10 Essential Things to Know Before Buying a Health Insurance Plan

10 Essential Things to Know Before Buying a Health Insurance Plan

In today’s unpredictable world, health insurance has become more than just a financial safeguard — it’s a necessity. With medical inflation rising at 12–14% annually in India, even a single hospitalization can strain savings or lead to debt. Yet, millions of Indians still buy health insurance without truly understanding how it works.

Whether you’re a first-time buyer or looking to upgrade your existing plan, this comprehensive guide from The CEO Magazine – Health Section (health.theceo.in) will help you make an informed decision. Let’s explore the 10 essential things to know before buying a health insurance plan in India.

1. Understand What Health Insurance Really Covers

At its core, health insurance reimburses or pays for your medical expenses — but not everything is covered automatically.

Typically covered expenses include:

• Hospitalization charges (room rent, surgery, ICU)

• Pre- and post-hospitalization costs

• Ambulance fees

• Doctor consultations and diagnostic tests

However, cosmetic treatments, dental work, infertility treatments, and pre-existing diseases (for a period) might not be covered initially.

Quick Insight: Always review the inclusions and exclusions carefully. Many buyers overlook this and face claim rejections later.

2. Choose the Right Sum Insured — Don’t Underestimate Costs

Healthcare costs are skyrocketing. In metros, even a minor surgery can cost ₹2–3 lakhs.

Thumb Rule:
Choose a sum insured of at least ₹5–10 lakhs for individuals and ₹15–25 lakhs for family floaters, depending on your city and family size.

Did You Know?
A NITI Aayog report found that 80% of Indians with low insurance coverage had to pay extra from pocket during hospitalization — negating the purpose of insurance.

3. Check for Waiting Periods on Pre-existing Diseases

Most policies come with a waiting period of 2–4 years for conditions like diabetes, hypertension, or thyroid disorders.

Pro Tip:
If you already have a lifestyle condition, go for plans with reduced waiting periods or disease-specific riders (e.g., diabetes care plans).

This ensures early claim eligibility and long-term financial protection.

4. Compare Cashless Hospital Network

Cashless treatment is one of the biggest benefits of health insurance — you don’t have to pay upfront during emergencies.

Before you buy:

• Check if your nearby hospitals are on the insurer’s empaneled list

• Verify if the insurer offers nationwide network coverage (especially for frequent travelers)

“A wide cashless hospital network is often the real test of an insurance company’s service quality.” — IRDAI Consumer Report, 2024

5. Evaluate Claim Settlement Ratio (CSR) and Process

The Claim Settlement Ratio (CSR) reflects how many claims an insurer settles versus total claims received.

Ideal Benchmark:
Go for insurers with CSR above 95% and transparent claim processes.

Also check:

• Turnaround time for settlement

• Ease of cashless approval

• 24x7 customer support availability

Example:
Top private insurers like HDFC ERGO, Star Health, and Niva Bupa have maintained CSRs of over 96% as per the latest IRDAI report.

6. Know About Room Rent Limits and Sub-limits

Every policy defines how much you can claim for a hospital room. Exceeding the room rent limit can proportionally reduce your claim amount.

Example:
If your policy covers ₹5,000 per day, but your hospital room costs ₹8,000, you may receive only 60–65% of the total claim.

Tip:
Opt for plans with no room rent capping or upgrade to higher room category cover for flexibility during emergencies.

7. Don’t Ignore Co-payments and Deductibles

A co-payment means you share a percentage of the claim cost with the insurer.
A deductible is a fixed amount you pay before the policy starts covering the rest.

Example:
If your policy has a 10% co-pay and you claim ₹2,00,000 — you’ll pay ₹20,000 yourself.

Advice:
Younger buyers should choose policies with zero co-pay, while senior citizens can use it to reduce premium costs.

8. Look for Maternity and Newborn Coverage (If Applicable)

If you are planning a family, maternity coverage is a smart inclusion. However, most plans come with a waiting period of 2–4 years before maternity claims can be made.

Checklist for maternity cover:

• Delivery expenses (normal/C-section)

• Pre- and post-natal care

• Newborn baby cover for initial months

Pro Tip:
Young couples should buy early to complete waiting periods well before planning childbirth.

9. Explore Add-ons and Riders That Boost Coverage

Riders help customize your policy without buying a new plan.

Popular add-ons include:

• Critical illness rider

• Hospital daily cash benefit

• Personal accident cover

• Top-up/super top-up plans for higher coverage

Why it matters:
Riders are cost-effective and prevent the need for multiple overlapping policies.

10. Read the Fine Print — Transparency Is Everything

Before signing the policy, always review:

• Exclusions list (what’s not covered)

• Renewal terms and age limit

• Pre-authorization process for cashless claims

• Premium revision clauses

Golden Rule:
Buy from insurers who offer lifetime renewability, clear documentation, and transparent grievance redressal systems.

“Informed buyers not only save money — they gain peace of mind knowing they’ll never be denied when it matters most.”

Bonus Tip: Buy Early, Stay Protected Longer

Buying health insurance at a younger age means:

• Lower premiums

• No pre-existing disease restrictions

• Longer coverage period with cumulative bonus

Early planning ensures your future healthcare is never a financial burden.

The CEO Magazine Insight: India’s Health Insurance Market Outlook

India’s health insurance sector is growing at over 20% CAGR, with IRDAI pushing for higher insurance penetration across Tier-II and Tier-III cities. The future lies in personalized, digital-first insurance ecosystems integrating teleconsultation, fitness tracking, and preventive health analytics.

Business Insight:
InsurTech startups like Digit, Plum, and ACKO are redefining customer experience with paperless claims and data-backed underwriting.

Takeaway Box

Key Takeaway:Choose coverage, not just cost. The best health insurance plan balances affordability, coverage, and claim reliability — ensuring protection when it matters most.