One of the most important pieces of financial advice I give to anyone who asks me, is to say that every person who does not have a Health insurance policy (commonly referred to as ‘Mediclaim’) must get one as soon as possible. We have discussed elsewhere about the importance of this as well as how to choose the right Health Insurance for your own needs. Today, however, let us consider a question that is much more complex – Should you have more than one health insurance policy?
Now we should all know how a Mediclaim policy works – in brief, you pay a yearly premium to an insurer, in return for which, in the event of you requiring medical intervention as defined by the terms of your insurance contract, the insurer bears the expense on your behalf.
The policy may be personal (directly bought by you or for you by a family member) or a group policy (typically a medical coverage you may have through your employer, or even through your professional body or society like ICAI or Lions Club). Further, the claim process may be Cashless – where the Insurer is intimated at the time of admission to Hospital and the payment is made by them directly for the treatments and services covered by them, or on Reimbursement basis, where the insured can submit a claim after the hospitalisation.
Having multiple Health Insurance Plans helps in the following ways:
Hedge against rejection : Not all policies cover all forms of medical conditions. Even otherwise, there is a chance of rejection for some minor issues by an Insurer. In such a case having the option to file the claim with another Insurer with whom you have a policy is always welcome. Even if the amount of claim with second insurer is lower, you can use the fact that the claim was accepted by them to ask the first to reopen the case.
Group vs Personal insurance : If the only policy you have is a group policy, it is a good idea to have another, personal policy. This is because the group policy depends on your membership of the group – changing your job, leaving the club or resigning your membership of a professional body could all result in you suddenly losing your coverage – and accident / illness does not wait for you to get another insurance before striking.
Cost effective : When we are younger we might go for a policy with a lower coverage. However as we look to increase coverage, we might realise that it is more expensive to have a single, high coverage plan, than to have multiple plans that add up to higher total coverage value.
Critical illness cover : While Mediclaim normally works to reimburse the insured for expenses on medical treatment and hospitalisation, keep in mind that for some illnesses requiring ongoing treatment (such as chemotherapy for cancer), or for physical disabilities, there is a continuous cost that is not part of hospitalisation, or at least 24-hour hospitalisation. However there are ‘Critical Illness’ policies that can be purchased either stand-alone or as a rider. If you wish to have such coverage it makes sense to opt for a separate policy even if it is a little more expensive.
Against this, it needs to be mentioned that having multiple policies can be a bureaucratic hassle. At the time of filing a cashless claim, it is possible that the Insurer you have specified will opt to only cover a part of the total expense, citing the ‘contribution’ clause, under which multiple insurers bear the cost of treatment in proportion to the coverage offered by them. In such a case you will have to file a reimbursement claim separately. Also, you do need to ensure that every time you take a new Mediclaim, you not only declare your existing Health Insurance Policies, but intimate existing ones about the new policy as well.
On balance, there are both plus and minus points to having multiple Insurance policies. While there is no compelling reason to do so, it is not a bad idea to have them to take care of the eventualities we have outlined above.
