Don’t have to declare existing insurance when buying new one

Published in Mint on 17th Feb 2015, Written by Abhishek Bondia

I suffered a fire-related accident at home and was hospitalized. I have two insurance policies. How can I claim from these companies as the hospital said it will provide only one discharge form?
—Karen D’Silva

Most medical insurance policies are indemnity policies. You are entitled to get your entire expenses reimbursed but not more than that. To claim from multiple policies, you need to submit a settlement letter from the first insurer to the second one. On request, the first insurer will give back the original discharge summary, bills and receipts. It will stamp these original documents. The second insurer will deduct the claim paid by first insurer from the total bill, and settle the rest.

I already have a medical cover from my employer but am planning to take a personal health insurance policy as well. Is it important to inform the insurer about my existing group cover?
—Farooq Ajmal

No, you are not required to declare your existing insurances, when buying a new health cover. In fact, a clause known as the ‘contribution clause’ has recently been removed from health insurance policies. This gives the right to an insured to claim from multiple policies in whichever proportion she may deem fit. She is not bound by the proportion of sum assured of underlying policies. So, the purpose of declaring existing insurances has been removed.

It is generally better to claim first from an employer’s group insurance policy rather than individual insurance. The former has far fewer exclusions and it helps protect the no-claim bonus on the individual insurance.

I want to take a floater health insurance cover for my parents, aged 60 and 55 years. What are the parameters to look at?
—Aditi

There are three broad factors you should consider. First is the claim settlement track record of the insurer. I am not comfortable with insurers that have a claim settlement ratio of less than 85%. Second, you should consider the exclusions and restrictions in the policy. You should compare plans for waiting period for pre-existing and named diseases, capping on specific ailments, restrictions on room eligibility and co-pay. Ideally, go for plans without any disease-wise capping, lowest waiting periods and no room rent capping. Most plans levy a co-pay for first-time insured above 60 years. So, you should be prepared for 10-20% co-pay. Finally, look at the premium rates. The Mint Mediclaim Ratings provide a synthesized recommendation based on these factors
(www.livemint.com/mintmediratings).

At this age, you should evaluate products with a long-term perspective as switching becomes difficult. Some insurers increase premium dramatically after 65-70 years. At that juncture, you will not be able to port to a new insurer as insurers are apprehensive of accepting new proposals of senior citizens.

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