insurance policy when you were 22 and had a BMI of 27. However, in a couple of years, thanks to your love for junk food, remote work, and abhorrence towards physical activities, your BMI went up to 33.
With the transparency quotient with your health insurer in mind, you apply for an endorsement on your BMI. You will now be looking at a higher premium, owing to the loading charges that will be added to your base premium.
- Age corrections of policyholders
Imagine this - whatever may the reason be, your documents comprise a wrong year of birth. Keeping true to these documents, you provided the same year in your application.
Now, you managed to rectify the year of birth across the documents and thus approach your health insurer to make the same alterations. Since the health insurance premium is swayed and determined by your age -
- Higher age = higher chances of ailments = higher premium
- Lower age = lower chances of ailments = lower premium
-thus, an alteration in your birth year, will change your insurance premium.
- Addition of family members to the policy
In the case of the best health insurance plans for families, insurers allow a maximum of - policyholder, his/her spouse, and 4 children (under the age of 25).
Say, your current policy covers just your spouse and you. But now, you want to add your 10-year-old daughter to the policy as well.
You can approach your insurer, who will gladly include the new member but will also add on to the premium since they now will be taking the financial risk for an additional member in your policy.
- Changes in the sum insured
In the case of - an added member, a futuristic thought about medical inflation, a shift to a higher Tier zone, or a growing age, you might be thinking of increasing your current sum insured.
With an endorsement, this will be easily feasible, provided you are willing to accept and bear the added premium charges owing to this boosted coverage.
2. Non-Financial Endorsement in Health Insurance
- Change in your name (policyholder)
Whether it be a complete change of name, a slight change in spelling, or an addition or change of surname due to marriage - along with your legal proceedings and alterations across documents, you will also have to inform and update your insurance provider and plan (respectively), lest you might face complications during the health insurance claim settlement.
This change will have no financial implications; however, this endorsement is a necessity to avoid any cases of policy rejection.
- Changes in documents, contact details, education, occupation, marital status, or bank account details
From marital status updates, changes in contact details (mobile number or email ID), current occupation, or bank details - your insurer has to be kept updated about all of this. No changes in premium will occur in such cases of endorsement.
Whether it’s a financial or a non-financial endorsement in health insurance, updates, alterations and additions are a necessity. While it helps you enjoy convenient access to tailored insurance products, it also ensures a smooth claim settlement in the future and helps build a transparent relationship with your provider.
Now, coming to the changes brought to the premium owing to such endorsements, it is not enough to know that the premium either increases or decreases. The question is how much does the premium change, how it is calculated, and under what cases does this premium change?
Let’s take a look -
How does endorsements in health insurance affect policy premium?
With the financial endorsements, health insurance premiums do get affected.
Now, if you
- Add on a rider,
- Change address to a higher zone,
- Alter your current age,
- Increase your BMI (Body Mass Index),
- Boost your sum insured, or
- Add a new family member (in case of family floater health insurance plans)
-the increase in premium is obvious and inevitable. But, the real question is HOW do the premiums change when an endorsement occurs? Here, take a look -
- Mid-Term Implementation of Endorsement:
You know, endorsements in health insurance can happen anytime across a health insurance policy term - initial period (during or immediately after health insurance policy purchase, mid-term, or during policy renewal).
Now, considering a policy term goes on for 12 months, endorsements in a health insurance plan during the initial or renewal day mean that paying the full amount for the perk obtained makes sense since you can get the complete worth.
However, when the changes are made in the middle of a term period, do you still have to pay the complete charges for your perk?
Well, NO!
The changes and increases in your premium happen on a PRO-RATA BASIS.
Let’s take an example to understand this better!
Ravi purchased one of the best health insurance policies available in the market. During an ongoing term, he realises, that he wants to add a protection rider to his plan. He wanted to shield his no-claim bonus, cover the cost of his consumables, and get protection against inflation.
His need was urgent and hence he opted for the endorsement during the middle of a policy year (6 months into the year).
His health insurer usually charged INR 1000 for this rider. However, since it was already halfway through the policy year, he was charged only INR 500.
- Premature Short Closure of Health Insurance Plan
Health insurance plans, in general, do not have an exit age. However, imagine this:
You have availed of a health insurance policy, without much market research. For the next couple of years, everything went on smoothly, but upon discussion with a group of friends, you suddenly realise that with your current policy, you are losing out on a lot of perks.
So, you decide to leave the plan while in the middle of a policy year. The problem here is, that such mid-year policy cancellation means your insurer would charge you a substantial penalty. And this fine via the endorsement in your policy means, your premiums that should have been returned on a pro-rata basis, will now not be returned in whole.
Say, for example -
You are a 25-year-old with a 2-year-old plan, for which you were paying INR 10,000. 6 months into the policy year, you decide to cancel the policy. However, instead of receiving INR 5000 when leaving the plan, there is a penalty deduction as per the health insurance policy underwriting.
How to apply for an endorsement in your health insurance policy?
Approach the insurer about the modifications that you want to introduce in your health insurance plan.
| Step 1 | Approach the insurer, informing them about the modifications to be made. |
|---|---|
| Step 2 | Send the supporting documents (if required) to the insurer via mail for the modifications to be made. |
| Step 3 | Insurer makes the changes/ Provides you a link (or their respective space on website) to make the alterations/additions. |
| Step 4 | Insurer reaches out to you via mail, informing you about the date from which the changes will be effective on your health insurance plan. |
| Step 5 | Insurer sends you the updated health insurance policy document with the requested changes/additions. |
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Conclusion
Health insurance endorsements are crucial details that existing and potential policyholders need to be aware of. When and how needed, they must approach their respective health insurance provider and request required changes and additions to their policy. This would bring in the ease of convenience when filing and settling a claim.
