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Should you buy a health insurance policy worth Rs 1 Crore?

1 crore health insurance policy

News on COVID hospitalisations running into lakhs has jolted people to look into the financial gap in their health insurance policies. As per Pankaj Arora, MD and CEO, Raheja QBE General Insurance, there have been cases where customers with co-morbid conditions have lodged claims worth Rs54 lakh for ICU treatment involving ventilator support for COVID-19.

This has forced people to think about opting for health insurance policies with Rs 1 crore sum insured so as to handle any medical uncertainty in future.  As per Amit Chhabra, Head-Health Insurance, Policybazaar, “Towards the end of 2019, the penetration of high sum insured policies (Rs 1 crore cover and above) was 2 percent, which has now grown to 35 percent, clearly showing how awareness around high sum insured covers has picked up”.

“In the first three months of 2021, the average share of Rs1 crore health plan bookings with us stands at 12.5 percent compared to 9 percent in 2020,” he points out.

But COVID isn’t the only giant in a room full of elephants.

“While COVID-19 has cornered all the attention, the fact remains that renal failure, cancer and cardio vascular diseases remain major reasons for emergency medical care,” says Roopam Asthana, CEO and Whole Time Director, Liberty General Insurance.

“Other lifestyle diseases are also rearing their ugly head in India. In this situation, health insurance is no longer a luxury for a few but a necessity for the masses of our country.”

What are the high-end claims that people mostly face?

“Cancer, organ transplant, cardiac surgery, stroke, multiple organ failure are some of the conditions which lead to higher claim amounts,” says Gurdeep Singh Batra, Bajaj Allianz General Insurance.

As per Arora, Raheja QBE has observed the following trend (refer table) when it comes to high-end claims. “Hospital bill reaching Rs 1 crore as part of a single hospitalization incident is rare. The two likely scenarios where the bills result into higher claim amounts are — if the customer is hospitalized in tertiary care hospitals, in ICU, for prolonged periods of time, due to multiple complications or if it is a floater policy and there are multiple claims of all the members covered under the policy.”

insurance claims hecklist
Costs are indicative and may vary from location to location (Metro/non metro) and hospital to hospital

Should You Purchase a Policy Worth 1 Crore then?

“Currently, there are very few claims reaching up to Rs. 1 crore. However, health insurance is to secure the future needs,” says Batra.

“With the medical inflation at 10-15 percent every year, we may see treatment costs increasing, especially with precautions that hospitals need to take regarding COVID-19,” he adds.

As per Dr Sudha Reddy, Head – Health and Travel, Digit Insurance, “In India a  health insurance cover of Rs 1 crore is seldom required. About 95 percent of the people opt for a sum Insured of Rs 5 to 10 lakhs.”

She suggests customers to select their health insurance sum insured by considering various factors such as age of all the members to be covered, city of residence (metro/non-metro), number of dependents, presence of pre-existing diseases and also how much they are willing to shed in the face of an emergency from their own savings.

“With advancements in medical infrastructure in India, treatments and hospitalizations have not only become accessible but also affordable. In such case, for a family of 4 taking a base family floater policy of Rs 25 lakh to 30 lakh should be sufficient.”

How to plan for such coverage?

If you are among the 5 percent who feel that a sum insured of Rs 1 cr will put you at ease, then the industry experts suggest that you go for it. As per Chhabra, “People buying health insurance plans with higher sum insured have increased drastically.”

A Rs 1 crore family floater plan (eldest member age of 35 years) will only cost you somewhere between Rs 1500-3500 per month.

But on whether you should cover your parents also in the same policy, he suggests, “It is always advisable to cover your parents in a different plan. The premium in a family floater plan is decided on the basis of the age of the eldest member.”

Batra, further clarifies it with the following (refer table) premium breakup, for Rs 1 crore health insurance options. He says with the advent of Platinum Plan under his company’s Health Guard policy, maximum possible cumulative bonus is 150 percent of the sum insured. Hence, it is advisable to have a single base policy with a sum insured of Rs 1 crore, as the cover can potentially become Rs 2.5 crore (including cumulative bonus).  Also, having a single policy ensures hassle-free claim processing, policy renewals and IT deductions.”

Below is the comparison between Bajaj Allianz General Insurer’s Health Guard, Star package and Star package + Extra Care Plus policy. Extra Care Plus is a super top-up policy.

floater policy

*Above premium are for floater policy of 2 Adults+2 Children and including of GST.
**For Star Package, 6 sections have been opted (Health Guard, PA, Education grant, Householder, Travelling baggage and Public Liability) resulting in 15% discount.

With this breakup, it is visible that opting for a lumpsum Rs 1 crore policy comes out cheaper from this health insurance provider. This however, varies from insurer to insurer. As per Arora, “With Raheja QBE, one can cover family for Rs 1 crore sum insured either by purchasing a Rs 1 crore base policy directly or going for a combination of Base + Super Top Up.”

Asthana from Liberty General Insurance agrees: “You can buy a base health insurance policy along with a super top up plan to get coverage of Rs 1 crore. For example, for a family of 4 (Assuming Male 33, Female 31, 1st Child-3 years and 2nd Child-1 year) Rs 1 crore sum insured premium is around Rs 55,000 to Rs 65,000. However, if the same family opts for a base policy of Rs 10 lakhs and another super top-up policy with deductible of Rs 10 lakh and Rs 1 crore sum insured, the combined premium of Rs 1 crore coverage of the same family could be around Rs 22,000 to Rs 25,000. With this option, one can save more than 50 percent of the premium cost for the same sum insured.”

It is hence advisable, that you select a combination from an insurer that best suits your needs, whether it is going for a 1 crore policy directly, or going for a combination package. If you want to ascertain the health of your health insurance company, this article from moneymonc (How good is your health insurance company in settling claims and addressing grievances?) might help you in making an informed decision.

(Elizabeth Mathai is a Kochi-based content creator and a therapist, with expertise in insurance)

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