How to Choose the Right Health Insurance Plan?

Over the past couple of decades, health complications have been on the rise. Irrespective of one's age, individuals have become more vulnerable to ailments, thanks to our sedentary lifestyle and the recent outbreak of COVID-19. 

Under such circumstances, you are left with an immense responsibility - ensuring the medical well-being of your family sans compromising your financial vault beyond repairs. This is where a health insurance plan might be the financial saviour you were looking for - a financial product that will come to your rescue to fund medical requirements during times of emergencies. 

Unfortunately, since it's a financial product, the need to choose it smartly is crucial - otherwise, you may not get your penny's worth. As industry experts, we will be helping you out with this entire process - it will be a quick glimpse into how our in-house experts recommend plans to clients!

The actual “best” plan can vary based on individual needs, so it’s critical to do personal research or, better yet, speak to one of Ditto’s IRDAI-certified experts and get solid insurance advice. Book a 30-minute call with us today!

How do you choose the correct health insurance plan?

Consumers have a variety of different options when it comes to selecting a good health insurance plan in the Indian market. In fact, there are options available for every section of the society. However, the abundance of options can also confuse you. To solve this problem, let’s take a look at what really matters when it comes to choosing a health insurance plan:

• Data metrics of insurer: When choosing a health insurance plan, it’s crucial to evaluate the insurer’s historical data as it helps us predict their future performance. 
  
  An insurer’s Claim Settlement Ratio (CSR) shows you the percentage of claims they settle out of the total claims received in a year. Ideally, you want this number to be 90% or higher, as it suggests the insurer honors most claims. But CSR alone doesn’t tell the whole story — you also need to look at the Incurred Claim Ratio (ICR).
  
  ICR measures the proportion of claims paid versus the total premiums collected in a year. A balanced ICR falls between 55% and 80%. If it’s too low, the insurer may be rejecting too many claims. If it’s too high, the company might be struggling financially, which could impact future payouts.
  
  Next, check the insurer’s hospital network. A robust network with over 10,000 hospitals, including ones near you, means better access to cashless treatments — so you avoid paying upfront and waiting for reimbursements.
  
  Lastly, consider the complaint volume. This shows the number of complaints per 10,000 claims. A lower complaint count usually signals a smoother claim settlement experience and fewer headaches for policyholders.
• Features of the plan: The features of a health insurance plan are just as crucial as the claim-related metrics. A well-rounded policy should protect you comprehensively, without cost-sharing clauses that leave you with unexpected expenses. Co-payments, for instance, require you to bear a percentage of the claim amount, often 10-20%. While this can lower your premium, it also means you’ll need to pay a portion of every hospitalization bill, which can be financially draining during a major medical event. Similarly, disease-wise sub-limits cap the maximum coverage amount for specific treatments, like capping heart surgery at ₹2 lakh, even if your overall sum insured is ₹10 lakh. Room rent limits are another restriction to watch out for — if your policy covers a room up to ₹5,000 per day, but you choose a ₹7,000 room, you’ll end up paying not just the difference but a proportionate deduction on the entire bill, which can inflate your out-of-pocket costs significantly.
  
  A comprehensive policy should also cover domiciliary treatments — treatments that would typically require hospitalization but are done at home due to medical necessity or lack of hospital availability. Daycare procedures, like cataract surgery or chemotherapy, should be included too, as modern medicine often allows complex treatments without overnight stays. Look for plans with restoration benefits, which automatically refill your sum insured after a claim so you’re never left uninsured for the rest of the year. No-claim bonuses reward you for staying healthy, increasing your coverage by a fixed percentage every year you don’t make a claim, while loyalty bonuses gradually enhance your sum insured for staying with the same insurer long-term. These features might seem like add-ons, but they can make a massive difference in how well your policy supports you when you need it most.
• Affordable Premiums: Affordable premiums are important, but they shouldn't be your only priority when choosing a health insurance plan. Cheaper plans may compromise on coverage or include cost-sharing features, like co-payment, which ultimately increase your out-of-pocket costs. Instead of just seeking low premiums, try to look for a plan that offers discounts on the premium. Some insurers may give you a certain percentage of discount for meeting fitness goals, like walking 10,000 steps or maintaining a claim-free record.
• Adequate sum insured: Choosing the right sum insured is crucial but there’s no one-size-fits-all approach to this. The adequate sum insured for you depends on your age, location, family size, and medical history. For instance, healthcare in Tier-1 cities is significantly more expensive than in Tier-2 cities, and medical inflation is pushing these costs even higher. Other than that, if you have a family floater plan, remember that the sum insured is shared among all members. So, a lower sum insured might leave you underinsured if multiple hospitalizations happen in a year.
• Exclusions: Exclusions are often buried in the fine print of the policy document, but they can make or break your claim experience. Permanent exclusions typically include self-inflicted injuries, substance abuse-related conditions, injuries from professional motor or adventure sports, gender-affirming care, and dental or vision treatments. Some insurers may also permanently exclude severe pre-existing conditions, like cancer. Understanding these in advance helps you know what’s covered and what isn’t, so you can avoid the shock of your life at the time of claim.
• Waiting periods: Waiting periods are another thing to keep in mind. Every policy has a mandatory 30-day initial waiting period where only accidents are covered. In addition to that, a waiting period which usually lasts two years and is applicable to slow-growing specific illnesses, like cataracts and kidney stones. 
  
  Pre-existing diseases (PEDs), like diabetes or hypertension, often have a waiting period of up to three years, and maternity coverage can take anywhere from nine months to four years. If you’re planning a family or have an existing condition, choosing a policy with a shorter waiting period makes sense. You can also opt for add-ons to reduce your waiting period.
• Add-ons: Add-ons can increase your coverage at a small extra cost. Free annual health check-ups help in the early detection and prevention of diseases. A consumables cover takes care of non-medical expenses which amount to 5%-10% of the total hospital bill. Apart from that, there are add-ons to reduce the PED waiting period as well.

What not to do when choosing a health insurance plan?

Now, we know what to look for when choosing a health insurance plan. However, there are also things that you should avoid doing when buying health insurance. Let’s take a look at them: 

• Rely on employee insurance: One of the biggest mistakes people make is relying solely on employer-provided health insurance. While it’s mandatory for companies to offer it, and it often comes with perks like no waiting periods and maternity coverage, it’s tied to your job. If you quit, retire, or switch careers, you lose that coverage — and although you can port the policy, the process can be complex. Plus, your employer can change the policy terms or even discontinue the coverage altogether. That’s why it’s always wise to have a personal retail plan alongside your employer insurance, giving you continuous coverage and long-term security.
• Prioritize the plan with the lowest premiums: Chasing the lowest premium without checking the policy’s offerings and limitations is another bad idea. A policy that seems cheap upfront often cuts corners by imposing co-payments, sub-limits, or exclusions that make claims harder. Instead of focusing only on price, look at what the policy covers and what it doesn’t. That way, you can avoid spending much more out-of-pocket than you saved in premiums.
• Stay clueless about the policy wording properly: Last but not least, don’t ignore the fine print of your policy document. Insurance jargon can be very confusing but overlooking the minute details of policy wording can cost you more later. Policy documents have important information about waiting periods, exclusions, non-medical expenses, etc., which could lead to additional hidden costs. 

If you are having trouble navigating the complex world of insurance, experts can guide you through the policy wording and help you make the most of your policy.

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Conclusion

Health insurance may seem like an added expense when you're young and in the prime of your health. However, the correct way to think about health insurance is to consider it as a safety net that is there to catch you during a financial fall. Choosing the right policy involves checking the insurer's metrics, reputation, and the policy's features and exclusions while avoiding common mistakes like opting for an inadequate sum insured or ignoring the policy wording. Health insurance should offer you one thing above all: peace of mind. So, choose a policy that truly has your back.