In this article, Lakshman shares how he bought a health insurance policy for his family. We are grateful to the members of the freefincal community for generously sharing their research with all of us.
Note: Health insurance is an extremely personalized purchase. Please do your extensive research before buying.
I started learning about personal finance last October (2023) through books by Vinod Pottayil and Monika Halan. I understood the importance of health Insurance from these two books. Shortly then, I sought more reliable resources to learn more. This was when Archana Lakshman Rao, a friend from the BYOB book club, recommended that I look at freefincal. The posts on freefincal on Health Insurance were my entry point in gathering in-depth knowledge on the subject. The blog led me to an E-Book by Venkatesh Jayaraman, a very meticulously prepared Excel by KR Lakshminarayanan, and another by Melvin Joseph.
I wanted to first secure health insurance for my parents, aged 54 and 51, as of 2024. I managed to get my parents to participate in this search to an extent. So, we decided to update the Excel sheet by K R Laxminarayanan rather than reinvent the wheel. Access the Google worksheet here.
Initially, K R Lakshminarayanan (referred to as KRL hereon) made this sheet to get health coverage for his family. He had used the Incurred Claims Ratio as a filter to zero in on a few insurers, after which premium projections were made upon a detailed comparison of the policy wordings. He then picked up an insurer and finally took his decision.
However, ICR, as Pattu mentioned in his YT video and article, isn’t a very good filter. Yes, it gives us a fair idea of the company’s profits, how the premiums may be hiked, the overall health of the pool of insured folks, and the probability of rejections. However, the fact that the ICR is low may mean that the premiums are too high already. It could be anything. So, we haven’t used this filter but have updated the sheet just in case one wants to use it (Now named ICR).
We then wanted to understand the market share of each of these 33 health insurers, which can be accessed from the ‘Market Share Sheet’ (Calculated based on premiums collected). 44% of the market share is with PSU health insurers, while the rest is private players. Among Private insurers, Star Health has the highest share, i.e. 15%, followed by the HDFC and ICICI Lombard, which have about 5% share each. We then added a sheet on our goals or requirements, which helped us decide the sum insured required and the kind of insurer my parents would need.
This exercise also included understanding the family history of health issues, which turned out to be shocking as we were unable to name the health conditions that our loved ones had. We are still looking for reports on some surgeries that were done a decade or more ago. My parents were clueless about why my grandparents popped so many tablets! And asking them was something my parents were not comfortable with! Go Figure!
Then, coming to the insurer, we were comfortable with PSUs, given our general distrust of the private insurers, which we share with Pattu. So, we have compared only PSU Family Floater policies here as opposed to KRL, which filtered out PSUs due to their high ICR. There are four PSU insurers, but we decided to drop New India Assurance Company as our family doctor and his hospital don’t prefer this one for various reasons. That left us with three potential insurers – United India, National Insurance and Oriental. Another reason why PSUs are the best bet is because the Government regularly infuses capital into these insurers, which have been around since the 20th century, to help increase their solvency ratios, which are often below the IRDAI required levels of 150%.
Now, the Excel sheet gives a detailed overview of the policy wordings, premiums and projections (Special thanks to KRL for this). Upon comparing, we realized National Insurance Parivar Plus Plan B is the best after the United India Family Medicare Policy. However, national insurance was unaffordable for me because of my current income level. Hence, we chose United India 10L Base SI + 40L Super Top Up. We might increase the cover if my income picks up, as this would be insufficient beyond 2044!
Also, don’t let anyone tell you that the PSUs have room rent limits! You can surpass the room rent limit with an extra premium with Oriental and National Insurance. United India doesn’t have a room rent limit but rather limits the type of room that is comfortable enough. As a family, we also believe in shared rooms that could help patients heal faster due to the company.
The super top-up policy wording was missing a lot of details that made me uncomfortable. Monika Halan recommended we make an email trail with the insurer, which was a bright idea. However, once our e-mails to the company were met with automated replies, one of us had to visit their office to clear up the confusion. They clearly stated that both policies would have the same terms and conditions. I found some visible differences, though; hence, some doubts still linger on my mind, and the same has been mentioned in the last two sheets. This would require another visit! We also learned that premium loading for diabetes would be up to 30% higher!
Regarding Agent/Intermediary, several trusted friends and mentors recommended taking the policy online. My opinion is: Let’s assume the agent is about 30-40 years old. We would probably be making claims another 20-30 years later (going by family history). Can the agent help us when he/she is 60/70? With advancements in tech and support from AIFW, friends, and family, we will pull it off, and I expect no issues with claims in the future. Money saved is money earned, and we decided to bag the discount for no agent involvement provided by United India.
Thank you!
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