Assessing insurer’s willingness to underwrite BP is hard

Published in Mint, October 16th 2013, Written by Kapil Mehta

Larger insurers are more comfortable underwriting people with medical conditions

I want to buy health insurance for my parents (my father is 54 years old and mother is 49 years old). Two years ago my father was diagnosed with high blood pressure (BP). I am looking for a policy which has a waiting period of up to two years for pre-existing diseases, no loading on next premiums when making claims, no co-payment and guaranteed renewability. I am looking at a sum assured of Rs.4 lakh for both my parents, with a premium of around Rs.25, 000. Could you please tell me if the factors that I have considered are correct and that the sum assured is adequate.

I suggest that your two most important considerations should be the pre-existing disease exclusion period and the insurer’s inclination to underwrite insurance for someone with high BP. Two years or less of waiting period is the right objective to set. You can look at to determine products with low waiting periods. Assessing the insurer’s willingness to underwrite high BP is more difficult. Empirically, I find larger private and public sector insurers are more comfortable underwriting people with medical conditions.
Guaranteed renewability and no loadings based on individual claims are features that, effective 1 October, the insurance regulator has mandated across health insurance products. This means you do not need these as explicit criteria.
My view on co-payment is that it is a good cost management feature. Some amount of co-pay or deductible will significantly lower your premium and make insurers more comfortable issuing insurance to your father.
With regards to the sum assured amount, Rs.4 lakh is low if you stay in a large city. Most critical illnesses quickly consume this kind of money. Also, medical inflation is higher than 15%. In effect this means that within a few years your parents will find this sum assured quite inadequate. At that time increasing the sum assured will be difficult and certainly more expensive. Look at the rates for Rs.10 lakh of sum assured. You will find that while the sum assured is 150% more, the premium increases by just about 50%. Make that investment now.

Can my entire family be covered under one personal accident policy?

I suggest that each person buy an independent personal accident policy. It is hard to group a few individuals into one policy and even if you were to do so, it would not be cheaper than buying individual insurances.
In any case, personal accident is fairly low-cost. A comprehensive cover of Rs.10 lakh per person should cost you Rs.1,000 a year.
Creating one large personal accident policy for several members makes sense when the group is large—20 people or more. Most often members in a group are company employees.

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