Avoid These Common Health Insurance Mistakes For Effective Coverage & Maximum Financial Security

Richa, a 35-year-old professional, purchased health insurance with a low premium, intentionally failing to disclose her smoking habits and pre-existing heart condition to keep costs down. However, when she required urgent heart surgery a few months later, her insurance claim for the expenses was denied after the company discovered her undisclosed medical conditions during their investigation.

Despite having an active health insurance policy, Richa's non-disclosure resulted in her bearing the high out-of-pocket costs for the surgery and hospitalisation, highlighting the critical importance of complete transparency when applying for such policies.

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Because of the intricate industry-specific language and the wide variety of coverage options, many people make poor choices when purchasing health insurance. It's easy to get lost in the jargon of health insurance and end up with a plan that doesn't work for your budget or healthcare needs because of confusing terms like deductibles, co-pays, networks, and exclusions. The selection process is further complicated by the wide variety of coverage types, premium amounts, and benefits available, any one of which could leave the policyholder underinsured, overpaying, or on the hook for unforeseen costs. Unforeseen problems may also arise from a policyholder's failure to fully comprehend the policy's terms, exclusions, and restrictions.

However, the exorbitant expenditures of medical care highlight the critical importance of health insurance. Consequently, it is crucial to make well-informed judgements when buying health insurance in order to secure the best possible coverage.

Read on to learn about some unique pitfalls to avoid when buying medical insurance.

Common Mistakes To Avoid When Buying Health Insurance

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Failure To Read And Understand Policy Documents

One common error people make when buying health insurance is not taking the time to read and comprehend all of the policy details. To avoid surprises and make sure the policy suits your unique requirements, it is essential to check the terms and conditions, coverage limitations, exclusions, waiting periods, and claim procedures. It can be challenging to make sense of a policy due to its dense prose and myriad of provisions.

If we take Karishma as an example, she bought health insurance without knowing that it wouldn't cover her pre-existing ailment. She was taken aback when her long-term diabetes care wasn't covered after she submitted a claim for it.

Selecting The Policy With The Lowest Monthly Premium

While premium cost should be taken into account, choosing the policy with the cheapest premium could be a mistake. A cheap monthly premium could mask coverage gaps, expensive out-of-pocket costs, or hefty deductibles. Weigh the premium against the level of protection offered to determine the policy's overall worth. However, it may result in insufficient coverage.

When Sarah found out she required an expensive surgery, she was shocked to learn that her health insurance plan's coverage limit was woefully inadequate and that she would have to pay a significant portion of the bill herself.

Also Read: Inclusion Of Mental Illness In Health Insurance Made Mandatory By IRDAI

Overlooking Network Restrictions

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Health insurance plans often have a network of healthcare providers with whom they have negotiated rates. Failing to check if your preferred doctors, hospitals, and specialists are included in the network can lead to higher out-of-pocket expenses or limited choices. Ensure that the policy offers adequate network coverage that includes the healthcare providers you prefer. Some plans have network restrictions, which means they cover only certain hospitals and doctors.

As an example, Neeraj failed to consider this when purchasing his policy. When he needed specialist care, he discovered his preferred doctor and hospital was out-of-network, resulting in significant additional costs.

Ignoring The Waiting Period

There is usually a waiting period before coverage begins to be paid for under most health insurance plans. Take Abhishek, who acquired a policy but then had to have knee replacement surgery a month later. Unfortunately, there was a one-year waiting period on his policy for elective surgeries like this, so he had to pay out of pocket.

Avoiding Annual Policy Reviews

Every year, you should check your health insurance plan because your needs may have changed. Check to see whether there are more cost-effective alternatives to the current coverage. Keep up with premiums, coverage, and policy changes to make sure your health insurance continues to meet your needs.

Let's take Maria, a young and healthy woman, as an example. When she was in her twenties, she splurged on a minimal insurance policy. When she was in her 30s and ready to start a family, she discovered her coverage did not cover pregnancy or childbirth.

Overlooking The Importance Of Co-Pay And Deductibles

Co-pay (a co-payment, or co-pay, is a fixed amount that an insured person pays out-of-pocket for a specific healthcare service, like a doctor's visit, with the remainder covered by their health insurance policy) and deductible (a deductible is the amount an insured person must pay for healthcare services each year before their health insurance begins to cover the costs) can significantly affect out-of-pocket costs.

For example, Ravi, a Bangalore-based software engineer, decided to buy health insurance with a 20% co-pay and Rs 50,000 deductible to lower his premium. However, when his wife needed surgery costing Rs 2,00,000, he was obligated to pay a co-pay of Rs 40,000 and a deductible of Rs 50,000 before his insurance coverage applied. Despite having health insurance, Ravi ended up bearing Rs 90,000 in out-of-pocket expenses. This experience underscored that opting for a lower premium by choosing a higher co-pay and deductible can lead to considerable out-of-pocket costs in the event of significant medical expenses.

Also Read; 7 Benefits Of Buying Health Insurance Right Away

Not Seeking Professional Advice

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Consult a licensed insurance agent or broker if you need help understanding your health insurance options or selecting the best coverage for your needs. Health insurance is complicated, but they can give you tailored advice based on your condition.

Relying Only On Employer-Provided Insurance

Insurance given by an employer may not meet all of your needs. For instance, Ankur counted entirely on the insurance provided by his employer. However, he was suddenly unemployed and lacked insurance at a time when he really needed it.

Other blunders that need to be avoided include:

Not considering your healthcare needs

Not comparing multiple options

Ignoring the policy exclusions

Not Disclosing Existing Medical Conditions

Consumers often have difficulty grasping the complexities of health insurance plans. Policygenius conducted a survey in 2021 and found that more than 60% of consumers admitted they didn't understand essential elements of their health insurance plans, such as deductibles and out-of-network costs. In addition, a National Sample Survey Office of India 2017-18 report said that 80% of Indians do not participate in any health insurance programme. This high percentage suggests a lack of understanding about health insurance, which could potentially lead to unexpected medical expenses for those not covered.

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