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Blog > Health Insurance > 85% of the first time health insurance buyers make these mistakes

Common Health Insurance Mistakes You Should Avoid

One thing 2020 has made loud and clear to each one of us is that buying health insurance is not just imperative, but a necessity.

As the midnight bells rang and the clock struck 12 at midnight on 31 December 2019, no one anticipated 2020 will onset a paradigm shift in the general perspective of masses when it comes to health insurance. Be it COVID-19 pandemic, west Bengal cyclones, economic recession in the just 6 months have compelled us to reconsider what is important and what is not.

Buying health insurance is important but more important is to buy right and sufficient health coverage for yourself and your family. Whether you want to buy one plan for your whole family or individual health insurance plans for each family member is a question you must ask in the early stage of picking up your insurance plan. We have discussed this topic in another blog, in more detail. Here we will discuss the common mistakes, do’s and don’ts of buying a health insurance policy for the first time.

What do 85% of the first time health insurance buyers do wrong?


#1 - Getting under or over insured - Mohit is a 26 years old, smart DevOps engineer. He recently bought a basic health insurance plan of 5 lakhs. He is fit, healthy and rarely falls sick. Mohit’s employer has a group insurance plan that give him a cover of 6 lacs. In this case, if Mohit unexpectedly falls sick and needs to be hospitalized in an emergency, he can raise a claim with either of his health insurance policies. Since he can make only one claim per hospitalization and is unlikely to be hospitalized again in that year. He is over insured. Just like Mohit, most people do not keep in mind their goals, employer insurance coverage, benefits and medical needs carefully while buying the health insurance policy.

#2 - Overlooking the policy wordings and fine print - Exclusions, policy wording, terms and conditions for plan benefits is another thing people often skip out of sheer tediousness of their complexity. Such documents are created by the underwriting teams to form a basis and guidelines for the claims and renewals to follow and use a lot of actuarial jargons. Though little browsing on these terms can tell you a lot about these jargons in simple language. For example, restore benefit is a common amongst health insurance plan benefits but the way it works varies from plan to plan and insurer to insurer. In some plans restore benefit may get triggered on partial utilization of sum insured, or in other cases complete utilization. Similarly, there are waiting periods for certain diseases and ailments.

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#3 - Non-disclosure of details on medical history - Sloppy mistakes, like incomplete details, not sharing information about your life style, medical history, pre-existing diseases is one of the major reasons amongst 5% of the rejected applications & claims in the insurance industry. Complete and honest disclosure of the medical history, helps the underwriting teams to perform risk analysis properly. As a result, to this risk-analysis, they may suggest you a better health insurance plan, right coverage to meet your needs or approve the policy at a slightly higher premium.

#4 - Ignoring geography and other demographic details - Where you live is often one of the most important things to consider while buying health insurance plan. Often this is also one of the most frequently asked questions in buying health insurance policy. Sometimes the health insurance premiums for those living in tier one metro cities is slightly higher than that for someone living in tier 2 & 3 or rather a non-metro city. This is particularly because of high healthcare costs in these cities. It is also important to check the network hospitals list of your insurer and insure that your preferred doctors and nearby hospitals are in that list. At these network hospitals you can get completely cashless treatments. What is otherwise the point of investing in a health insurance plan that won’t cover your expenses at the hospitals you are going to visit when needed. HDFC ERGO Health has a wide network of 10,000+ hospitals across country.

#5 - Not looking beyond premium or tax savings - Most people buy health insurance as part of their long term financial planning to save tax on premiums under section 80 C. While it is one of the benefits of buying health insurance plan, it is better to opt for a sufficient coverage. So look at the sum insured and maybe plan for combination of health insurance plans including standard or comprehensive health insurance plans, top-up plans, disease specific plans, co-payment or deductible options to find the right health insurance plan with sufficient coverage as per your health care needs in the policy term. 

#6 - Imitating your social circles - Most people buy the most popular or best-selling health insurance plans without giving it a much thought. There is no one who understands your health care needs better than you so avoid imitating your friends, relatives or peers. If you prefer AYUSH treatment over allopathic treatment, look for a plan that gives you that kind of coverage. Depending upon what stage of life are you on might also, help you to choose the right health insurance plan.

You can know more about how to choose health insurance plan according to the life stage.

Bottom Line:

We did a deep study and research on health insurance buying behavior only to find that most people find it overwhelming to choose a health insurance plan that is best for them. Every informed decision making requires you to dig deep, compare multiple products and their variants, and understand the insurance jargons and choosing the right insurer. We do all of this for every purchase we make from cell phones to the cars, nail enamel to the kitchen appliances we buy. And our first purchase in each of those categories was a bit overwhelming in its own way. So keep calm and choose your health insurance policy today from HDFC ERGO Health.

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