Health insurance, a must for senior citizens despite high premiums

Vikas, a school friend, reached out last week for help on his parents' insurance. Both were above 60. His parents, now retired, were earlier covered by a bank-provided group health insurance policy. The bank now withdrew the plan. His employer, did not provide coverage for parents. So, Vikas was in a fix. The cost of a standard mediclaim for senior citizens was three times more. Moreover, a new plan would mean restarting the waiting period for pre-existing and specific treatments. Effectively, it means less coverage for the next few years and substantially higher premium.

Senior citizens have no health insurance, ironically, at an age when they need it the most. They consider buying an independent health insurance plan, but are discouraged by the price and conditions. Insurers are not upbeat about offering senior citizen health plans, despite high premiums. Since medical contingencies are common during old age, insurers face high claims. This phenomenon increases loss ratios for them. To filter out potential claim-prone cases, insurers put strong underwriting checks. Often, insurers deny policies to patients with high levels of diabetes, blood pressure, or cholesterol. Several of these are lifestyle conditions and are likely to develop at old age. A large part of our urban population gets affected by these.

A way out is to port an existing group policy to an individual plan. It ensures that the period of the coverage in the group plan gets counted towards the waiting period of the individual plan. Individual plans allow the policyholder to renew lifelong, earn no-claims bonus, and enjoy wellness benefits. Porting can be done to an individual plan of the same insurer as the group plan. On subsequent renewals, you can choose to port to other individual plans as well. The premium applicable though will be of the individual plan. Vikas was paying around Rs 9000 to cover his parents for Rs 5 lakh family floater with the bank's policy. He was offered an individual plan with the same insurer for Rs 40,000.

If you are not already covered by a group plan, you need to buy a fresh individual health insurance. The good news is that you will have a lot to choose from because you are not tied to one insurer. For Vikas, he could have got coverage of Rs 5 lakhs from another insurer for around Rs 30,000. When choosing an individual plan, consider an insurer with high claim settlement experience, and one that offers high no-claims bonus. Most individual plans come with a waiting period of four years for pre-existing diseases and between 1-2 years for specific ailments.

A few insurers offer specially designed plans for senior citizens. Such plans have lower waiting periods, especially for pre-existing ailments. To enable this, substantial co-payment and disease wise limits are applied. One of such plans offers one year waiting period for pre-existing diseases, but a 50 per cent copay is applied for all claims linked to the pre-existing conditions. Vikas could have bought this plan for around Rs 40,000. This can be a good plan, if you are unable to get a standard mediclaim due to a pre-existing medical condition.

A few senior citizens may have existing individual plans, but with low coverage amounts. These plans can be efficiently enhanced through a top-up health insurance policy. Top-up plans come with a deductible. Claims up to the deductible amount are not paid. Amount over and above the deductible is reimbursed through the top-up plan. For Vikas' parents, a top-up of Rs 10 lakh with a deductible of Rs 5 lakhs would cost around Rs 10,000. Most top-up plans have a four-year waiting period for pre-existing diseases with no co-payment.

Premiums for senior citizen health plans are high, resulting in considerable cash outlay. However, given the high probability of medical contingencies, having a health insurance plan is prudent. Though the annual premium eats into the savings corpus, the absence of a health insurance policy can lead to a catastrophic loss to the savings if there is a claim. Avoiding a health plan because of high premium would be true to the adage of being penny wise and pound foolish. As one grows older, peace of mind and a sense of security are perhaps the highest priorities. An insurance plan provides just those.

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